Assignment no 3

Fundamental of Partnership

1 Garry, Harry and Robert were partners in a firm sharing profits in the ratio of 7:4:9 .
Their capitals on 1st April 2021 were: Garry ₹ 2,00,000; Harry ₹ 75,000 and Robert
₹ 3,50,000. Their partnership deed provided for the following: (i) 10% of the net
profit to be transferred to General Reserve. (ii) Interest on capital is to be allowed @
9% p.a. (iii) Salary of ₹ 6,000 per month to Harry (iv) Interest on Drawings @ 6%
p.a. Drawings made against the anticipated profits, by Garry during the year ₹
25,000, Harry withdrew ₹ 5,000 at the end of each quarter, Robert withdrew ₹
25,000 on1st June 2021 for personal use. During the year ended 31st March 2022 the
firm earned profits of ₹ 1,70,000. Prepare Profit and Loss Appropriation Account.
2 Manoj and Billu are equal partners. Manoj is a sleeping partner and Billu is an Active
working partner. Their capitals on 1st April 2021 were: Manoj ₹ 6,000 Credit and
Billu (₹ 20,000) Debit. Mr Manoj has given a loan to the firm ₹ 10,000 on 1st April
2021 @ 10% p.a. Partnership deed allows 10% p.a. interest on capital. Salary to
every Active working partner @ 3,000 p.a. but partnership deed is silent on interest
on loan payable to any partner, in case any partner provides loan to the firm. Profit
for the year ending 31st March 2022 was ₹ 7,000 before providing above. Prepare
Profit and Loss Appropriation Account.
3 X and Y started a partnership firm on 1st Dec.2021. Their capitals were ₹ 6,00,000
and ₹ 4,50,000 respectively. On 1st Jan.2022 X advanced a loan of ₹ 1,00,000 to the
firm. It was agreed that: i. Interest on Partner’s Loan will be paid @ 10% p.a. ii. Rent
will be paid to Y ₹ 2,000 per month (for providing office space to the firm) iii.
Interest on drawings to be charged @ 10% p.a. Interest on capital allowed @ 8% p.a.
as charge. iv. Manager will get a commission of 10% on the net profit after charging
such commission. Drawings made by X and Y during the year ₹ 3,000 and ₹ 4,000
respectively. A fine of ₹ 650 was charged from Y for competing with the firm. Profit
during the year was ₹ 16,000. Show the distribution of profit/loss when interest on
capital is to be allowed whether firm incurs a loss.
4 A, B and C were partners in a firm. On 1 st April, 2020 the balance in their capital
accounts stood at ₹ 8,00,000, ₹ 6,00,000 and ₹ 4,00,000 respectively. As per the
provisions of the partnership deed, partners were entitled to interest on capital @ 5%
p.a., salary to B ₹ 3,000 per month and a commission of ₹ 12,000 to C. A’s share of
profit, excluding interest on capital, was guaranteed at ₹ 25,000 p.a. B’s share of
profit, including interest on capital but excluding salary was guaranteed at ₹ 55,000
p.a. Any deficiency arising on that account was to be met by C. The profits of the
 firm for the year ending 31st March, 2021 amounted to ₹ 2,16,000. Prepare Profit
and Loss Appropriation Account for the year ending 31st March, 2021.
5 On 31st March, 2021, the balance in the capital accounts of Asha, Nisha and Disha
after making adjustments for profits and drawings were ₹ 1,50,000, ₹ 1,20,000 and ₹
90,000 respectively. Subsequently, it was discovered that interest on capital and
interest on drawings had been omitted. The partners were entitled to interest on
capital @ 10% p.a. Interest on drawings was also to be charged @ 10% p.a. The
drawings during the year were: Asha ₹ 50,000, Nisha ₹ 60,000 and Disha ₹ 30,000.
The net profit for the year ending 31st March, 2021 amounted to ₹ 1,00,000. The
profit-sharing ratio was 2: 2: 1. Pass the necessary adjustment entry. Also show your
workings clearly.
6 Yadu, Vidu and Radhu were partners in a firm sharing profits in the ratio of 4 : 3 : 3.
Their fixed capitals on 1st April, 2020 were ₹ 9,00,000, ₹ 5,00,000 and ₹ 4,00,000
respectively. On 1st November, 2020, Yadu gave a loan of ₹ 80,000 to the firm. As
per the partnership agreement: (i) The partners were entitled to an interest on capital
@ 6% p.a. (ii) Interest on partners’ drawings was to be charged @ 8% p.a. The firm
earned profits of ₹ 2,53,000 (after interest on Yadu’s loan) during the year 2020 − 21.
