APS INSTITUTE

ACCOUNTS
CLASS-XII
CHAPTER 1. PARTNERSHIP FIRM - FUNDAMENTALS

MULTIPLE CHOICE QUESTIONS (MCQS)

1. Which one of the following is not an essential feature of a partnership?

(a) There must be a business

(b) The business must be carried on for profits

(c) The business must be carried on by all the partners

(d) There must be an agreement

2. Net profit of a firm is ₹49,500. Manager is entitled to a commission of 10%

on profits after charging his commission. Manager’s Commission will be :
(A) ₹4,950
(B) ₹4,500
(C) ₹5,500
(D) ₹495
3. Number of partners in a partnership firm may be .

(a) Maximum ten

(b) Maximum one hundred

(c) Maximum fifty

(d) Maximum two

4.. X, Y and Z are partners sharing profits and losses equally. Their capital
balances on March, 31, 2012 are ₹80,000, ₹60,000 and ₹40,000 respectively.
Their personal assets are worth as follows : X — ₹20,000, Y — ₹15,000 and Z
— ₹10,000. The extent of their liability in the firm would be :
(A) X — ₹80,000 : Y — ₹60,000 : and Z — ₹40,000
(B) X — ₹20,000 : Y — ₹15,000 : and Z — ₹10,000
(C) X — ₹1,00,000 : Y — ₹75,000 : and Z — ₹50,000
(D) Equal

5. In the absence of Partnership Deed, the interest is allowed on partner’s

capital:
(A) @ 5% p.a.
(B) @ 6% p.a.
(C) @ 12% p.a.
(D) No interest is allowed

6. A and B are partners in partnership firm without any agreement. A has

given a loan of ₹50,000 to the firm. At the end of year loss was incurred in the
business. Following interest may be paid to A by the firm :
(A) @5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) As there is a loss in the business, interest can’t be paid

7. A, B and C were Partners with capitals of ₹50,000; ₹40,000 and ? 30,000

respectively carrying on business in partnership. The firm’s reported profit for
the year was ₹80,000. As per provision of the Indian Partnership Act, 1932,
find out the share of each partner in the above amount after taking into
account
that no interest has been provided on an advance by A of ₹20,000 in addition
to his capital contribution.
(A) ₹26,267 for Partner B and C and ₹27,466 for Partner A.
(B) ₹26,667 each partner.
(C) ₹33,333 for A ₹26,667 for B and ₹20,000 for C.
(D) ₹30,000 each partner.

8. Which of the following items are recorded in the Profit &

Loss Appropriation Account of a partnership firm?
(A) Interest on Capital
(B) Salary to Partner
(C) Transfer to Reserve
(D) All of the above

9. A and B are partners. According to Profit and Loss Account, the net profit
for the year is ₹2,00,000. The total interest on partner’s drawings is ₹1,000. As
 salary is ₹40,000 per year and B’s salary is ₹3,000 per month. The net profit as
per Profit and Loss Appropriation Account will be :
(A) ₹1,23,000
(B) ₹1,25,000
(C) ₹1,56,000
(D) ₹1,58,000

10. Net profit of a firm is ₹49,500. Manager is entitled to a commission of

10% on profits before charging his commission. Manager’s Commission will
be :
(A) ₹4,950
(B) ₹4,500
(C) ₹5,500
(D) ₹495

1. (c) 2. (b) 3. (c) 4. (b) 5. (d) 6. (b) 7. (a) 8. (d) 9. (b) 10. (a)

1. A and B are partners in a farm. A is entitled to a salary of ₹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 ₹4,40,000. Show the distribution of profit.

Solution:

Dr. Profit and Loss of Appropriate Account Cr.

Till 31st March, 2018

Particulars ₹ Particulars ₹

To A’s Salary 1,80,000 By Profit & Loss A/c (Net Profit) 4,40,000

To A’s Commission 44,000

(₹4,40,000 x 10/100)

To B’s Commission 40,000

(₹4,40,000 x 10/110)

To Profit transferred to:

A’s Capital A/c 88,000 1,76,000

B’s Capital A/c 88,000

4,40,000 4,40,000
Question 2

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 ₹1,50,000, Y ₹1,26,000 , Z ₹1,20,000.
Prepare a journal entry.

Solution:

Calculation of Interest on Drawings:

Since the date of the drawing is not given, interest will be charged for 6 months.

