Important Questions - Partnership Fundamentals | Crash Course of Accountancy - Class 12 - Commerce PDF Download

Question: 1
A and B are partners in a firm sharing profits and losses in the ratio of 3:2 with capitals of Rs.5,00,000 and Rs.2,50,000 respectively. Each partner is entitled to 10% p.a. interest on his capital. A is entitled to a commission of 10% on net profits remaining after deducting interest on capitals but before charging any commission. B is entitled to a commission of 8% of net profits remaining after deducting interest on capitals and after charging all commissions. The profit for the year prior to calculation of interest on capital was Rs.3,75,000.

Prepare Profit and Loss Appropriation Account and partner’s capital account.

Question: 2
A, B and C were partners in a firm having capitals of Rs.60,000; Rs.60,000 and Rs.80,000 respectively. Their Current Account balances were A: Rs.10,000; B: Rs.5,000 and C: Rs.2,000(Dr.). According to the partnership deed the partners were entitled to interest on capital @5%p.a. C being the working partner was also entitled to a salary of 6,000 p.a. The profits were to be divided as follows:
(a) The first Rs.20,000 in proportion to their capitals.
(b) Next Rs.30,000 in the ratio of 5:3:2.
(c) Remaining profits to be shared equally.

The firm made a profit of Rs.1,56,000 before charging any of the above items. Prepare the Profit & Loss Appropriation Account and pass necessary journal entry for apportionment of profit.

Question: 3
Calculate the interest on drawings of Mr. Arun @ 10 % p.a. for the year ended 31st March, 2007 in each of the following alternative cases:
Case (a) If he withdrew Rs.5,000 p.m. in the beginning of every month;
Case (b) If he withdrew Rs.5,000 at the end of every month;
Case (c) If he withdrew Rs.5,000 p.m.;
Case (d) If he withdrew Rs.60,000 during the year;
Case (e) If he withdrew as follows:
                                                 Rs.
1st June, 2006                    20,000
31st August, 2006              10,000
31st Oct., 2006                   18,000
1st Feb., 2007                     12,000  

Case (f) If he withdrew Rs.15,000 in the beginning of each quarter;
Case (g) If he withdrew Rs.15,000 at the end of the quarter;
Case (h) If he withdrew Rs.15,000 during the middle of each quarter.

Question: 4
Lalan and Balan were partners in a firm sharing profits in the ratio of 3:2. Their fixed capitals on 1st April, 2010 were: Lalan Rs.1,00,000 and Balan Rs.2,00,000. They agree to allow interest on capital @ 12% per annum and to charge on drawings @ 15% per annum. The firm earned a profit, before all above adjustments, of Rs.30,000 for the year ended 31st march, 2011. The drawings of Lalan and Balan during the year were Rs.3,000 and Rs.5,000 respectively. Showing your calculations clearly, prepare Profit and Loss Appropriation Account of Lalan and Balan. The interest on capital will be allowed even if the firm incurs a loss.       

Question: 5
A, B and C were partners in a firm. On 1-4-2010 their capitals stood at Rs.50,000, Rs.25,000 and Rs.25,000 respectively. As per the provisions of the partnership deed:
(a) C was entitled for a salary of Rs.1,000 p.m.
(b) Partners were entitled to interest on capital at 5 % p.a.
(c) Profits were to be shared in the ratios of capitals.

The net profit for the year ended 31.3.2011 of Rs.33,000 was divided equally without providing for the above terms. Pass an adjustment entry to rectify the above error.

Question:  6
The partners of a firm distributed the profits for the year ended 31st March, 2003, Rs.1,50,000 in the ratio of 2:2:1 without providing for the following adjustments:
(i) A and B were entitled to a salary of Rs.1,500 per quarter.
(ii) C was entitled to a commission of Rs.18,000.
(iii) A and C had guaranteed a minimum profit of Rs.50,000 p.a. to B. (iv) Profits were to be shared in the ratio of 3:3:2.

Pass necessary journal entry for the above adjustments in the books of the firm.

Question:  7
X, Y and Z are partners in a a firm. On 1st April, 2013 their capital accounts should at Rs.4,80,000, Rs. 3,60,000 and Rs.2,40,000 respectively. They shared profits and losses in the proportion of 5:3:2. Partners are entitled to interest on capital @ 5% per annum and salary to Y @ Rs.1,800 per month and commission of Rs.7,200 to Z respectively as per the provisions of the partnership deed.
X’s share of profit (excluding interest on capital but including salary) is guaranteed at a not less than of Rs.15,000 p.a. Y’s share of profit, including interest on capital but excluding salary, is guaranteed at not less than Rs.33,000 p.a. Any deficiency arising on that account shall be met by Z. The profits of the firm for the year ended 31st March, 2014 amounted to Rs.1,29,600. Prepare Profit & loss Appropriation Acccount for the year ended on 31st March, 2014.

