GRADE : XII SUBJECT: ACCOUNTANCY

PART A : Chapter 2 - Accounting for Partnership Firms : Fundamentals

1) Rajesh and Prabhu entered into a partnership to float M/s R.P. Enterprises by writing
Partnership Deed. Rajesh has invested more capital than Prabhu and Prabhu spends
more time in managing the business, Rajesh demands that he be given 75% of profit
instead of 50% as agreed. Is his demand acceptable? Give reasons. (1)

2) Rent paid to partner is debited to Profit and Loss Account .Why? (1)

3) Why interest on Partners’ Capitals or interest on drawings is recorded through Profit

4) Ved intends to retire from the firm and desires that his son Dev be inducted as a partner
in his place. The partnership does not have any clause with respect to it. Suggest how
Dev can be inducted into the firm as a partner. (1)

5) Musa and Bloom are partners sharing profits and losses in the ratio of 3:2 with capitals
of ₹ 4,00,000 and ₹ 3,00,000 respectively. Interest on capital is agreed @ 5% p.a.
Bloom is to be allowed an annual salary of ₹ 30,000 which has not been withdrawn.
Profit for the year ending 31st March, 2017 prior to calculation of interest on capital but
after charging Bloom’s salary is ₹ 1,20,000. A provision of 5% of the profit is to be
made in respect of commission to the manager. Prepare an account showing the
appropriation of profit. (3)

6) X and Y are partners sharing profits and losses in the ratio of 3:2. X being a non-
working partner contributes ₹ 2,00,000 as his capital. Y being a working partner agrees
to work for the firm. The partnership deed provides for interest on capital @ 8% p.a.
and salary to every working partner @ ₹ 8,000 per month. Net Profit before providing
for interest on capital and partner’s salary for the year ended 31st March, 2017 was ₹
80,000. Show the distribution of profits. (3)

7) A and B contribute ₹ 40,000 and ₹ 20,000 respectively by way of capital on which they
agree to pay interest @ 6% p.a. Their respective share of profit is 2:3. And the business
profit (before interest) for the year is ₹ 3,000. Show the relevant account to allocate
interest on capitals :
(i) If the Partnership Deed is silent about the treatment of interest on capital.
(ii) If interest is a charge as per the Partnership Deed. (3)

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 8) A, B and C are partners sharing profits in the ratio of 5:4:1 respectively. C is guaranteed
that his share of profit in any year will not be less than ₹ 50,000. The profit for the year
ending 31st March 2019 is ₹ 3,50,000. Amount of shortfall in the profits of C will be
borne by A & B in the ratio of 3:2 respectively. Pass the necessary Journal entries. (3)

9) A & B entered into partnership on 1st April, 2016 without any partnership deed. They
introduced capitals of ₹ 5,00,000 and ₹ 3,00,000 respectively. On 31st October 2016, A
advanced ₹ 2,00,000 by way of loan to the firm without any agreement as to interest.
The Profit and Loss Account for the year ended 31.3.2017 showed a profit of
₹ 4,30,000; but the partners could not agree upon the amount of interest on loan to be
charged and the basis of division of profits.
Prepare Profit & Loss Appropriation Account and Partners’ Capital Accounts. (3)

10) A and B are partners with capitals of ₹ 60,000 and ₹ 20,000 respectively on 1st April
2014. The trading profit for the year ended 31st March, 2017 was ₹ 24,000. Interest on
capital is to be allowed @ 6% p.a. B is entitled to a salary of ₹ 6,000 p.a. The drawings
of the partners were ₹ 6,000 and ₹ 4,000 respectively; interest on drawings for A being
₹ 200 and B ₹ 100. Pass the necessary Journal entries and also show their Capital
Accounts, if they are fixed. (4)

11) Reshma and Ramesh are partners doing a dry cleaning business in Lucknow, sharing
profits in the ratio 2:1 with capitals ₹ 5,00,000 and ₹ 4,00,000 respectively. Reshma
withdrew the following amounts during the year to pay the hostel expenses of her son.
(₹)
1st April 10,000
1st June 9,000
1st Nov. 14,000
1st Dec. 5,000
Ramesh withdrew ₹ 15,000 on the first day of April, July, October and January to pay rent for
the accommodation of his family. He also paid ₹ 20,000 per month as rent for the office of
partnership which was in a nearby shopping complex. Calculate interest on Drawings @ 6%
p.a. (4)

12) Akil, Bipul and Chetan are partners in a firm. Partnership Deed doesnot allow interest
on capital. But it has been allowed @ 5% p.a. for the years ended on 31st March 2017
and 31st March 2018. Their fixed capitals on which interest were allowed were :
Akil ₹ 5,00,000 ; Bipul ₹ 4,00,000 and Chetan ₹ 3,00,000. They shared profit as follows
during the two years ended:
31st March, 2017 – 5:3:2
31st March, 2018 – 2:2:1
You are required to pass an adjustment entry on 1st April, 2018. (4)

