Class XII

Assignment -2

ACCOUNTING FOR PARTNERSHIP FIRMS- FUNDAMENTALS

1 The Capital Accounts of X and Y showed balances of Rs40,000 and Rs20,000 on 1st April,2020.
They shared profits in the ratio of 3: 2. They are allowed interest on Capitals @ 10% p.a. and are
charged interest on drawings @ 12% p.a. X also advanced a loan of Rs10,000 to the firm on 1st
August, 2020.
During the year X withdrew Rs1,000 per month in the beginning of every month, whereas Y
withdrew Rs1,000 per month at the end of every month.
The profits for the year ended 31st March, 2021, before the above mentioned adjustments were
Rs20,960. Show the distribution of profits and prepare the partner’s Capital Accounts.
2 A, B and C are in partnership. On 1st April, 2021 their capitals were: A Rs5,00,000 (Credit), B
Rs3,00,000 (Credit) and C Rs40,000 (Debit). As per partnership deed Interest on Capita is to be
allowed @ 6% p.a. and Interest on drawings is to be charged @ 8% p.a.
You find that:
a) On 1st July 2018, A withdrew Rs1,00,000 against capital;
b) B withdrew Rs5,000 p.a. during the year.
c) C withdrew Rs60,000 during the year.
The profit for the year ended 31st March, 2022 amounted to Rs3,84,000.
You are required to prepare journal entries for the above transactions and also prepare partner’s
capital accounts.
3 Shikha and Fatima were partners in a firm sharing profits in the ratio of 5: 3. Their fixed capitals
on 1.4.2021 were : Shikha Rs3,00,000 and Fatima Rs4,00,000. They agreed to allow interest on
capital @ 12% per annum and to charge on drawings @ 15% per annum. the profit of the firm
for the year ended 31.3.2022 before all above adjustments were Rs63,000. The drawings made
by Shikha were Rs10,000 and by Fatima Rs20,000 during the year. Prepare Profit and Loss
Appropriation Account. the interest on capital will be allowed even if the firm incurs a loss.
4 Shiv and Hari entered into partnership on 1st April, 2020, contributing RS5,00,000 and
Rs2,00,000 respectively. Hari also introduced Rs1,00,000 as additional capital on 1st July, 2020.
They agreed to share profits and losses in the ratio of 3: 2. Following information is provided
regarding the partnership:
a) Shiv & Hari, each are allowed a salary of Rs5,000 per quarter.
b) Interest is to be allowed on Capitals @ 8% p.a. and charged on drawings at 10% p.a.
Drawings of Shiv and Hari during the year were Rs12,000 and Rs10,000 respectively. Profit as
at 31st March, 2021 before the above mentioned adjustments was Rs1,96,000.
Prepare:
a) Profit and Loss Appropriation A/c, and
b) Partner’s Capital A/cs.
5 Sarita and Vandana were partners in a firm sharing profits in the ratio of their capitals
contributed on commencement of business which were Rs4,00,000 and Rs3,00,000 respectively.
The firm started business on April 1, 2021. According to the partnership agreement:
a) Every year, in case of profit, Rs50,000 or 10% of the profit, whichever is more will be
donated for providing school fees of specially abled children.
b) Interest on capital is to be allowed at 12% p.a. an interest on Drawings is to be charged at
10% p.a.
c) Sarita and Vandana are to get a monthly salary of Rs10,000 and Rs15,000 respectively.
The profits for year ended March 31, 2022 before making appropriations was Rs6,00,000. The
drawings of Sarita and Vandana were Rs2,00,000 and Rs2,50,000, respectively. Interest on
drawings amounted to Rs10,000 for Sarita and Rs12,500 for Vandana.