Question:  8
Three Chartered Accountants A, B and C form a partnership, profits being divisible in the ratio of 3 : 2 :1 subject to the following:

(a) Cs share of profits guaranteed to be not less than Rs. 15,000 p.a.
(b) B gives a guarantee to the effect that gross fee earned by him for the firm shall be equal to his average gross fee of the preceeding five years when he was carrying on profession alone, which on an average works out at Rs. 25,000.

The profits for the first year of the partnership are Rs. 75,000. The gross fee earned by B for the firm is Rs. 16,000. You are required to show Profit and Loss Appropriation Account after giving effect to the above.

Question:  9

A and B are in partnership sharing profits and losses in the ratio of 3 : 2. They decided to admit C, their Manager, as a partner with effect from 1st April, 2015, giving 1/4th share of profits. C, while a Manager, was in receipt of a salary of Rs. 27,000 p.a. and a commission of 10% of the net profits after charging such salary and commission.

In terms of the Partnership Deed, any excess amount, which C will be entitled to receive as a partner over the amount which would have been due to him if he continued to be the Manager, would have to be personally borne by A out of his share of profits. Profits for the year ended 31stMarch, 2016 amounted to Rs. 2,25,000.

Question:  10
A and B are partners sharing profits and losses in the ratio of 3:1. On 1st April, 2015, their capitals were: A—Rs. 50,000 and B-Rs. 30,000. During the year ended 31st March, 2016, they earned net profit of Rs. 74,000. The terms of partnership are:
(i) Interest on the capital is to be allowed @ 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  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.

Question:  11
X and Y are partners in a firm. Their capitals as on April 1, 2009 were Rs.2,50,000 and Rs.1,80,000 respectively. They share profits equally. On July 1, 2009, they decided that their capitals should be Rs.2,00,000 each. The necessary adjustments in the capitals were made by withdrawing or introducing cash. According to the partnership deed, interest on capital is to be allowed at 8%p.a. X is to get an annual salary of Rs.4,000 and Y is allowed a monthly salary of Rs.800. It was found that Y is regularly withdrawing his monthly salary.

The manager of the firm is entitled to a commission of 10% of the profit before any adjustment is made according to the partnership deed.

Net Profit for the year ended 31st March, 2010, before charging interest on capital and salary was Rs.80,000. Prepare the profit and loss appropriation account, partner’s capital accounts and current accounts.

Question:  12
The partners of a firm distributed the profits for the year ended 31st March, 2003, 90,000 in the ratio of 3:2:1 without providing for the following adjustments:
(i) A and B were entitled to a salary of Rs.1,500 each per annum.
(ii) B was entitled to a commission of Rs.4,500.
(iii) B and C had guaranteed a minimum profit of Rs.35,000 p.a. to A.
(iv) Profits were to be shared in the ratio of 3:3:2.

Pass necessary journal entry for the above adjustments in the books of the firm.

Question:  13
The capitals of A, B and C stood at Rs.20,000, Rs.15,000 and Rs.10,000 respectively after the necessary adjustment in respect of drawings and net profits. Subsequently, it was discovered that interest on capital at 10% p.a. and interest on drawings Rs.130, Rs.90 and Rs.50 respectively have been ignored. Profit of the year already adjusted was Rs.10,000. Drawings of the partners were Rs.1,000, Rs.800 and Rs.500 respectively. They share profits and losses in the ratio of 2:1:1. Give necessary journal entry to rectify the accounts.

Question:  14 
X, Y and Z were in partnership. X and Y sharing profits in the proportion of 2:1 and Z receiving a salary of Rs.1,790 per month plus 5% of the profit after charging his salary and commission or 1/5 th of the profit of the firm whichever is more. Any excess of the latter over the former received by Z is, under the partnership deed, to be borne by X. The profit for the year ended 31st Dec., 1996 amounted to Rs.1,28,520 after charging Z’s salary.

Prepare the Profit and Loss Appropriation Account showing the division of the profit of the year.

Question:  15
X and Y are in partnership sharing profits and losses in the ratio of 2:1. They decided to admit Z, their manager, as a partner giving him 1/5 th share of profit. Z, while a manager, was receiving a salary of Rs.25,000 per annum plus a commission of 10% of the net profits after charging such salary and commission.