X: 5% on ₹1,50,000 for 6 months = ₹ 3,750

Y: 5% on ₹1,26,000 for 6 months = ₹ 3,150

Z: 5% on ₹1,20,000 for 6 months = ₹ 3,000

₹ 9,900

Table Showing Adjustments

X (₹) Y (₹) Z (₹) Total

Interest on Drawings Dr.

3,750 3,150 3,000 9,900
cr.
4,950 3,300 1,650 9,900
Division of ₹9,900 in 3:2:1

Difference Cr.1200 Cr. 150 DR.1,350 ——–

Hence, the adjusting entry will be:

Journal Entry

Date Particulars Y’s Capital A/c L. Dr. ₹ Cr. ₹

F

Z’s Capital A/c Dr. 1,350

To 1,200
X’s Capital A/c 150
Y’s Capital A/c
(Adjustment in respect of interest on drawing omitted in previous
 year’s account)

Question 3

Akshara and Samiksha are partners. Business is carried from the property owned by Akshara on
a monthly rent of ₹5,000. Akshara is entitled to a salary of ₹40,000 per quarter and Samiksha
get a commission of 4% on net sales, which during the year was ₹5,00,000. Net profit till 31st
March, 2018 before providing for rent was ₹6,00,000

Prepare a profit and loss appropriate account till 31st March 2018.

Solution:

Dr. Profit and Loss Appropriate Account Cr.

Till 31st March, 2018

Particulars ₹ Particulars ₹

To Salary to Akshara 1,60,000 By Profit & Loss A/c (Net Profit) 5,40,000
To commission to Samiksha 2,00,000 ( ₹6,00,000 – ₹60,000)

To Profit transferred to:

Akshara’s Capital A/c 90,000 1,80,000

Samiksha’s Capital A/c 90,000

5,40,000 5,40,000

*Rent paid to a partner is a charge against profits. It will be debited to the Profit & Loss
Account.

Question 4

Ravi and Mohan were partners in a firm sharing profits in the ratio of 7:5. Their respective
fixed capitals were Ravi ₹10,00,000 and Mohan ₹7,00,000. The partnership deed provided for
the following:

1. Interest on Capital @ 12% pa.

2. Ravi’s salary ₹6,000 per month and Mohan’s salary ₹60,000 per year.

The profit till March 31-3-2019 was ₹5,04,000 which was distributed equally, without
providing for the above. Record an adjustment entry.
Solution:

Statement of Adjustments

Ravi (₹) Mohan (₹) Total (₹)

Interest on Capitals Cr. 1,20,000 84,000 2,04,000

Salary Cr. 72,000 60,000 1,32,000

Profit left* after authorizing interest on capital and salary will be 98,000 70,000 1,68,000
₹5,04,000 – ₹2,04,000 – ₹1,32,000 = ₹1,68,000. The profit
sharing ration will be divided into, i.e, 7:5

Net amount that should have been received Cr. 2,90,000 2,14,000 5,04,000

Less: Profit already distributed equally Dr. 2,52,000 2,52,000 5,04,000

Net Effect (Cr.) (DR.) ———–

38,000 38,000

*Remaining profit will have to be calculated when profit has already been distributed in wrong
profit sharing ratio.

5. Amit and Sumit commenced business as partners on 01.04.2014. Amit

contributed Rs. 40,000 and Sumit Rs. 25, 000 as their share of capital. The
partners decided to share their profits in the ratio of 2:1. Amit was entitled to
salary of Rs. 6,000 p.a. Interest on capital was to be provided @ 6% p.a. The
drawings of Rs. 4, 000 was made by Amit and Rs. 8,000 was made by Sumit.
The profits after providing salary and interest on capital for the year ended
31 March, 2015 were Rs. 12,000.
st

Draw up the capital accounts of the partners

1. When capitals are fluctuating

2. When capitals are Fixed
Solution:
1. When capitals are fluctuating
Capital Accounts of Amit and Sumit
Dr. Cr.
 Sumit Amit .
Amit Sumit
Particulars . Particulars
(Rs.) (Rs.)
(Rs.) (Rs.)
By Balance A/c 40,000
25,000
4,000 8,000 (Capital) 6,000
1,500
To 52,400 22,500 By Salary A/c 2,400
4,000
Drawing By Interest on 8,000
A/c capital A/c
To Balance By Profit and
c/d 56,400 30,500 Loss 56,400 30,500
Appropriation
A/c
When capital are Fixed Capital accounts

Dr. Cr.
Amit Sumit Amit
Sumit
Particulars . . Particulars .
(Rs.)
(Rs.) (Rs.) (Rs.)

