On 1st April, 2013, Jay and Vijay entered into a partnership for supplying laboratory equipments to government schools situated in remote and backward areas
TS Grewal Solutions (2025 – 26) – Accounting for partnership firm – Fundamentals
26 :- On 1st April, 2013, Jay and Vijay entered into a partnership for supplying laboratory equipments 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 of On 1st April, 2013, Jay and Vijay entered into a partnership for supplying laboratory equipments 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 of 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 only, prepare the ‘profit and loss appropriation’ of Jay and Vijay for the year ended 31st March, 2014.
Solution
WORKING NOTES :-
(i) Calculation of interest on capitals of partners
Jay’s interest of capital = 80,000 x 9/100 = Rs 7,200
Vijay’s interest of capital = 50,000 x 9/100 = Rs 4,500
NOTE : As interest on capital is more than the available profit, thus, it will be allowed in the ratio of interest of capitals i.e, 8:5 among partners.
(ii) Distribution of Net profit in 8:5 as interest on capital
Jay’s share = 7,800 x 8/13 = Rs 4,800
Vijay’s share = 7,800 x 5/13 = Rs 3,000
Question 1 to 5 (Partnership Deed)
Question 6 to 8 (Interest on loan by partner to the firm)
Question 9 – 13 (Interest on Loan to the firm by Partner and Loan by the Firm to Partner)
Question 14 – 19 (Profit & Loss Appropriation Account)
Question 20 – 22 (Fixed Capital)
Question 23 to 25 (Fluctuating capital)
Question 26 (When interest on capital is an appropriation and profits are inadequate)
Question 27 to 31 (Calculation of interest on partners capital)
Question 32 to 35 (Salary or commission to partners)
Question 36 to 41 (Calculation of interest on partners drawings, amount of drawings and rate of interest on drawings)
Question 42 to 46 (Calculation of interest on partners drawings, amount of drawings and rate of interest on drawings)
Question 47 to 50 (Profit and loss appropriation account and partner’s capital account)
Question 51 to 53 (Transfer of profits to reserve)
Question 54 to 55 (Appropriations more than available profits)
Question 56 – (Adjusting and transfer entries)
Question 57 to 61 (Adjustments for incorrect appropriations in the past [past adjustments])
Question 62 to 66 (Adjustments for incorrect appropriations in the past)
Question 67 to 72 (Adjustments for incorrect appropriations in the past)
Question 73 to 75 (Adjustments for incorrect appropriations in the past)
Question 76 to 80 (Guarantee of minimum profit to a partner)
Question 81 to 85 (Guarantee of minimum profit to a partner)
Question 86 to 89 (Guarantee of minimum profits to a partner)
Question 90 – 91 (Minimum earnings guaranteed by a partner)