It was also agreed that any excess amount which Z receives as a partner (over his salary and commission) will be borne by X. Profit for the year amounted to Rs.3,22,000, before payment of salary and commission. Prepare a Profit & Loss Appropriation Account.

Question:  16
A, B and C are partners.  Their fixed capitals as on 31st Dec. 2002 were A Rs.2,00,000, B Rs.3,00,000 and C Rs.4,00,000. Profits for the year 2002 amounting to Rs.1,80,000 were distributed. Give the necessary adjusting entry in each of the following alternative cases: 
Case (a) Interest on capital was credited @ 8% p.a. though there was no such provision in the partnership deed.

Case (b) Interest on capital was not credited @ 8% p.a. though there was such provision in the partnership deed.

Case (c) Interest on capital was credited @ 8% p.a. instead of 10% p.a.

Case (d) Interest on capital was credited @ 10% p.a. instead of 8% p.a.

Question:  17
Ankur, Bhavna and Disha are partners in a firm. On 1stApril, 2015, the balance in their Capital Accounts stood at Rs. 14,00,000, Rs. 6,00,000 and Rs. 4,00,000 respectively. They shared profits in the proportion of 7:3:2 respectively. Partners are entitled to interest on capital @ 6% per annum and salary to Bhavna @X 50,000 p.a. and a commission of? 3,000 per month to Disha as per the provisions of the Partnership Deed.

Bhavna's share of profit (excluding interest on capital) is guaranteed at not less than Rs. 1,70,000 p.a. Disha's share of profit (including interest on capital but excluding salary) is guaranteed at not less than Rs. 1,50,000 p.a. Any deficiency arising on that account shall be met by Ankur. The profits of the firm for the year ended 31st March, 2016 amounted to Rs. 9,50,000.

Prepare 'Profit and Loss Appropriation Account' for the year ended 31stMarch, 2016.

Question:  18
Ram and Mohan are partners sharing profits and losses in the ratio of 2:1. At the end of third year, i.e., on 31st March, 2011, they decided to take their manager Mr. Sohan into partnership with effect from 1st April, 2008. As manager, Sohan was getting annual salary of Rs.24,000. He had also advanced Rs.30,000 to the firm by way of a loan on which he was getting interest @ 15% per annum.

During the three years firm’s profits after adjusting salary to Sohan, interest on loan and interest on the capital of the partners were:
2009     Profit         Rs. 43,900
2010     Loss            Rs. 20,000
2011     Profit          Rs. 1,00,000
According to the new agreement, Sohan is to be given annual salary of Rs.16,800 and 1/5 th share in the profits of the firm. Sohan’s loan shall be treated as his Capital from the beginning and similar to other partners as his capital will carry interest @ 10% per annum.

Record the journal entry to give effect to the above.

Question:  19
Kapoor and Mayank are partners, sharing profits in the ratio of 3 : 2. They employed Anurag as their manager, to whom they paid a salary of Rs. 1500 p.m. Anurag deposited Rs. 40,000 on which interest is payable @ 18% p.a. At the end of 2014 (after the division of profit), it was decided that Anurag should be treated as partner w.e.f. Jan. 1., 2011 with 1/5 th share in profits. His deposit being considered as capital carrying interest @ 12% p.a. like capital of other partners. Firm’s profits after allowing interest on capital were as follows:
(Rs.)
2011    Profit     1,18,000
2012   Profit     1,24,000
2013    Loss       (8,000)
2014   Profit     1,56,000
Record the necessary journal entries to give effect to the above.

Question:  20
X and Y entered into a partnership business on 1 st April, 2013 and contributed Rs. 80,000 and Rs. 60,000 respectively as their capitals. On 1 st Oct., X granted a loan of Rs. 20,000. The terms of the partnership agreement are as follows:
(a) 20% of Profits before charging Interest on Drawings but after making appropriations to be transferred to General Reserve.
(b) Interest on Capital @ 12% p.a. and Interest on Drawings @ 10% p.a.
(c) X to get a monthly salary of Rs. 2,000 and Y to get salary of Rs. 9,000 per quarter.
(d) X is entitled to a commission of 2% on Sales. Sales for the year were Rs. 3,50,000.
(e) Profits & Losses to beshared in the ratio of their Capital Contribution up to Rs. 70,000 and above Rs 70,000 equally.
The profit for the year ended 31st March, 2014, before providing for any Interest was Rs. 1,84,400. The drawings of X and Y were Rs. 40,000 and Rs. 50,000 respectively. Pass the journal entries and prepare P & L appropriation a/c.