To Balance 40,000 25,000 By Balance A/c 40,000 25,000

c/d 40,000 25,000 (Capital) 40,000 25,000
Current Accounts
Dr. Cr.
Amit Sumit
Amit Sumit
Particulars Particulars . .
(Rs.) (Rs.)
(Rs.) (Rs.)
By Salary A/c 40,000 1,500
4,000 8,000
By Interest on 2,400 4,000
12,400 –
capital A/c 8,000 2,500
To Drawing
By Profit and
A/c
Loss
To Balance
Appropriation
c/d 16,400 8,000 16,400 8,000
A/c
To Balance c/d
(Closing Balance)
Working Notes: Profits after salary and interest Rs. 12,000

Amit share = = 8,000

Sumit share = = 4,000

6. State Difference between Fixed Capital Account & Fluctuating Capital

Account:
Basis Fixed Capital Account Fluctuating Capital Account
1. No. of Two accounts for each partner Only one account is
Accounts Fixed Capital Account & current maintained for each partner,
maintained Account. i.e., capital Account.
Balance does not change except
2. Balance under specific circumstances Balance changes frequently
chane (introduction of additional from period to period.
capital and capital withdrawn)
All adjustments for
All adjustments for drawing
drawings, interest on
interest on drawing, interest on
3. Adjustments drawing & capital, salary,
capital, salary and profit/loss are
profit/loss are made in
made in current account.
Capital Accounts.
Fixed Capital Account. Capital
Account has credit balance Fluctuating Capital account
4. Balance always However, current account can have debit or credit
may have debit or credit balance.
balance.

7: X and Y invested Rs. 20,000 & Rs. 10,000. Interest on capital is allowed @ 6% per
annum. Profits are shared in ratio of 2 : 3. Profits for year ending 11.3.2015 is Rs.
1,500. Show allocation of profits when partnership deed.
(a) Allows interest on capital & deed is silent on treating interest as charge.
(b) Interest is charge against profit.
Solution:
(a) When partnership deed is silent on treating interest as a charge,
Profit & Loss Appropriation Account for the year ending 31.3.2015

Dr. Cr.
( (R
Particulars Particulars
s.) (Rs.)
To Interest on 1,500 1,500
By Profit & Loss
Capital
A/c
X 1000 1,500 1,500
(Net Profits)
Y 500

Working Notes: Interest on X’s Capital = = 1200

Y’s Capital = = 600

Total Interest = 1800
Ratio of Interest = 1200 : 600 = 2 : 1
 Interest allowed to partner =

Interest to X = = Rs. 1000

Interest allowed by y = = Rs. 500

(b) Interest is charge on profit – In such case full interest will be given & loss is
transferred to partner’s capital accounts.
Profit & Loss Appropriation is not prepared in this case instead profit & Loss Account
is prepared & deficit is treated as loss.
Profit & Loss Account
For the year ending on 31.3.2015
Dr. Cr.

Particulars Particulars
(Rs.) (Rs.)
By Profit before Interest 1,500
To Interest on 1800
By Loss transferred to 300
Capital
Capital A/cs
X1200
1800 X120 1800
Y 600
Y 180
(a) In case of Sufficient Profits
Profit and Loss Appropriation A/c Dr.
To Interest on Capital A/c
(Being interest on capital transferred to P & L Appropriation A/c
(b) In case of Insufficient Profits or Losses
Profit & Loss/Profit and Loss Adjustment A/c Dr.
To Interest on Capital A/c
(Being interest on capital transferred to P & L Adjustment A/c)

8: A and B are partners in business. Their capitals at the end of year were Rs. 48,000 &
Rs. 36,000 respectively. During the year ended March 31st 2015 A’s Drawings and B’s
drawings were Rs. 8, 000 & Rs. 12, 000 respectively. Profits before charging interest
on capital during the year were Rs. 32, 000. Calculate Interest on partners’ capitals @
10% p.a.
Solution
Statement showing calculation of opening capitals

Particulars
A(Rs.) B(Rs.)
Closing Capital 48,000 36,000
Add: Drawings already credited 8000 12,000
 56,000 48,000
Less: Profits already credited 16,000 16,000
Opening capitals or capitals in the
beginning 40,000 32,000
Interest on Capital @ 10% p.a.
4,000 3,200

For additional capital interest is calculated for period for which capital is utilized e.g. if
additional capital is introduced on 1 April in firm where accounts are closed on 31st
December.

