Montfort School Roorkee- Fundamentals of Partnership
Assignment -1
1. A and B are in partnership. Where are A’s interest on drawings and interest
on capital recorded in his current account?
Interest on Capital Interest on Drawings
2. Where do interest on capital and interest on partners’ loans appear?
Interest on Capital Interest on Drawings
Profit and loss account Profit and loss account
Profit and loss appropriation account Profit and loss appropriation account
3. Haris and Usama started business in partnership on 1 st April, 2019 without
any agreement. Mr. Haris introduced capital Rs. 60,000 and Mr. Usama Rs.
40,000. On June 1st, 2019 Mr. Usama advanced Rs. 20,000 by way of loan to
the firm. The profit for the year ended 31st, December 2019, was amounted
to Rs, 18,000.
Required: Prepare Profit and Loss Appropriation Account at the end of 31st
March 2020.
4. Basit and Laiba are partners in a firm sharing profit in the ratio of 3:2. They
had advanced to the firm a sum of Rs. 50,000 as a loan in their profit-
sharing ratio on 1st, July 2019. The partnership deed is silent on interest on
loan from partners. Profit for current year was Rs. 85,000.
Required: Prepare Profit and Loss Appropriation Account at the end of
March 31st, 2020.
5. Sohail and Maham are partners in a firm sharing profit in the ratio of 5:3.
The partnership agreement provided that Sohail was to be paid salary of Rs.
1,500 per month and Maham was to get a commission of Rs. 12,000 per year.
Interest on capital was to be allowed @ 4% p.a. and interest on drawings was to
be charged @ 5% p.a. Interest on Sohail’s drawings was Rs. 1,800 and Maham’s
drawings was Rs. 1,200. Capital of Sohail was Rs. 140,000 and Maham Rs.
100,000. The firm earned a profit Rs. 75,000 for the year ended March 31st,
2019.
Required: Prepare Profit and Loss Appropriation Account of the firm.
5. Huda and Anum are partners sharing profit and losses in the ratio of 3:2. On
1st April, 2019 their capitals were: Huda was 80,000 and Anum Rs. 40,000.
Prepare Profit and Loss Appropriation Account and the Partner’s Capital
Accounts at the end of April 30th, 2020, after considering the following
items:
(a) Interest on Capital is to be allowed Rs. 5% per annum.
(b) Interest on the loan advance by Huda of Rs. 6,000 and Anum Rs. 4,500.
(c) Interest on partner’s drawings @ 6% p.a.
Drawing: Huda Rs. 20,000 and Anum Rs. 15,000.
(d) Rs. 7,100 is to be transferred to Reserve Account.
The net profit for the end of year April 30th, 2020 was Rs. 46,500.
6. A, B and C are partners in a firm. Their capital balances as on 1.1.16 were
₹50,000, ₹40,000 and ₹30,000 respectively. Prepare Profit and Loss
Appropriation Account for the year ended 31.12.16 after considering the
following information:
(i) Interest on Capital @ 10% p.a.
(ii) A will get a monthly salary of ₹800
(iii) Net profit before considering the above is ₹50,000
(iv) 10% of profit should be transferred to general reserve
(v) The ratio of sharing profit and loss by A, B and C is 4:3:2.
7. Rabi and Shashi are partners in a firm sharing profits and losses in the ratio
of 3:1. Net profit of the firm during the year ended 31st December, 2016
amounts to ₹3,00,000.
From the following information, prepare Profit & Loss Appropriation Account
of the firm for the year ended on 31st December, 2016:
(i) On 01.01.2016, the balances in the Capital and Current Accounts of the
partners were:
Rabi: ₹1,60,000 (capital a/c); ₹20,000 (current a/c)
Shashi: ₹1,20,000 (capital a/c); ₹12,000 (current a/c)
(ii) Interest on Capital @ 5% p.a.
(iii) Interest on partners' drawing @ 10% p.a.
Drawing during the year were: Rabi = ₹40,000; Shashi = ₹30,000
(iv) Rabi is entitled to a commission of 5% of net profit before considering
the above items.
8. A, B and C are partners in a firm with capitals ₹4,00,000, ₹3,00,000 and
₹3,00,000 respectively on 1st January, 2017. The partnership deed contains
the following clauses:
(i) Interest on Capital @ 5% p.a.
(ii) Interest on drawing @ 6% p.a.
(iii) A gets salary ₹4,000 p.m.
(iv) B gets commission @ 10% on the Net Profit
(v) Profits and losses to be shared: A:B:C = 4:3:3
The net profit of the firm for the year ended 31st December, 2017
amounted to ₹4,80,000 and the drawings of the partners are: A = ₹ 30,000,
B =₹20,000 and C = ₹10,000.
Prepare Profit and Loss Appropriation Account for the year ended on
31.12.2017.
9. M, A and N started a business Man Ltd. with capitals ₹80,000, ₹50,000 and
₹65,000, respectively and agreed to share profit and losses in the ratio
5:3:4. Drawings made by the partners during the year were ₹ 7,100, ₹5,300
and ₹6,400, respectively. Net Profit for the year was ₹ 72,000 for the
year ended on 31.3.2022. In the Partnership Deed, the following were
mentioned:
1. Interest on capital to be allowed @ 7% p.a.
2. ₹ 9,500 p.a. salary to be paid to partners.
3. Interest on Drawings to be charged @ 5% p.a.
4. ₹ 13,000 to be transferred to Reserve.
Pass necessary Journal entries related to the division of profit and
prepare Profit and Loss Appropriation A/c for the year ending on 31st
March,2022.
10. From the following information, prepare the capital account of partners A and B
when their capitals are fluctuating.
Particulars A B
₹ ₹
Capital on 1st April 2018 (Cr. balance) 2,20,000 1,50,000
Additional Capital 18,000 16,000
Drawings during the year 10,000 6,000
Interest on drawings 500 300
Share of profit for 2018-19 35,000 25,800
Interest on capital 3,500 2,500
Salary Nil 18,000
Commission 12,000 Nil
11. From the following information, prepare the capital account of partners Shiv
and Hari when their capitals are fixed
Shiv ₹ Hari₹
Capital 1 April 2022 5,00,000 5,00,000
Current Account Balance 50,000 25,000 debit
Additional Capital 1,00,000 1,00,000
Capital Withdrawn 25,000 20,000
Drawings 15,000 10,000
Interest on drawings 2,000 1,000
Interest on Capital 35,0000 35,000
Salary 15,000 15,000
Commission 2,000
