Delhi Public School, Hyderabad

Worksheet

1 Mark Questions
1. Define Partnership.

2. Explain partnership deed.

3. List any four characteristics of partnership.
4. Why is profit and loss appropriation account prepared?
5. Name any six items, which are shown in the profit and loss appropriation account.
6. How will you calculate interest on the drawings of equal amounts on the first day of every
month of a calendar year?
7. How will you calculate interest on the drawings of equal amounts on the last day of every
month of a calendar year?
8. How will you calculate interest on the drawings of equal amounts on 15th day of every month
of a calendar year?
9. What is the status of partnership from an accounting viewpoint?
10. List the items that may appear on the debit side and credit side of a partner's fluctuating capital
account.
11. Give two points of difference between Profit and Loss and profit and loss appropriation A/c.
12. Write any two difference between fixed and fluctuating methods of capital.
13. What is the maximum number of partners that a partnership firm can have? Name the act that
provides for the maximum number of partners in a partnership firm.
14. Akshat, Bilal an Charu are partners dealing in the sale of sports equipment. Akshat without
the knowledge of Bilal and Charu is also running the business of supplying sports equipment
to a few sports clubs in which his son is a member. He is earning good profits from this
business but did not inform Bilal an Charu about this. Was Akshat correct in doing so?
Indicate a value which he did not follow.
15. In the absence of partnership deed, interest on loan of a partner is allowed.
a) At 8% per annum
b) At 6% per annum
c) No interest is allowed
d) At 12% per annum
16. The partnership deed is silent on payment of salary to partners. Amita, a partner claimed that
since she managed the business, she should get a monthly salary of ₹ 10,000.
Is she entitled for the salary? Given reason.
17. What share of profit would a ‘sleeping partner’ who has contributed 75% of the total capital,
get in the absence of a deed?
18. What is meant by a partnership deed?
19. Can a partner be exempted from sharing the losses in a firm? If Yes, under what
circumstances?
20. Tom and Harry were partners in a firm sharing profits in the ratio of 5 : 3. During the year
ended 31-03-2015, Tom had withdrawn ₹ 40,000. Interest on his drawings amounted to ₹ 2,000.
Pass necessary journal entry for charging interest on drawings assuming that the capitals of the
partners were fluctuating.
21. Abha and Bharat were partners. They shared profits and losses equally. On April 1st, 2014
their capital account showed balances of ₹ 3,00,000 and ₹ 2,00,000 respectively. Calculate the
amount of profit to be distributed between the partners if the partnership deed provided for
interest on capital @ 10% p.a. and the firm earned a profit of ₹ 50,000 for the year ended 31st
March, 2015.
22. State any one difference between fixed capital accounts and fluctuating capital account of
partners.
23. What are the circumstances under which the balance of the ‘fixed capital accounts’ may
change?
24. The Accountant of the firm has debited the Profit and Loss Appropriation A/c for rent paid to a
Partner. Is the treatment given by the Accountant correct? Give reason in support of your
answer.
25. Partners Current Account are opened when their Capital Accounts are _______.
26. Profit and loss Appropriation is an extension of the ____ account.
27. Partners may or may not have written ________.

3 Mark Questions

28. On 01-04-2013 Jay and Vijay, entered into partnership for supplying laboratory equipment to
government schools situated in remote and backward areas. They contributed capitals of ₹
80,000 and ₹ 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 ₹ 7,800.
Showing your calculations clearly, prepare profit and loss appropriation account of Jan and
Vijay for the year ended 31-03-2014.
29. Mona, Nisha and Priyanka are partners in a firm. They contributed ₹ 50,000 each as capital
three years ago. At that time, Priyanka agreed to look after the business as Mona and Nisha
were busy. The profits for the past three years were ₹ 15,000, ₹ 25,000 and ₹ 50,000
respectively. While going through the books of accounts, Mona noticed that the profits had
been distributed in the ratio of 1 : 1 : 2. When she enquired from Priyanka about this, Priyanka
answered that since she looked after the business she should get more profit. Mona disagreed
and it was decided to distribute profit equally retrospectively for the last three years.
(i) You are required to make necessary correction in the boos of account of Mona, Nisha
and Priyanka by passing an adjustment entry.
(ii) Identify the value which was not practiced by Priyanka while distributing profits.

