1. On 1st April, 2023 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
withdrew the following amounts of capital.
Date Capital Introduced Capital Withdrawn
1st May, 2023 10,000 –
30th June, 2023 – 5,000
30th September, 2023 97,000 –
1st February, 2024 – 87,000
The partnership deed provided for interest on capital @ 6% per annum. Calculate interest on capitals of the partners.
2. 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.
3. 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 and losses 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.
4. Dev withdrew ₹ 10,000 on 15th day of every month. Interest on drawings was to be charged @ 12% per annum.
Calculate interest on Dev’s drawings.
5. Where would you record interest on drawings when capitals are fluctuating?
6. On April 1st, 2014 an existing firm had assets of Rs. 75,000 including cash of Rs. 5,000. The partners’ capital
accounts showed a balance of Rs. 60,000 and reserves constituted the rest. If the normal rate of return is 20% and the
goodwill of the firm is valued at Rs. 24,000 at 4 years purchase of super profits, find the average profits of the firm.
7. Dinesh and Mahesh are partners sharing profits and losses in the ratio of 3 : 2. They admit Ramesh into partnership
for 1/4th share in profits. Ramesh brings in his share of goodwill in cash. Goodwill for this purpose shall be calculated
at two years’ purchase of the weighted average normal profit of past three years. Weights being assigned to each year
2017−1; 2018−2 and 2019−3. Profits of the last three years were:
2017 − Profit ₹ 50,000 (including profits on sale of assets ₹ 5,000).
2018 − Loss ₹ 20,000 (including loss by fire ₹ 35,000).
2019 − Profit ₹ 70,000 (including insurance claim received ₹ 18,000 and interest on investments and dividend
received ₹ 8,000).
Calculate the value of goodwill. Also, calculate the goodwill brought in by Ramesh.
1. Calculation of Interest on Capital
Mohan = 1,00,000 × 6100 = ₹ 6,000
2.
6.
7. Normal Profits for the year 2017=Total Profits-Profit on Sale of Assets=₹(50,000-
5,000)=₹45,000
Normal Profits for the year 2018=Loss by Fire-Total Loss=₹(35,000-20,000)=₹15,000
Normal Profits for the year 2019=Total Profit-Insurance Claim Received-Dividend
Received=₹(70,000-18,000-8,000)=₹44,000
Normal Profits Weighted Profits
Year Weights
(₹) (₹)
2017 45,000 1 45,000
2018 15,000 2 30,000
2019 44,000 3 1,32,000
Total 6 2,07,000
