T.S. Grewal’s Double Entry Book Keeping—Accounting for Not-for-Profit Organisations and Partnership Firms
1. A and B are partners sharing Profit and Loss in the ratio of 3 : 2 having Capital Account balances of
` 50,000 and ` 40,000 on 1st April, 2018. On 1st July, 2018, A introduced ` 10,000 as his additional
capital whereas B introduced only ` 1,000. Interest on capital is allowed to partners @ 10% p.a.
Calculate interest on capital for the financial year ended 31st March, 2019.
[Ans.: Total Interest Payable: A—` 5,750; B—` 4,075.]
2. Ram and Mohan are partners in a business. Their capitals at the end of the year were ` 24,000 and ` 18,000
respectively. During the year, Ram’s drawings and Mohan’s drawings were ` 4,000 and ` 6,000 respectively.
Profit (before charging interest on capital) during the year was ` 16,000. Calculate interest on capital
@ 5% p.a. for the year ended 31st March, 2019.
[Ans.: Interest on Capital: Ram—` 1,000; Mohan—` 800.]
3. Pranshu and Himanshu are partners sharing profits and losses in the ratio of 3 : 2 respectively. They admit
Anshu as partner with 1/6 share in the profits of the firm. Pranshu personally guaranteed that Anshu’s share
of profit would not be less than ` 30,000 in any year. The net profit of the firm for the year ending 31st
March, 2013 was ` 90,000.
Prepare Profit & Loss Appropriation Account. (AI 2014 C)
[Ans.: Deficiency to be borne by Pranshu—` 15,000; Share of Profit: Pranshu—
` 30,000; Himanshu—` 30,000; and Anshu—` 30,000; New Ratio = 3 : 2 : 1.]
4. Ankur and Bobby were into the business of providing software solutions in India. They were sharing
profits and losses in the ratio 3 : 2. They admitted Rohit for a 1/5 share in the firm. Rohit, an alumni
of IIT, Chennai would help them to expand their business to various South African countries where
he had been working earlier. Rohit is guaranteed a minimum profit of ` 2,00,000 for the year. Any
deficiency in Rohit’s share is to be borne by Ankur and Bobby in the ratio 4 : 1. Loss for the year was
` 10,00,000. Pass the necessary Journal entries. (CBSE Sample Paper 2015)
[Ans.: For Distribution of Loss: Dr. Ankur’s Capital A/c by ` 4,80,000; Bobby’s Capital A/c by ` 3,20,000;
and Rohit’s Capital A/c by ` 2,00,000; and Cr. Profit & Loss A/c by ` 10,00,000.
For Meeting the Deficiency: Dr. Ankur’s Capital A/c by ` 3,20,000; and Bobby’s Capital A/c by ` 80,000
and Cr. Rohit’s Capital A/c by ` 4,00,000.]
5. Anita, Bimla and Cherry are three partners. On 1st April, 2019, their Capitals stood as: Anita ` 1,00,000,
Bimla ` 2,00,000 and Cherry ` 3,00,000. It was decided that:
(a) they would receive interest on Capitals @ 5% p.a.,
(b) Anita would get a salary of ` 5,000 per month,
(c) Bimla would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the divisible profit would be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2020 was
` 5,00,000. Prepare Profit & Loss Appropriation Account and the Capital Accounts of the Partners.
[Ans.: Divisible Profit—` 3,86,190; Commission (Bimla)—` 23,810; General Reserve—` 38,619; Share of
Profit: Anita—` 1,15,857; Bimla—` 1,15,857, Cherry—` 1,15,857;
Closing Balances of Capital A/cs: Anita—` 2,80,857;
Bimla—` 3,49,667; Cherry—` 4,30,857.]
6. A, B and C were partners. Their capitals were A—` 30,000; B—` 20,000 and C—` 10,000 respectively.
According to the Partnership Deed, they were entitled to an interest on capital @ 5% p.a. In addition,
B was also entitled to draw a salary of ` 500 per month. C was entitled to a commission of 5% on
the profits after charging the interest on capital, but before charging the salary payable to B. The net
profit for the year were ` 30,000 distributed in the ratio of capitals without providing for any of the
above adjustments. The profits were to be shared in the ratio of 5 : 3 : 2.
Pass necessary adjustment entry showing the workings clearly.
[Ans.: Debit A’s Current A/c by ` 3,675; Credit B’s Current A/c by ` 2,895 and C’s Current A/c by ` 780.]
[Hint: It is assumed that Capitals are fixed.]
1
, T.S. Grewal’s Double Entry Book Keeping—Accounting for Not-for-Profit Organisations and Partnership Firms
7. Gian, Rajat and Bishan are partners sharing profits equally. Gian drew regularly ` 10,000 in the beginning
of every month for six months ended 30th September, 2019. Rajat drew regularly ` 10,000 at the end
of every month for six months ended 30th September, 2019. Bishan drew regularly ` 10,000 in the
middle of every month for six months ended 30th September, 2019. Calculate interest on drawings
@ 5% p.a. for the year ended 31st March, 2020.