1 P.T.O
 You are required to prepare Profit and Loss Appropriation Account and Partner’s Capital
Accounts assuming that their capitals are fluctuating.
6 A and B are partners sharing profits in the ratio of 3:2, with Capitals of Rs5,00,000 and
Rs3,00,000 respectively. Interest on Capital is agreed @ 6% p.a. B is to be allowed an annual
salary of Rs60,000. During the year 2019-20, the profits prior to the calculation of interest on
capital but after charging B’s salary amounted to Rs1,80,000. A provision of 5% of the profit is
to be made in respect of commission to the Manager.
Prepare Profit and Loss Appropriation account showing the distribution of profit and the
partner’s capital accounts for the year ending March 31, 2020.
7 A and B are partners in a firm. A is entitled to a salary of Rs15,000 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 for the year ended 31st March 2022 was
Rs4,40,000.
You are required to show the distribution of profit.
8 A and B are partners in a firm sharing profits and losses in the ratio of 3: 2 with capitals of
Rs5,00,000 and Rs2,50,000 respectively on 1st April, 2021. Each partner is entitled to 10% p.a.
interest on his capital. A is entitled to a commission of 10% on net profit remaining after
deducting interest on capitals but before charging any commission. B is entitled to a commission
of 8% of net profit remaining after deducting interest on capitals and after charging all
commissions. The profits for the year ended 31st March, 2022 prior to calculation of interest on
capital was Rs3,75,000.
Profit & Loss appropriation account.
7 A, B and C were partners in a firm having capitals of Rs60,000; Rs60,000 and Rs80,000
respectively. Their Current Account balances were A : Rs10,000; B : Rs5,000 and C : Rs2,000
(Dr.). According to the partnership deed 10% of the profit is to be transferred to General Reserve
and the partners were entitled to interest on capital @ 5% p.a. C being the working partner was
also entitled to a salary of Rs12,000 p.a. The profits were to be divided as follows:
a) The first Rs20,000 in proportion to their capitals.
b) Next Rs30,000 in the ratio of 5: 3: 2.
c) Remaining profits to be shared equally.
The firm made a profit of Rs1,80,000 for the year ended 31st March, 2022 before charging any of
the above items. Prepare the profit & Loss Appropriation Account and pass necessary journal
entry for appointment of divisible profit.
8 The partnership agreement of Maneesh and Girish provided that
i) Profits will be shared equally.
ii) Maneesh will be allowed a salary of Rs400 p.m.
iii) Girish who manages the sales department will be allowed a commission equal to 10%
of the net profit after allowing Maneesh’s salary.
iv) 7% interest will be allowed on partner’s fixed capital.
v) 5% interest will be charged on partner’s annual drawings.
vi) The fixed capitals of Maneesh and Girish are Rs1,00,000 and Rs80,000 respectively.
Their annual drawings were Rs16,000 and Rs14,000 respectively. The net profit for
the year ending March 31, 2022 amounted to Rs40,000.
Prepare firm’s Profit and Loss Appropriation Account.
9 A and B are partners with capitals of Rs5,00,000 and Rs3,00,000 respectively. The profit for the
year ended 31st March 2022 was Rs3,46,000 before allowing interest on partner’s loan. Show the
distribution of profit after taking the following into consideration:
i) Interest on A’s Loan of Rs1,50,000 to the firm provided on 1st April, 2021.
ii) Interest on capital to be allowed @ 5% p.a.
iii) Interest on drawings @ 6% p.a. Drawings were A Rs60,000 and B Rs40,000.
iv) B is to be allowed a Commission of 2% on sales. Sales for the year were Rs30,00,000.
v) 10% of the divisible profits is to be kept in a Reserve Account.
2 P.T.O
10 Akshra and Samiksha are in partnership. Business is being carried from the property owned by
Akshra on a monthly rent of Rs5,000. Akshra is entitled to a salary of Rs40,000 per quarter and
Samiksha is to get commission of 4% on net sales, which during the year was Rs50,00,000. Net
profit for the year ended 31st March, 2022 before providing for rent was Rs6,00,000.
You are required to prepare Profit and Loss Appropriation Account for the year ended 31st
March, 2022.
11 A and B are partners sharing profits and losses in the ratio of 2: 1. A is a non-working partner
and has contributed Rs12,00,000 as his capital. B is working partner. The partnership deed
provides for interest on capital @ 10% p.a. and salary of Rs7,500 per month to the working
partner. the net profit for the year ended 31st March, 2021 before providing for interest on capital
and salary amounted to Rs70,000. You are required to show the distribution of profit.
12 Shreya and Vivek were partners in a firm sharing profits in the ratio 3: 2. The balances in their
capital and current accounts as on 1st April, 2017 were as under:
Shreya(Rs) Vivek(Rs)
Capital Accounts 5,00,000 2,50,000
Current Accounts 1,00,000 (Cr.) 28,000 (Dr.)
The partnership deed provided that Shreya was to be paid a salary of Rs5,000 p.m. whereas
Vivek was to get a commission of Rs30,000 for the year.
Interest on capital was to be allowed @ 8% p.a. whereas interest on drawings was to be charged
@ 6% p.a. The drawings of Shreya were Rs15,000 drawn on 30th September 2017 while Vivek
withdrew Rs30,000 on 1st September, 2017. The net profit of the firm for the year before making
the above adjustments was Rs1,20,000.
Prepare Profit and Loss Appropriation Account and Partner’s Capital & Current Accounts.

3 P.T.O