Interest =
As money is utilized for 9 months

9: Aarushi and Simran are partners in a firm. During the year ended on 1st March,
2015 Aarushi makes the drawings as under:
Date of Drawing Amount (Rs.)
01-08-2015 5,000
31-12-2014 10,000
31-03-2015 15,000
Partnership Deed provided that partners are to be charged interest on drawing @ 12%
p.a. Calculate the interest chargeable to Aarushi Drawing by using Simple Interest
Method and Product Method.
Solution:

1. Simple Interest Method

Date of Amount Months till March 31, Interest @ 12%
Drawing (Rs.) 2014 pm(Rs.)
400
01-08-2015 5,000 08 300
31-12-2014 10,000 03 000
31-03-2015 15,000 00
700
Before charging interest on capital the year were Rs. 32,000. Calculate Interest on
partners’ capitals @ 10% p.a.

Solution:
Statement showing calculation of opening capitals

A B
Particulars
(Rs.) (Rs.)
Closing Capital 48,000 36,000
 8000 12,000
Add: Drawings already credited
56,000 48,000
Less: Profits already credited
16,000 16,000
Opening capitals or capitals in the
beginning 40,000 32,000
Interest on Capital @ 10% p.a.
4,000 3,200
For additional capital interest is calculated for period for which capital is utilized e.g. if
additional capital is introduced on 1 April in firm where accounts are closed on 31st
December.

Interest =
As money is utilized for 9 months
2. Product Method
Date of Amount of Months for which Amount has Product
Drawing Drawings (Rs.) Withdrawn till December 31, 2014 (Rs.)
40,00
01-08-2015 5,000 08 30,00
31-12-2014 10,000 03 00000
31-03-2015 15,000 00
70,000

Interest on Drawing = (in months)

= = Rs. 700

10: Calculate interest on drawings of Mr. X @ 10% p.a. if he withdrawn Rs.

1000 per month (i) in the beginning of each Month (ii) In the middle each of
month (iii) at end of each month.
Total Amount with withdrawn = Rs. =12, 000.
Solution:

(i) Interest on Drawing =

= Rs. 650

(ii) Interest on drawing =

= Rs. 600

(iii) Interest on drawing =

= Rs. 550

11: Calculate interest on drawing of Vimal if the withdrew Rs. 48000 Quarter
withdrawn evenly (i) at beginning of each Quarter (ii) in the middle of each of at
end (iii) Quarter. Rate of interest is 10% p.a.
Solution:
Case I – Drawing made on beginning of each Quarter

Interest on drawing =

= Rs. 3,000
Case II – Drawing made in middle of each quarter

Interest on drawing =

= Rs. 2,400
Case III – Drawing made at end of each quarter

Interest on drawing =

= Rs. 1,800
Similarly Interest can be calculated by following formulas Half yearly Drawings
for year when
(a) Drawings are made in the beginning of each period (half-year)

Interest on drawing =
(b) Drawings are made in the middle of each period (half year)

Interest on drawing =
(c) Drawings are made at the end of each period (half year)

Interest on drawing =
For monthly drawings for 6 months (Last 6 months)

For monthly drawings for 6 months (Last 6 months)

(a) Drawings are made in the beginning of each month

Interest =
(b) Drawings are made in the middle of each month

Interest =
(c) Drawings are made at the end of each month

Interest =

12: A and B entered into partnership on 1st April, 2014 without any partnership
deed. They introduced capitals of Rs. 5,00,000 and Rs. 3,00,000 respectively. On
31st October, 2014, A advanced Rs. 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 31-03-2015 showed a profit of
Rs. 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. Pass a Journal Entry for
the distribution of the Profits between the partners and prepare the Capital A/cs
of both the partners and Loan A/c of ‘A’.
Solution:
Profit and Loss Appropriation Account
For the year ending on 31st March, 2015
Dr. Cr.

Particulars (Rs.) Particulars (Rs.)

