Chapter - Partnership Fundamentals
Q1. A and B are partners. The net divisible profit as per Profit and Loss Appropriation A/c is 2,50,000. The total interest on partner’s drawing is 4,000. A’s salary is 4,000 per quarter and B’s salary is 40,000 per annum. Calculate the net profit/loss earned during the year.
Q2. A group of 60 persons want to form a partnership business in India. Can they do so? Give reason in support of your answer.
Q3. At what rate will partners be entitled for remuneration in absence of partnership deed?
Q4. List anyone difference between Profit & Loss Appropriation Account and Profit & Loss Adjustment Account.
Q5. Kavita, Meenakshi and Gauri are partners doing a paper business in Ludhiana. After the accounts of partnership have been drawn up and closed, it was discovered that for the years ending 31st March 2013 and 2014, Interest on capital has been allowed to partners @ 6% p. a. although there is no provision for interest on capital in the partnership deed. Their fixed capitals were 2,00,000; 1,60,000 and 1,20,000
respectively. During the last two years they had shared the profits as under:
31 March 2013 3 : 2 : 1
31 March 2014 5 : 3 : 2
You are required to give necessary adjusting entry on April 1, 2014.
Q6. Mohit and Rohan share profits and losses in the ratio of 2:1. They admit Rahul as partner with 1/4 share in profits with a guarantee that his share of profit shall be at least Rs. 50,000. The net loss of the firm for the year ending March 31, 2006 was Rs. 1,60,000. Pass an entry for distribution of profits and guarantee?
Q7. Amit, Babita and Sona form a partnership firm, sharing profits in the ratio of 3 : 2 : 1, subject to the following :
(i) Sona’s share in the profits, guaranteed to be not less than Rs. 15,000 in any year.
(ii) Babita gives guarantee to the effect that gross fee earned by her for the firm shall be equal to her average gross fee of the proceeding five years, when she was carrying on profession alone (which is Rs. 25,000). The net profit for the year ended March 31, 2007 is Rs. 75,000. The gross fee earned by Babita for the firm was Rs. 16,000.You are required to prepare P & L Appropriation A/c.
Q8. Sasta , Khasta and Pasta are in partnership , sasta and khasta are sharing profits in ratio of 3:1 and pasta receiving an annual salary of 32000 plus 5% of the profits after charging his salary his commission , or ¼ share in profits whichever is more . Any excess latter over former recived by pasta is, under the partnership deed, to be borne by sasta and khasta in 3:2 . the profit for the year ended 31 march 2011 came to be Rs. 168000 after charging pasta’s salary . Show the distributions of profits among the partners.
Q9. The net profit of X, Y and Z for the year ended March 31, 2006 was Rs. 60,000 and the same was distributed among them in their agreed ratio of 3 : 1 : 1. It was subsequently discovered that the under mentioned transactions were not recorded in the books :
(i) Interest on Capital @ 5% p.a.
(ii) Interest on drawings amounting to X Rs. 700, Y Rs. 500 and Z Rs. 300.
(iii) Partner’s Salary : X Rs. 1000, Y Rs. 1500 p.a.
The capital accounts of partners were fixed as : X Rs. 1,00,000, Y Rs. 80,000 and Z Rs.60,000. Record the adjustment entry.
Q10. On March 31, 2003, after the close of books of accounts, the capital accounts of Ram, Shyam and Mohan showed balance of Rs. 24,000 Rs. 18,000 and Rs. 12,000, respectively. It was later discovered that interest on capital @ 5% and interest on drawings @ 10% had been omitted. The profit for the year ended March 31, 2003, amounted to Rs. 36,000 and the partner’s drawings had been Ram, Rs. 3,600; Shyam, Rs. 4,500 and Mohan, Rs. 2,700. The profit sharing ratio of Ram, Shyam and Mohan was 3:2:1. Calculate interest on capital and pass adjustment entry.
Q11. A and B are partners sharing profits and losses in the ratio of3: 1. On 1st April, 2013, their capitals were:A-Rs.50,000 and B- Rs.3000. During the year ended 31st March, 2014, they earned net profit of Rs.74,000. The terms of partnership are:
(i) Interest on the capital is to be charged @ 6% p.a.
(ii) A will get commission @ 2% on turnover.
(iii) B will get a salary of Rs.500 per month.
(iv) B will get commission of 5% on profits after deduction of interest, salary and commission (including his own commission).
(v) A is entitled to a rent of Rs. 2,000 per month for the use of his premises by the firm. It is paid to him by cheque at the end of every month.
Partners' drawings for the year were: A- Rs. 8,000 and B- Rs. 6,000.
Turnover for the year was Rs. 3,00,000. After considering the above factors, you are required to prepare
Profit and Loss Appropriation Account and Capital Accounts of the Partners.
|1. What is a partnership firm?|
|2. What is the difference between a partnership firm and a company?|
|3. How is the profit or loss of a partnership firm shared among partners?|
|4. What are the different types of partnerships?|
|5. What is the process of accounting for a partnership firm?|