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 13) A, B, C and D are partners sharing profits and losses in the ratio of 4:3:2:1. Their
capitals as at 1st April, 2017 were ₹ 3,00,000; ₹ 2,50,000; ₹ 1,50,000 and ₹ 1,00,000
respectively. D’s share of profit excluding interest on capital has been guaranteed by the
firm to be not less than ₹ 2,50,000. C’s share of profit including interest on capital and
salary guaranteed by A is not less than ₹ 2,60,000.The profits for the year ended 31st
March, 2018 were ₹ 9,00,000 before interest on capital @ 10% and salary to C @
₹10,000 p.m. Prepare Profit and Loss Appropriation Account. (4)

14) A, B and C are partners in a firm sharing profits and losses in the ratio of 2:2:1. Their
fixed capitals are ₹ 1,00,000; ₹ 80,000 and ₹ 70,000 respectively. For the year 2017 –
18, interest on capital was credited to them @ 9% p.a. instead of 12%.Give the
adjusting Journal entry. (4)

15) The capital accounts of A and B stood at ₹ 4,00,000 and ₹ 3,00,000 respectively after
necessary adjustment in respect of the drawings and the net profits for the year ended
31st March ,2018. It was subsequently ascertained that 5% p.a. interest on capital and
drawings was not taken into account in arriving at the net profit. The drawings of the
partners had been: A – ₹ 12,000 drawn at the end of each quarter and B – ₹ 18,000
drawn at the end of each half year. The profits for the year as adjusted amounted to
₹ 2,00,000. The partners share profits in the ratio of 3:2. You are required to pass
Journal entries and show adjusted capitals of the partners. (4)

16) X, Y and Z are partners in a firm sharing profit and losses in the ratio of 5:3:2. Their
fixed capitals were ₹ 3,00,000; ₹ 2,00,000 and ₹ 1,00,000respectively. For the year
ended 31st March , 2018, interest on capital was credited to them @ 10% instead of 8%
p.a. Showing your working notes clearly , pass necessary rectifying entry. (4)

17) P,Q and R were partners in a firm manufacturing food items. They were sharing profits
in the ratio of 5:3:2. Their capitals on 1st April , 2017 were ₹ 4,00,000; ₹ 5,00,000 and ₹
9,00,000 respectively. After the flood in Chennai, all partners decided to help the flood
victims personally. For this P withdrew ₹ 30,000 from the firm on 30th September,
2017. Q instead of withdrawing cash from the firm, he took some food items from the
firm worth ₹ 25,000 and distributed those to the flood victims. On the other hand, R
withdrew ₹ 2,50,000 from his capital on 1st January , 2018 and built a shelter home to
help flood victims. The Partnership Deed provides for charging interest on drawings @
6% p.a. After the final accounts were prepared it was discovered that interest on
drawings had not been charged. Give necessary adjusting entry and showing working
notes clearly. (4)

18) On 31st March, 2017 fixed capitals of R, M and A were ₹ 4,00,000; ₹ 3,50,000 and ₹
2,90,000 respectively .Subsequently , it was found that interest on capital and interest
on drawings had been omitted. The partners were entitled to interest on capital @ 5%
p.a. Drawings during the year were R – ₹ 2,00,000 ; M – ₹ 1,50,000 and A – ₹ 90,000.
Interest on drawings were R – ₹ 5,000; M – ₹ 3,600 and A – ₹ 2,000. Profit during the
year was ₹ 12,00,000. Profit sharing ratio of the partners was 3:2:1. Record necessary
adjustment entry for rectifying the above errors of omission. Show your workings. (4)

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 19)

(6)

20)

(6)

21) After the accounts of a partnership have been drawn up, and the books closed, it is
discovered that interest on capitals for the year 2016 – 17 and 2017 – 18 has been
credited to partners though there is no such provision in the partnership deed. The
amounts involved are:

Interest Credited
2016 – 17 2017 – 18
₹ ₹
A 350 360
B 200 210
C 110 110
You are required to put through adjusting entries as on 1st April, 2018, if the profits were
shared as follows: 2016-17 – 1:1:1 and 2017-18 – 3:4:3.The capitals are fixed. (6)

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 22) A, B and C were partners in a firm. On 1st April, 2017, their capitals stood as
₹ 5,00,000; ₹ 2,50,000 and ₹ 2,50,000 respectively. As per provisions of the
Partnership Deed:
(i) C was entitled for a salary of ₹ 5,000 per month.
(ii) A was entitled for a commission of ₹ 80,000 p.a.
(iii) Partners were entitled to interest on capital @ 6% p.a.
(iv) Partners will share profits in the ratio of capitals.
Net Profit for the year ended 31st March,2018 was ₹ 3,00,000, which was distributed
equally without taking into consideration the above provisions. Showing your
workings clearly, pass necessary adjustment entry for the above. (6)

23) Ankur, Bhavna and Disha are partners in a firm. On 1st April, 2017, the balance in their
capital accounts stood at ₹ 14,00,000; ₹ 6,00,000 and ₹ 4,00,000 respectively. They
shared profits in the proportion of 7:3:2 respectively. Partners are entitled to interest on
capital @ 6% p.a. and salary to Bhavna @ ₹ 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
₹ 1,70,000 p.a. Disha’s share of profit (including interest on capital but excluding
commission) is guaranteed at not less than ₹ 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, 2018 amounted to ₹ 9,50,000.
Prepare Profit and Loss Appropriation Account. (6)

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