By Profit and Loss 1,500
To Profits transferred to Capital A/c
A/c
of :
4,25,00 Net Profits 4,30,000 4,25,00
A 2,12,500
0 Less : Int. on 0
B 2,12,500
A’s Loan 5,000

Partner’s Capital A/cs

Dr. Cr.
Particular
Date A Rs. B Rs. Date Particulars A Rs. B Rs.
s

By Bank A/c 500000 300000

7,12,50 5,12,50
To 1.4.2014 By Profit and 2,12,50 2,12,50
1.3.201 0 0
balance 31.3.201 Loss 0 0
5
c/d 7,12,50 5,12,50 5 appropriatio 7,12,50 5,12,50
0 0 n A/c 0 0

Journal
Dr. Cr.
Date Particulars LF. Debit(Rs.) Debit(Rs.)
Profit and Loss Appropriation A/C Dr.
To A’s Capital A/c
2,12,500
31.3.2015 To B’s Capital A/c 4,25,000
2,12,500
(Being profit distributed among the
partners)

A’s Loan A/c

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs.) (Rs.)
 2014 2,00,000
2,05,000 By Bank A/c
2015 To A’s Capital Oct., 31 5,000
By interest on
March, 31 c/d 2015
2,05,000 Loan A/c 2,05,000
Mar., 31

13: Manoj Sahil and Dipankar are partners in a firm sharing profit and losses
equally.
The have omitted interest on Capital @ 10% per annum for three years ended on
31st March, 2015. Their fixed Capital on which interest was to be calculated
throughout were:
Manoj Rs. 3,00,000
Sahil Rs. 2,00,000
Dipankar Rs. 1,00,000
Give the necessary adjusting journal entry with working notes.
Solution:
Books of Manoj, Sahil and Dipankar
Journal

Date Particulars LF. Debit Credit

(Rs.) (Rs.)
Dipankar’s Current A/c Dr.
To Manoj’s Current A/c
31.3.2015 30,000 30,000
(Being adjustment entry
passed)

STATEMENT SHOWING ADJUSTMENT

Manoj Sahil Dipankar

Date Particulars (Rs.)
(Rs.) (Rs.) (Rs.)
Amount to be given
90,000 60,000 30,000
—– Interest on Capital
Total A 90,000 60,000 30,000

Amount already given to be taken back now

——) :
—- Profit taken back from the partners in 60,000 60,000 60,000
their profit sharing ratio
———— 160,000+30,000 = 1,80,000)
30,000 Nil 30,000
Effect (A-B)
Credit Debit

14: A and B are partners in a firm sharing profits and losses in the into 3:2. The
 following was the Balance Sheet of the firm as on 31.3.2015.
Balance Sheet
As on 31-3-2015

Date Liabilities . Rs. Assets Rs.

Capital a/c 80,000 Sundry Assets 80,000
31.3.2015 A 60,000
80,000 80,000
B 20,000

The profits Rs. 30,000 for the year ended 31-03-2015 were divided between the
partner, without allowing interest on capital @ 12% p.a. and salary to A Rs. 1,000
per month. During the year A withdrew Rs 10,000 and B Rs. 20,000.
Pass the necessary adjustment entry and show your working clearly.
Solution
Book of A and B
Journal

Debit Debit
Date Particulars LF.
(Rs.) (Rs.)
B’s Capital A/c Dr.
To A’s Capital A/c
31.3.2015 5,280 5,280
(Being interest on capital and salary to A not Charged,
now rectified)

Working Notes :
1. Calculation of Opening Capital: As Closing Balance Sheet is given so before
calculation of interest opening capital should be calculated.

Particulars .A (Rs.) B (Rs.)

60,000 20,000
Capital at the End 10,000 20,000
Add : Drawings 70,000 40,000
Less : Profits during the year (18,000) (12,000)
Opening Capital
52,000 28,000

2. Calculation of Net Effect

STATEMENT SHOWING ADJUSTMENT

A B
Particulars
(Rs.) (Rs.)
A. Amount to be given (credited) 5,280 5,280
Interest on Capital 12,000 –
(Not provided) 3,360
Salary to A 18,240
(Not provided)
12,960 8,640
Total A 12,960 8,640
B. Amount already given to be taken back
Now (Debited) :
Loss to the firm due to Interest on Capital and Sal A be debited to
the partners in their profit sharing ratio 5,280 5,280
(Rs. 18,240+3,360=21,600) Credit Debit
Total B
NET E NET Effect (A-B)

15: Ram, shyam & Mohan are partners in a firm sharing profit & losses in
the ratio of 2:1:2. Their fixed capitals were Rs. 3,00,000, Rs. 1,00,000 an Rs.
2,00,000 respectively. Interest on capital for the year ending 31st March, 201
was credited to them @ 9% p.a. instead of 10% p.a. The profits for the year
before charging interest was Rs. 2,50,000. Prepare necessary adjustment
entry.
Solution:
Journal

Date Particulars L.F.A (Rs.)B (Rs.)