[Ans.: Interest on Drawings: (i) Gian—` 2,375; (ii) Rajat—` 2,125; (iii) Bishan—` 2,250.]
8 (Appropriation of Profit). Complete the following accounts:
Dr. PROFIT & LOSS APPROPRIATION ACCOUNT for the year ended 31st March, 2020 Cr.
Particulars ` Particulars `
To Interest on Capital A/cs: By Profit & Loss A/c (Net Profit) 10,86,250
A 50,000 By Interest on Drawings A/cs:
B 55,000 A 16,125
C 30,000 1,35,000 B 18,000
To A’s Commission A/c (A’s Current A/c) ? C 14,625 48,750
To B’s Salary A/c (B’ Current A/c) ?
To Profit transferred to:
A’s Current A/c ?
B’s Current A/c ?
C’s Current A/c ? ?
11,35,000 11,35,000
Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)
To Bank A/c 1,00,000 By Bank A/c ? ? ?
To Balance c/d ? ? ? By Bank A/c 6,00,000
8,00,000 6,00,000 3,00,000 8,00,000 6,00,000 3,00,000
Dr. PARTNERS’ CURRENT ACCOUNTS Cr.
Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)
To Drawings A/c 50,000 80,000 90,000 By Interest on
To Drawings A/c 90,000 80,000 30,000 Capital A/c ? ? ?
To Drawings A/c 1,00,000 80,000 60,000 By A’s Commission A/c 2,00,000
To Interest on By B’s Salary A/c 3,00,000
Drawings A/c ? ? ? By Profit & Loss
To Balance c/d 1,93,875 2,97,000 App. A/c (Profit) 2,00,000 2,00,000 1,00,000
By Balance c/d 64,625
4,50,000 5,55,000 1,94,625 4,50,000 5,55,000 1,94,625
Solution: PROFIT & LOSS APPROPRIATION ACCOUNT
Dr. for the year ended 31st March, 2020 Cr.
Particulars
` Particulars `
To Interest on Capital A/cs: By Profit & Loss A/c (Net Profit) 10,86,250
A 50,000 By Interest on Drawings A/cs:
B 55,000 A 16,125
C 30,000 1,35,000 B 18,000
To A’s Commission A/c (A’s Current A/c) 2,00,000 C 14,625 48,750
To B’s Salary A/c (B’s Current A/c) 3,00,000
To Profit transferred to:
A’s Current A/c 2,00,000
B’s Current A/c 2,00,000
C’s Current A/c 1,00,000 5,00,000
11,35,000 11,35,000
2
1. A and B are partners sharing Profit and Loss in the ratio of 3 : 2 having Capital Account balances of
` 50,000 and ` 40,000 on 1st April, 2018. On 1st July, 2018, A introduced ` 10,000 as his additional
capital whereas B introduced only ` 1,000. Interest on capital is allowed to partners @ 10% p.a.
Calculate interest on capital for the financial year ended 31st March, 2019.
[Ans.: Total Interest Payable: A—` 5,750; B—` 4,075.]
2. Ram and Mohan are partners in a business. Their capitals at the end of the year were ` 24,000 and ` 18,000
respectively. During the year, Ram’s drawings and Mohan’s drawings were ` 4,000 and ` 6,000 respectively.
Profit (before charging interest on capital) during the year was ` 16,000. Calculate interest on capital
@ 5% p.a. for the year ended 31st March, 2019.
[Ans.: Interest on Capital: Ram—` 1,000; Mohan—` 800.]
3. Pranshu and Himanshu are partners sharing profits and losses in the ratio of 3 : 2 respectively. They admit
Anshu as partner with 1/6 share in the profits of the firm. Pranshu personally guaranteed that Anshu’s share
of profit would not be less than ` 30,000 in any year. The net profit of the firm for the year ending 31st
March, 2013 was ` 90,000.
Prepare Profit & Loss Appropriation Account. (AI 2014 C)
[Ans.: Deficiency to be borne by Pranshu—` 15,000; Share of Profit: Pranshu—
` 30,000; Himanshu—` 30,000; and Anshu—` 30,000; New Ratio = 3 : 2 : 1.]
4. Ankur and Bobby were into the business of providing software solutions in India. They were sharing
profits and losses in the ratio 3 : 2. They admitted Rohit for a 1/5 share in the firm. Rohit, an alumni
of IIT, Chennai would help them to expand their business to various South African countries where
he had been working earlier. Rohit is guaranteed a minimum profit of ` 2,00,000 for the year. Any
deficiency in Rohit’s share is to be borne by Ankur and Bobby in the ratio 4 : 1. Loss for the year was
` 10,00,000. Pass the necessary Journal entries. (CBSE Sample Paper 2015)
[Ans.: For Distribution of Loss: Dr. Ankur’s Capital A/c by ` 4,80,000; Bobby’s Capital A/c by ` 3,20,000;
and Rohit’s Capital A/c by ` 2,00,000; and Cr. Profit & Loss A/c by ` 10,00,000.