Partners’ drawings for the year amounted to Yadu : ₹ 80,000, Vidu : ₹ 70,000 and
Radhu : ₹ 50,000. Prepare Profit and Loss Appropriation Account and Partners
capital accounts for the year ending 31st March, 2021.
7 Sonu and Rajat started a partnership firm on April 1, 2021. They contributed ₹
8,00,000 and ₹ 6,00,000 respectively as their capitals and decided to share profits
and losses in the ratio of 3 : 2. The partnership deed provided that Sonu was to be
paid a salary of ₹ 20,000 per month and Rajat a commission of 5% on turnover. It
also provided that interest on capital be allowed @ 8% p.a. Sonu withdrew ₹ 20,000
on 1st December, 2021 and Rajat withdrew ₹ 5,000 at the end of each month. Interest
on drawings was charged @ 6% p.a. The net profit as per Profit and Loss Account for
the year ended 31st March, 2022 was ₹4,89,950. The turnover of the firm for the
year ended 31st March, 2022 amounted to ₹ 20,00,000. Pass necessary journal
entries for the above transactions in the books of Sonu and Rajat.
8 Jay, Vijay and Karan were partners of an architect firm sharing profits in the ratio of
2: 2: 1. Their partnership deed provided the following: I. A monthly salary of ₹
15,000 each to Jay and Vijay. II. Karan was guaranteed a profit of ₹ 5,00,000 and Jay
guaranteed that he will earn an annual fee of ₹ 2,00,000. Any deficiency arising
because of guarantee to Karan will be borne by Jay and Vijay in the ratio of 3: 2.
During the year ended 31st March, 2022 Jay earned fee of ₹ 1,75,000 and the profits
of the firm amounted to ₹15,00,000. Showing your workings clearly prepare Profit
and Loss Appropriation Account and the Capital Account of Jay, Vijay and Karan for
the year ended 31st March, 2022
9 Moli, Bhola and Raj were partners in a firm sharing profits and losses in the ratio of 3
: 3 : 4. Their partnership deed provided for the following : i. Interest on capital @ 5%
p.a. ii. Interest on drawing @ 12% p.a. iii. Interest on partner’s loan @ 6% p.a. iv.
Moli was allowed an annual salary of ₹ 4,000; Bhola was allowed a commission of
10% of net profit as shown by Profit and Loss Account and Raj was guaranteed a
profit of ₹ 1,50,000 after making all the adjustments as provided in the partnership
agreement. Their fixed capitals were Moil: ₹ 5,00,000; Bhola : ₹ 8,00,000 and Raj :
 ₹ 4,00,000. On 1 st April, 2021 Bhola extended a loan of ₹ 1,00,000 to the firm. The
net profit of the firm for the year ended 31st March, 2022 before interest on Bhola’s
loan was ₹ 3,06,000. Prepare Profit and Loss Appropriation Account of Moli, Bhola
and Raj for the year ended 31st March, 2022 and their Current Accounts assuming
that Bhola withdrew ₹ 5,000 at the end of each month, Moli withdrew ₹ 10,000 at
the end of each quarter and Raj withdrew ₹ 40,000 at the end of each half year.
10 Mudit and Uday are partners in a firm sharing profits in the ratio 2: 3. Their capital
accounts as on April 1, 2021 showed balances of ₹ 70,000 and ₹ 60,000 respectively.
The drawings of Mudit and Uday during the year 2021-2022 were ₹ 16,000 and ₹
12,000 respectively. Both the amounts were withdrawn on 1st January 2022. It was
subsequently found that the following items had been omitted while preparing the
final accounts for the year ended 31st March 2022. (a) Interest on capitals @ 6% p.a.;
(b) Interest on drawings @ 6% p.a.; (c) Mudit was entitled to a commission of ₹
4,000 for the whole year. Showing you workings clearly pass a rectifying entry in the
books of the firm.
11 A, B and C are partners in a firm sharing profits and losses in the ratio of 3:3:2.The
partnership deed provided for the following: (i) Salary of ₹ 2,000 per quarter to A
and B. (ii) C was entitled to a commission of ₹ 8,000. (iii) B was guaranteed a profit
of ₹ 50,000 p.a. The profit of the firm for the year ended 31st March, 2019 was ₹ 1,
50,000 which was distributed among A, B and C in the ratio of 2:2:1, without taking
into consideration the provisions of partnership deed. Pass necessary rectifying entry
for the above adjustments in the books of the firm. Show your working clearly.
12 A and B are partners in a firm sharing profits and losses in the ratio of 7:3. Their
fixed capitals were: A ₹ 9, 00,000 and B ₹ 4, 00,000. The partnership deed provided
the 3 5 following: (i) Interest on Capital @ 10% p.a (ii) A’s salary ₹ 50,000 per year
and B’s salary ₹ 3,000 per month. Profit for the year ended 31st March, 2019 ₹ 2,
78,000 was distributed without providing for interest on capital and partners’ salary.
