Accounts -1999 -Set I

Q1) List any two items appearing on the credit side of a partner’s capital account, when capitals are fluctuating. (Marks 2)
Ans1) (i) Interest on capital of the partner.
(ii) Partner’s salary.

Q2) (a) A and B are partners in a firm sharing profits in the ratio of 3 : 2. They had advanced to the firm a sum of Rs. 30,000/- as a loan in their profit sharing ratio on July 1st, 1998. The partnership deed is silent on the question of interest on loan from partners. Compute the interest payable by the firm to the partners, assuming the firm closes its books on December 31st.
(Marks 3)

Ans. 2) (a) According to the provisions of the Indian Partnership Act, 1932, interest @ 6% p.a. is payable to the partners on the amount of loan advanced by them to the firm.
A’s loan = 30000 x 3/5 = 18000
B’s loan = 30000 x 2/5 = 12000
Interest on A’s loan = 18000 x 6/100 x 6/12 = 540
Interest on B’s loan = 12000 x 6/100 x 6/12 = 360
Total Interest payable by firm to partners = 540 + 360 = Rs. 900

Q2) (b) A, B and C are partners sharing profits in the ratio of 5 : 4 : 1. C is given a guarantee that his share of profits in any given year would be Rs. 5000/-. Deficiency, if any, would be borne by A and B equally. The profits for the year 1998 amounted to Rs. 40000/-. Pass necessary entries in the books of the firm. (Marks 3)

Ans. 2) (b) Working Notes :
C’s share in profit = 1/10 x 40000 = 40000
C’s guarantee = 5000
C’s deficiency = 5000 – 4000 = 1000
The deficiency is to be borne equally by A and B.
A’s share of profit = 5/10 x 40000 = 20000
Less : C’s guarantee 500
A’ profit = 19500
B’s share of profit = 4/10 x 40000 = 16000
Less: C’s guarantee 500
B’s profit = 15500

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