30. Mukesh and Ramesh are partners sharing profits and losses in the ratio of 2 : 1 respectively.
They admit Rupesh as a partner with 1/4 share in profit with a guarantee that his share of
profit shall be at least ₹ 55,000. The net profit of the firm for the year ending 31st March, 2013
was ₹ 1,60,000.
Prepare profit and loss appropriation account.
31. A & B are partners sharing profits & Losses in the ratio of 3:2 having capital of Rs.50,000 and
Rs.40,000 on 1-4-2003. On 1st July 2003. A introduced Rs.10,000 as his additional capital
whereas B introduced only Rs.1000. If the interest on capital is allowed to partners at 10% p.a.
calculate interest on capital if the financial year closes on 31st March every year.
32. M, K and L are partners, they admit P as a partner with a guarantee that his share of profit
shall not be less than Rs.20,000 per annum. Profits are to be shared in the proportion of 4:3:3:2.
The total profit for the year ended 2002 were Rs.96,000. Prepare P & L Appropriation A/c
showing the division of profit for the year.
33. X and Y are partners. X is capital is Rs.10,000, Y’s capital is Rs.6,000. Interest is payable at 6%
p.a. Y is entitled to a salary of Rs.300 per month. Profits for current year before charging any
interest and salary to Mr Y is Rs.8,000. Divide the profit between X and Y.

4 Mark Questions

34. Aparajita, Megha and Akanksha are partners in a firm with capitals 50,000,
25,000 and 25,000 respectively. As per the provisions of partnership deed, following
were agreed:
a) Profits were to be shared in the ratio of capitals.
b) Akanksha was entitled for a salary of 1,500 per month.
c) Interest on capital was provided to all the partners @ 5% p. a.

The net profit for the year 2012 of 45,000 was divided equally without providing for the above
terms. Pass the necessary adjustment journal entry showing the working.
35. Vikas and Vivek were partners in a firm sharing profits in the ratio of 3 : 2. On 1-04-2014 they
admit Vandana as a new partner for 1/8th share in the profit with a guaranteed profit of ₹
1,50,000. The new profit-sharing ratio between Vivek and Vikas will remain the same but they
decided to bear any deficiency on account of guarantee to Vandana in the ration 2 : 3. The
profit of the firm for the year ended 31-03-2015 was ₹ 9,00,000.
Prepare profit and loss appropriation account of Vikas, Vivek and Vandana for the year ended
31-03-2015.
36. Jain, Gupta and Sing were partners in a firm. Their fixed capitals were : Jain ₹ 4,00,000, Gupta ₹
6,00,000 and Sing ₹ 10,00,000. They were sharing profits in the ratio of their capitals. The firm
was engaged in the processing and distribution of flavoured milk. The partnership deed
provided for interest on capital at 10% per annum. During the year ended 31st March, 2014 the
firm earned profit of ₹ 1,47,000.
Showing your working notes clearly, prepare profit and loss appropriation account of the firm.

37. Singh and Gupta decided to start a partnership firm to manufacture low cost jute bags as
plastic bags were creating many environmental problems. They contributed capitals of ₹
1,00,000 and ₹ 50,000 on 1st April, 2012 for this. Singh expressed his willingness to admit
Shakti as a partners without capital, who is specially abled but a very creative and intelligent
friend of his. Gupta agreed to this.
The terms of partnership were as follows :
(i) Singh, Gupta and Shakti will share profits in the ratio of 2 : 2 : 1.
(ii) Interest on capital will be provided @ 6% per annum.
Due to shortage of capital, Singh contributed ₹ 25,000 on 30th September, 2012 and Gupta
Contributed ₹ 10,000 on 1st January, 2013 as additional capital. The profit of the firm for the
year ended 31st March, 2013 was ₹ 1,68,900.
(a) Prepare profit and loss appropriation account for the year ending 31st March, 2013.
(b) Identify any two values which the firm wants to communicate to the society.

