Commerce Exam > Commerce Notes > DK Goel Solutions: Accounting for Partnership Firms – Fundamentals
DK Goel Solutions: Accounting for Partnership Firms – Fundamentals - Commerce PDF Download
Q1: A and B are partners in a farm. A is entitled to a salary of Rs. 15,000 p.m and a commission of 10% of net profit before charging any commission. B is entitled to a commission of 10% of net profit after charging his commission. Net profit till 31st March 2018 was Rs. 4,40,000. Show the distribution of profit.
Ans:
Q2: X, Y, and Z are partners sharing profits and losses in the ratio 3:2:1. After the final accounts have been prepared, it discovered that interest in drawings@5% p.a had not been taken into consideration. The drawings of the partners were: X Rs. 1,50,000, Y Rs. 1,26,000 , Z Rs. 1,20,000. Prepare a journal entry.
Ans:
Calculation of Interest on Drawings:
Since the date of the drawing is not given, interest will be charged for 6 months.
X: 5% on Rs. 1,50,000 for 6 months = Rs. 3,750
Y: 5% on Rs. 1,26,000 for 6 months = Rs. 3,150
Z: 5% on Rs. 1,20,000 for 6 months = Rs. 3,700
Rs. 9,900
Hence, the adjusting entry will be:
Q3: Akshara and Samiksha are partners. Business is carried from the property owned by Akshara on a monthly rent of Rs. 5,000. Akshara is entitled to a salary of Rs. 40,000 per quarter and Samiksha get a commission of 4% on net sales, which during the year was Rs. 5,00,000. Net profit till 31st March, 2018 before providing for rent was Rs. 6,00,000
Prepare a profit and loss appropriate account till 31st March 2018.
Ans: 
*Rent paid to a partner is a charge against profits. It will be debited to the Profit & Loss Account.
Q4: Ravi and Mohan were partners in a firm sharing profits in the ratio of 7:5. Their respective fixed capitals were Ravi Rs. 10,00,000 and Mohan Rs. 7,00,000. The partnership deed provided for the following:
- Interest on Capital @ 12% pa.
- Ravi’s salary Rs. 6,000 per month and Mohan’s salary Rs. 60,000 per year.
The profit till March 31-3-2019 was Rs. 5,04,000 which was distributed equally, without providing for the above. Record an adjustment entry.
Ans:
*Remaining profit will have to be calculated when profit has already been distributed in wrong profit sharing ratio.
FAQs on DK Goel Solutions: Accounting for Partnership Firms – Fundamentals - Commerce
| 1. What are the key features of a partnership firm in accounting? |  |
Ans. A partnership firm is characterized by two or more individuals who come together to operate a business with the intention of sharing profits. Key features include mutual agency, limited liability (in some cases), sharing of profits and losses, and the partnership agreement which outlines the roles and responsibilities of each partner.
| 2. How is profit sharing determined in a partnership? | |
Ans. Profit sharing in a partnership is usually determined by the partnership agreement, which specifies the ratio in which profits and losses will be shared among partners. If no agreement exists, profits are typically shared equally unless stated otherwise.
| 3. What is a partnership deed and why is it important? | |
Ans. A partnership deed is a legal document that outlines the terms and conditions of a partnership agreement. It is important as it provides clarity on the rights and duties of partners, profit-sharing ratios, capital contributions, and other operational guidelines, thus preventing disputes.
| 4. How do you record the admission of a new partner in accounting? | |
Ans. The admission of a new partner involves adjusting the capital accounts of existing partners and creating a new capital account for the new partner. It may also require the revaluation of assets and liabilities to reflect their current value and determine goodwill, which is often paid to existing partners.
| 5. What is the treatment of goodwill in a partnership firm? | |
Ans. Goodwill in a partnership firm represents the intangible asset reflecting the firm's reputation and customer relationships. It is recorded in the books at the time of the admission of a new partner or when there's a change in profit-sharing ratio. The treatment involves valuing goodwill and distributing it among the partners based on their profit-sharing ratios.
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Nov 14, 2024 Last updated |
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