Shyam’s Current A/c Dr.
Mohan’s Current A/c Dr. 200
31.3.2015 600
To Ram’s Current A/c 400
(For interest less charged on capital now rectified)

Working Notes:
Table showing Adjustment

Ram Shyam Mohan

Total
(Rs.) (Rs.) (Rs.)
27,000 9,000 18,000 54,000
Interest already credited @ 9% 30,000 10,000 20,000 60,000
Interest that should have been credited @ 10% 3,000 1,000 2,000 6,000
Partners less credited 2,400 1,200 2,400 6,000
Debit profits which were reduced
By Rs. 6,000 in ratio of 2:1:2 600 200 400
Cr. Dr. Dr.
16: A, B & C are patterns in a firm sharing profits & losses in ration of 2:3:5.
Their fixed capitals were Rs. 15,00,000, Rs.30,00,000 & Rs. 60,00,000
reactively. For the year ended 31st March 2015, interest was credited 12%
intend of 10%. Pass the necessary adjustment entry.
Solution
Journal

Date Particulars L.F.A (Rs.)B (Rs.)

C’s Current A/c Dr.
To A’s Current A/c 12,000
31.3.2015 15,000
To B’s Current A/c 3,000
(For interest excessive charged now rectified)

Working Notes:
Table showing Adjustment

A B C
Total
(Rs.) (Rs.) (Rs.)
1,80,000 3,60,000 7,20,00 12,60,00
Interest already credited @ 12% 1,50,000 3,00,000 6,00,000 10,50,000
Interest that should have been credited @ 10%
Partners less credited with 30,000 60,000 1,20,000 2,10,000
By recovering this interest profits will be increased by 42,000 63,000 1,05,000 2,10,000
Rs. 2,10,000 & divided in 2:3:5 12,000 3,000 15,000 __
Net Effect Cr. Cr. Dr. __

17: A and B were partners in a firm sharing profits and losses in the ratio of
3:2. They admit C for 1/6th share in profits and guaranteed that his share of
profits will not be less then Rs. 25,000. Total profits of the firm for the year
ended 1st March, 2015 were Rs. 90,000. Calculate share of profits for each
partner when.
1. Guarantee is given by firm.
2. Guarantee is given by A
3. Guarantee is given by A and B equally.

Solution:
Case 1. When Guarantee is given by firm.
Profit and Loss Appropriation Account
For the year ending on 31st March, 2015
Dr.
Cr.

Particulars (Rs.) Particulars Rs.)

To A’s Capital A/c 39,000 By Profit and Loss A/c / 90,000
(3/s of Rs. 65,000) 26,000
To B’s Capital A/c 25,000
(2/s of Rs. 65,000)
To C’s Capital A/c
90,000 90,000
(1/6 of Rs. 90,000 or
Rs. 25,000 whichever is more
Profit and Loss Appropriation Account
For the year ending on 31st March, 2015
Dr. Cr.

Particulars (Rs.) Particulars (Rs.)

To A’s Capital A/c 35,000 By Profit and Loss A/c

90,000
(3/6 of Rs. 90,000) 45,000 30,000 (Net Profits)
Less : Deficiency
Borne for C (10,000)
To B’s Capital A/c
(2/6 of Rs. 90,000)
90,000 90,000
To C’s Capital A/c
(1/6 of Rs. 90,000) 15,000
Add : Deficiency
Recover form A10,000
Cose: 3. When Guarantee is given by A & B equally.
Profit and Loss Appropriation Account
For the year ending on 31st March, 2015
Dr. Cr.
Particulars (Rs.) Particulars Rs.)
To A’s Capital A/c 40,000
By Profit and Loss A/c
(3/6 of Rs. 90,000) 25,000 90,000
(Net Profits)
45,000 25,000
Less : Deficiency Borne
for C
(1/2 of Rs.10,000) 5,000
To B’s Capital A/c
(2/6 of Rs. 90,000)
30,000
Less : Deficiency Borne
for C
90,000 90,000
(1/2 of Rs. 10,000) 5,000
To C’s Capital A/c
(1/6 of Rs. 90,000)
15,000
Add : Deficiency
Recover form A 5,000
Deficiency Recovered
From B 5,000