38. G, H and R were partners in a fir sharing profits in the ratio of 7 : 4 : 9. Their fixed capitals
were : G ₹ 2,00,000, H ₹ 75,000 and R ₹ 3,50,000. Their partnership deed provided for the
following:
(i) Interest on capital @ 9% per annum.
(ii) Salary of ₹ 6,000 per month to H.
(iii) Interest on drawings @ 6% per annum.
During the year ended 31st December, 2009 the firm earned a profit of ₹ 1,70,000. Interest on
G’s drawings was ₹ 750, on H’s drawings ₹ 450 and on R’s drawings ₹ 1,250.
Prepare profit and loss appropriation account for the year ended 31st December,2009.
39. Praveen, Sahil and Riya are partners having fixed capitals of ₹ 2,00,000, ₹ 1,60,000 and ₹
1,20,000 respectively. They share profits in the ratio of 3 : 1 : 1. The partnership deed provided
for the following which were not recorded in the books.
(i) Interest on capital @ 5% p.a.
(ii) Salary to Praveen ₹ 1,500 p.m and Riya ₹ 1,000 p.m.
(iii) Transfer of profit to general reserve ₹ 10,000.
Net profit for the year ended 31st March, 2015 was ₹ 1,00,000.
Pass necessary rectifying entry for the above adjustments in the books of the firm. Also show
your workings clearly.

40. A, B and C were partners in a firm. On 1st April, 2008 their fixed capitals stood at ₹ 50,000, ₹
25,000 and ₹ 25,000 respectively
As per the provisions of the partnership deed:
(i) B was entitled for a salary of ₹ 5,000 per annum.
(ii) All the partners were entitled to interest on capital at 5% per annum.
(iii) Profits were to be shared in the ratio of capitals. The net profit for the year ending
31st March, 2009 of ₹ 33,000 and 31st March, 2010 of ₹ 45,000 was divided equally
without providing for the above terms.
Pass an adjustment journal entry to rectify the above error.

6 Mark Questions

41. X and Y are partners in a firm. They agree on the following:

X is entitled to a salary of 500 per month together with a commission of 10% of the net profit
after charging salary, but before charging any commission. Y is entitled to a salary of 3,000 p. a.
together with a commission of 8% of Net Profit after charging salary and all commissions.
Net Profit before charging any commission but after charging salary is 60,000. Prepare Profit
and Loss Appropriation Account.
42. On 1st April, 2013 Mohan and Sohan entered into partnership for doing business of dry fruits.
Mohan introduced ₹ 1,00,000 as capital and Sohan introduced ₹ 50,000. Since Sohan could
introduce only ₹ 50,000 it was further agreed that as and when there will be a need Sohan will
introduce further capital. Sohan was also allowed to withdraw from his capital when the need
for the capital was less. During the year ended 31st March, 2014, Sohan introduced and
withdraw the following amounts of capital.

Date Capital introduced (₹) Capital withdrawn (₹)

1 May, 2013
st
10,000 -
30th June, 2013 - 5,000
30th Sep, 2013 97,000 -
1st Feb, 2014 - 87,000

The Partnership deed provided for interest on capital @ 6% p.a. Calculate interest on capital of
the partners.
43. A, B and C were partners. They started business in one of the remote tribal areas of Odisha.
They were interested in the development of the tribal community by providing good education
and health. On 31st March, 2013 after making adjustments for profits and drawings their
capitals were A ₹ 4,00,000, B ₹ 3,00,000 and C ₹ 2,00,000. The drawings of the partners were A ₹
4,000 per month, B ₹ 3,000 per month and C ₹ 2,000 per month. The profit of the firm for the
year ended 31st March, 2013 was ₹ 6,00,000. Subsequently it was found that the interest on
capital @ 6% per annum due, had been omitted.
Showing your working notes clearly, pass necessary adjustment entry for the above. Also,
identify any two values highlighted in the above question.

