Satnam and Qureshi after doing their MBA decided to start a partnership firm to manufacture ISI marked electronic goods for economically weaker section of the society. Satnam also expressed his willingness to admit Juliee as partner without capital who is especially abled but a very creative and intelligent friend of him. Qureshi agreed to this. They formed a partnership on 1st April 2012 on the following terms:
(i) Satnam will contribute Rs 4,00,000 and Qureshi will contribute Rs 2,00,000 as capitals.
(ii) Satnam, Qureshi and Juliee will share profits in the ratio of 2:2:1.
(iii) Interest on capital will be allowed @ 6% p.a. Due to shortage of capital Satnam contributed Rs 50,000 on 30th September, 2012 and Qureshi contributed Rs 20,000 on 1st January, 2013 as additional capitals. The profit of the firm for the year ended 31st March, 2013 was Rs 3,37,800.
(a) Identify any two values which the firm wants to communicate to the society.
(b) Prepare Profit & Loss Appropriation Account for the year ending 31st March, 2013.
(a) Values:
1) Devotion to law, to manufacture ISI marked goods.
2) Sensitivity towards especially abled people.
(b)
Working Notes:
Calculation of Interest on Capital:
a) Interest on Satnam’s capital:
On Initial capital of Rs 4,00,000
4,00,000* 6% = 24,000
On additional capital of Rs 50,000
50,000* 6% * 6/12 = 1500
Total interest on Satnam’s capital = 24000 + 1500 = Rs 25,500.
b) Interest on Qureshi’s Capital:
On initial capital of Rs 2,00,000
2,00,000* 6% = Rs 12,000
On additional capital of Rs 20,000
20,000 * 6% * 3/12 = Rs 300
Total interest on Qureshi’s Capital = 12,300
In the absence of partnership deed the profits of a firm are divided among the partners:
(a) In the ratio of capital
(b) Equally
(c) In the ratio of time devoted for the firm's business
(d) According to the managerial abilities of the partners
Dev, Swati and Sanskar were partners in a firm sharing profits in the ratio of 2:2:1. On 31-3-2014 their Balance Sheet was as follows:
On 30thJune, 2014 Dev died. According to partnership agreement Dev was entitled to interest on capital at 12% per annum. His share of profit till the date of his death was to be calculated on the basis of the average profits of last four years. The profit of the last four years were:
| Years | Profit (RS) |
| 2010-2011 | 2,04,000 |
| 2011-2012 | 1,80,000 |
| 2012-2013 | 90,000 |
| 2013-2014(Loss) | 57,000 |
On 1-4-2014, Dev withdrew Rs 15,000 to pay for his medical bills.
Prepare Dev's account to be presented to his executors.
On 1-4-2013 Jay and Vijay, entered into partnership for supplying laboratory equipment’s to government schools situated in remote and backward areas. They contributed capitals of Rs 80,000 and Rs 50,000 respectively and agreed to share the profits in the ratio 3: 2. The partnership deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of Rs 7,800.
Showing your calculations clearly, prepare 'Profit and Loss Appropriation Account' of Jay and Vijay for the year ended 31-3-2014.
Naveen, Seerat and Hina were partners in a firm manufacturing blankets. They were sharing profits in the ratio of 5 : 3 : 2. Their capitals on 1st April, 2012 were Rs 2,00,000: Rs 3,00,000 and Rs 6,00,000 respectively. After the floods in Uttaranchal, all partners decided to help the flood victims personally. For this Naveen withdrew Rs 10,000 from the firm on 1st September, 2012. Seerat, instead of withdrawing cash from the firm took blankets amounting to Rs 12,000 from the firm and distributed to the flood victims. On the other hand, Hina withdrew Rs 2,00,000 from her capital on 1st January, 2013 and set up a centre to provide medical facilities in the flood affected area. 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 the necessary adjusting journal entry and show the working notes clearly. Also state any two values that the partners wanted to communicate to the society.