Showing your working clearly, pass the necessary adjustment entry for the above
omission
13 Maanika, Bhavi and Komal are partners sharing profits in the ratio of 6:4:1. Komal is
guaranteed a minimum profit of ₹ 2,00,000. The firm incurred a loss of ₹ 22, 00,000
for the year ended 31st March, 2018. Pass necessary journal entry regarding
deficiency borne by Maanika and Bhavi and prepare Profit and Loss Appropriation
Account.
14 Sunil, Aadil and Mona are partners having fixed capitals of Rs. 2,00,000, Rs.
1,60,000 and Rs. 1,20,000 respectively. They share profits in the ratio of 3: 1 : 1. The
partnership deed provided for the following which were not recorded in the books. (i)
Interest on capital @ 5% per annum. (ii) Salary to Sunil Rs. 1,500 per month and to
Mona Rs. 1,000 per month. (iii) Transfer of profit to general reserve Rs. 10,000. Net
profit for the year ended 31st March, 2022 was Rs. 1,00,000. Pass necessary
rectifying entry for the above adjustments in the books of the firm. Also show your
workings clearly.
15 Rajesh and Dinesh are two partners in a firm sharing profit and losses in the ratio of
3:2. At the time of distributing the net profit between the partners, interest on capital
was credited @18% instead of 8% wrongly. Now, pass an adjusting journal entry to
correct this error. Partners’ capitals are given on 1st April, 2021 as Rs. 5,00,000 and
 Rs. 3,00,000 respectively. Profit on 31st March, 2022 is Rs. 2,00,000
16 The partnership agreement between Girraj and Neeraj provides that. (i) Profits will
be shared equally. (ii) Girraj will be allowed a salary of Rs.400 per month. (iii)
Neeraj who manages the sales department will be allowed a commission equal to
10% of the net profits, after allowing Girraj’s salary. (iv) 7% interest will be allowed
on partners’ fixed capital. (v) 5% interest will be charged on partners’ annual
drawings. (vi) The fixed capitals of Girraj and Neeraj are Rs. 1,00,000 and Rs.
80,000 respectively. Their annual drawings were Rs. 16,000 and Rs. 14,000
respectively. The net profit for the year ending 31st March, 2006 amounted to Rs.
40,000. Prepare firm’s profit and loss appropriation account.
17 Camila and Andrew are partners in a firm sharing profit and loss in the ratio of 3 : 2.
The balances in their capital and current accounts as on 1st April, 2021 were as under
Items Camila (Rs.) Andrew (Rs.)
Capital accounts 3,00,000 2,00,000
Current accounts (Cr) 1,00,000 80,000
The partnership deed provides that Camila is to be paid salary @ Rs. 500 per month
whereas, Andrew is to get a commission of Rs. 40,000 for the year. Interest on capital
is to be credited at 6% per annum. The drawings of Camila and Andrew for the year
were Rs. 30,000 and Rs. 10,000, respectively. The net profit of the firm before
making these adjustments was Rs. 2,49,000. Interest on Camila’s drawings was Rs.
750 and Andrew’s drawings was Rs. 250. Prepare profit and loss appropriation
account
18 Saagar and Balveer are partners in the ratio of 3 : 2. The firm maintains fluctuating
capital accounts and the balance of the same as on 31st March, 2020 amounted to Rs.
1,60,000 and Rs. 1,40,000 for Saagar and Balveer respectively. Their drawings
during the year were Rs. 30,000 each. As per partnership deed, interest on capital
@10% p.a. on opening capitals had been provided to them. Calculate opening
capitals of partners given that their profits were Rs. 90,000.
19 Pratap, Ravi and Shyam are partners in a firm sharing profits and losses in the ratio
5:3:2. Shyam is given a guaranteed profit of Rs. 30,000 irrespective of his actual
share. Any deficiency due to this arrangement is borne by Pratap and Ravi equally.
During the year 2021-22, the net profit of the firm was Rs. 1,40,000. Show the
distribution of profit among the partners
20 Kashyap, Bharadwaj and Vishwamitra are partners in a firm sharing profits and
losses in the ratio 3:3:2. On 1st April 2021 their capital balances stood at Rs. 90,000
Rs. 80,000 and Rs. 70,000 respectively. The partnership deed provides interest on
capital at 12% p.a. During the year 2021-22, the Net Profit of the firm was Rs.
1,20,000 distributed equally among the partners without providing interest on capital.
You are required to pass an adjustment journal entry to rectify the errors. Show your
working clearly..