44. Ali, Bimal and Deepak are partners in a firm. On 1st April, 2011 their capital accounts stood at
₹ 4,00,000, ₹ 3,00,000 and ₹ 2,00,000 respectively. They shared profits in the ratio of 5 : 3 : 2
respectively. Partners are entitled to interest on capital @ 10% per annum and salary to Bimal
and Deepak @ ₹ 2,000 per month and ₹ 3,000 per quarter respectively as per the provisions of
the partnership deed.
Bimal’s share of profit (excluding interest on capital but including salary) is guaranteed at a
minimum of ₹ 50,000 per annum. Any deficiency arising on that account shall be met by
Deepak. The profits of the firm for the year ended 31st March, 2012 amount to ₹ 2,00,000.
Prepare profit and loss appropriation account for the year ended on 31st March, 2012.
45. Anand, Bhaskar and Dinkar are partners in a firm on 1st April, 2011, the balance in their capital
accounts stood at ₹ 10,00,000, ₹ 8,00,0000 and ₹ 6,00,000 respectively. They shared profits in the
proportion of 5 : 4 : 3 respectively. Partners are entitled to interest on capital @ 10% per annum
and salary to Bhaskar @ ₹ 4,000 per month and a commission of ₹ 16,000 per quarter to Dinkar
as per provisions of the partnership deed.
Anand’s shar of profit (excluding interest on capital) is guaranteed at not less than ₹ 1,90,000
per annum. Bhaskar’s share of profit (including interest on capital, but excluding salary) is
guaranteed at not less than ₹ 2,45,000 per annum. Any deficiency arising on that account shall
be met by Dinkar. The profits of the firm for the year ended 31st March, 2012 amounted to ₹
8,32,000.
Prepare profit and loss appropriation account for the year ended 31st March, 2012.
46. From the following Balance Sheet of Girish and Gokul, calculate interest on capital and interest
on drawings @ 5% per annum for the year ended 31st March, 2015. During the year Girish
withdraw 2,000 at the beginning of every month and Gokul withdrew 15,000 during the
year. The profits for the year ended 31st March, 2015 and were 84,000.

Amount
Liabilities Amount Assets

Capital Accounts: Sundry Assets 1,84,000

Girish 90,000
Gokul 70,000
Profit and Loss Appropriation A/c 24,000
(2014-2015) ---------- ----------
1,84,000 1,84,000
====== ======
47. P and Q are partners with capitals of Rs. 6,00,000 and Rs. 4,00,000 respectively. The profit and
Loss Account of the firm showed a net Profit of Rs. 4, 26,800 for the year. Prepare Profit and
Loss appropriation account after taking the following into consideration:-
Interest on P's Loan of Rs. 2,00,000 to the firm (ii) Interest on 'capital to be allowed @ 6% p.a.
(iii) Interest on Drawings @ 8% p.a. Drawings were; P Rs 80,000 and Q Rs. 1000,000. (iv) Q is to
be allowed a commission on sales @ 3%. Sales for the year was Rs. 1000000 (v) 10% of the
divisible profits is to be kept in a Reserve Account.
48. A, and C are partners with fixed capitals of Rs. 2,00,000, Rs. 1,50,000 and Rs. 1,00,000
respectively. The balance of current accounts on 1st January, 2004 were A Rs. 10,000 (Cr.); B Rs.
4,000 (Cr.) and C Rs. 3,000 (Dr.). A gave a loan to the firm of Rs. 25,000 on 1st July, 2004. The
Partnership deed provided for the following:- (i) Interest on Capital at 6%. (ii) Interest on
drawings at 9%. Each partner drew Rs. 12,000 on 1st July, 2004. (iii) Rs. 25,000 is to be
transferred in a Reserve Account. (iv) Profit sharing ratio is 5:3: 2 upto Rs. 80,000 and above Rs.
80,000 equally. Net Profit of the firm before above adjustments was Rs. 1,98,360. From the
above information prepare Profit and Loss Appropriation Account, Capital and Current
Accounts of the partners.