For Meeting the Deficiency: Dr. Ankur’s Capital A/c by ` 3,20,000; and Bobby’s Capital A/c by ` 80,000
and Cr. Rohit’s Capital A/c by ` 4,00,000.]
5. Anita, Bimla and Cherry are three partners. On 1st April, 2019, their Capitals stood as: Anita ` 1,00,000,
Bimla ` 2,00,000 and Cherry ` 3,00,000. It was decided that:
(a) they would receive interest on Capitals @ 5% p.a.,
(b) Anita would get a salary of ` 5,000 per month,
(c) Bimla would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the divisible profit would be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2020 was
` 5,00,000. Prepare Profit & Loss Appropriation Account and the Capital Accounts of the Partners.
[Ans.: Divisible Profit—` 3,86,190; Commission (Bimla)—` 23,810; General Reserve—` 38,619; Share of
Profit: Anita—` 1,15,857; Bimla—` 1,15,857, Cherry—` 1,15,857;
Closing Balances of Capital A/cs: Anita—` 2,80,857;
Bimla—` 3,49,667; Cherry—` 4,30,857.]
6. A, B and C were partners. Their capitals were A—` 30,000; B—` 20,000 and C—` 10,000 respectively.
According to the Partnership Deed, they were entitled to an interest on capital @ 5% p.a. In addition,
B was also entitled to draw a salary of ` 500 per month. C was entitled to a commission of 5% on
the profits after charging the interest on capital, but before charging the salary payable to B. The net
profit for the year were ` 30,000 distributed in the ratio of capitals without providing for any of the
above adjustments. The profits were to be shared in the ratio of 5 : 3 : 2.
Pass necessary adjustment entry showing the workings clearly.
[Ans.: Debit A’s Current A/c by ` 3,675; Credit B’s Current A/c by ` 2,895 and C’s Current A/c by ` 780.]
[Hint: It is assumed that Capitals are fixed.]
1
, T.S. Grewal’s Double Entry Book Keeping—Accounting for Not-for-Profit Organisations and Partnership Firms
7. Gian, Rajat and Bishan are partners sharing profits equally. Gian drew regularly ` 10,000 in the beginning
of every month for six months ended 30th September, 2019. Rajat drew regularly ` 10,000 at the end
of every month for six months ended 30th September, 2019. Bishan drew regularly ` 10,000 in the
middle of every month for six months ended 30th September, 2019. Calculate interest on drawings
@ 5% p.a. for the year ended 31st March, 2020.
[Ans.: Interest on Drawings: (i) Gian—` 2,375; (ii) Rajat—` 2,125; (iii) Bishan—` 2,250.]
8 (Appropriation of Profit). Complete the following accounts:
Dr. PROFIT & LOSS APPROPRIATION ACCOUNT for the year ended 31st March, 2020 Cr.
Particulars ` Particulars `
To Interest on Capital A/cs: By Profit & Loss A/c (Net Profit) 10,86,250
A 50,000 By Interest on Drawings A/cs:
B 55,000 A 16,125
C 30,000 1,35,000 B 18,000
To A’s Commission A/c (A’s Current A/c) ? C 14,625 48,750
To B’s Salary A/c (B’ Current A/c) ?
To Profit transferred to:
A’s Current A/c ?
B’s Current A/c ?
C’s Current A/c ? ?
11,35,000 11,35,000
Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)
To Bank A/c 1,00,000 By Bank A/c ? ? ?
To Balance c/d ? ? ? By Bank A/c 6,00,000
8,00,000 6,00,000 3,00,000 8,00,000 6,00,000 3,00,000
Dr. PARTNERS’ CURRENT ACCOUNTS Cr.
Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)
To Drawings A/c 50,000 80,000 90,000 By Interest on
To Drawings A/c 90,000 80,000 30,000 Capital A/c ? ? ?
To Drawings A/c 1,00,000 80,000 60,000 By A’s Commission A/c 2,00,000
To Interest on By B’s Salary A/c 3,00,000
Drawings A/c ? ? ? By Profit & Loss
To Balance c/d 1,93,875 2,97,000 App. A/c (Profit) 2,00,000 2,00,000 1,00,000
By Balance c/d 64,625
4,50,000 5,55,000 1,94,625 4,50,000 5,55,000 1,94,625
Solution: PROFIT & LOSS APPROPRIATION ACCOUNT
Dr. for the year ended 31st March, 2020 Cr.
Particulars
` Particulars `
To Interest on Capital A/cs: By Profit & Loss A/c (Net Profit) 10,86,250
A 50,000 By Interest on Drawings A/cs:
B 55,000 A 16,125
C 30,000 1,35,000 B 18,000
To A’s Commission A/c (A’s Current A/c) 2,00,000 C 14,625 48,750
To B’s Salary A/c (B’s Current A/c) 3,00,000
To Profit transferred to:
A’s Current A/c 2,00,000
B’s Current A/c 2,00,000
C’s Current A/c 1,00,000 5,00,000
11,35,000 11,35,000
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