Fundamentals of partnership and Goodwill Test

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Fundamentals of partnership and Goodwill Test - 7

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Weekly Quiz Competition

Question 1
1 / -0

A, B and C are partners sharing profits equally. A and B has given a minimum gurantee of Rs. 8,000 to the C. How much amount of profit C will get, when profit of the firm is Rs.30,000.

A
8,000

B
30,000

C
10,000

D
22,000

Solution

Minimum guarantee of profit to a partner means, that partner will not get the less amount than the guarantee amount. If there is any deficiency, it will borne by the existing partners who have given guarantee. But it does not mean that he will get only guarantee amount, if his profit exceeds the limit of guaranteed amount, that will be paid to him. For example, in the above question guaranteed amount of C is Rs. 8,000 but he is getting Rs. 10,000 as per the profit sharing ratio. So he will get Rs. 10,000.
Question 2
1 / -0

Which account is to be recorded on debit side for charging the interest on partner’s loan?

A
Partner’s Capital A/c

B
Partner’s Current A/c

C
Partners Loan A/c

D
Interest on Partner's Loan Account

Solution

Entry for interest due on partner’s loan :

Interest on Partners Loan A/c Dr.

To Partner' s Loan A/c
Question 3
1 / -0

Profit and Loss Appropriation Account is pepared ______

A
After calculating Net Profit

B
Before calculating Gross Profit

C
Before calculating Net Profit

D
After calculating Gross Profit

Solution

Profit and Loss Account is prepared after calculating the net profit. Profit and loss appropriation account shows the distribution of net profit amongst the partners in the form of interest on capital, salary, commission and remuneration etc. and transfer of profit to various reserves. profit and loss appropriation account is prepared after the preparation of profit and loss account.
Question 4
1 / -0

Calculate the Interest on Drawings of Ram @10% p.a for the year ended 31st March 2012.If Ram withdraw drawings Rs. 2000 p.m in the beginning of every month.

A
₹1200

B
₹1100

C
₹1400

D
Rs. 1300

Solution

In this case partner has withdran a fixed amount on a fixed date for the full year. To calculate the interest on drawings follow these two steps in this situation:
Step 1 : Average Time Period = 12 + 1 = 13/2 = 6.5 months
Step 2. Interest on Drawings = 24,000 × 10/100 × 6.5/12 = 1,300

Question 5

1 / -0

Calculate interest on drawings, if owner withdrew the following amounts as follows Jan.31 Rs. 6000, Mar.31 Rs.4000, July 1 Rs.8000, Sep.30 Rs.3000, 1 Nov, Rs.5000. Accounts are closed on 31st December every year and rate of interest on drawings is 10% p.a.

₹1418.93

₹1418.33

Rs.1408.33

₹1408.93

Solution

When amounts are different for each drawings and dates of drawings are also different, in such a case Product method should be used to calculate the interest on drawings:

Amount	Months	Products
6,000	11	66,000
4,000	09	36,000
8,000	06	48,000
3,000	03	9,000
5,000	02	10,000

Interest on drawings = Total products Rs.1,69,000 × 10/100 × 1/12 = 1,408.33

Question 6
1 / -0

Calculate interest on drawing if Partner withdrew Rs. 6,000 at the end of each quarter. Rate of interest on drawings is 10% p.a. and accounting period is 1st January to 31st December.

A
Rs.900

B
Rs. 950

C
Rs. 1,800

D
Rs. 975

Solution

When drawings are made at the end of each quarter for the same amount, use these two steps to find out the interest on drawings:
Step 1. Average Time Period = 9 + 0 = 9/2 = 4.5
Step 2. Interest on Drawings = 24,000 × 10/100 × 4.5/12 = Rs. 900
Question 7
1 / -0

Ram and Rohit started business on 1st April, 2012 with capitals of Rs. 250,000 and Rs.150,000 respectively. On the 1st October 2012, they decided that their capitals should be Rs.200,000 each. The necessary adjustments in the capitals were made by introducing or withdrawing cash. Interest on capital is allowed at 8% p.a. Calculate the interest on Rohit’s Capital on March 31, 2013.

A
₹12000

B
₹14050

C
Rs.14000

D
₹12050

Solution

Interest on Rohit’s Capital:
1,50,000 × 8/100 × 6/12 = 6,000
2,00,000 × 8/100 × 6/12 = 8,000
Total Interest on Rohit’s Capital = 6,000 + 8,000 = 14,000
Question 8
1 / -0

P and Q were partners in a firm sharing profits and losses in the ratio 3:2.They admit R for 1/6th share in profits and guaranteed that his share will not be less than Rs. 25000.Total profit of the firm were Rs. 90,000 Calculate share of profit for each partner when guarantee is given by P.

A
P = ₹40000, Q = ₹25,000, R = ₹25,000

B
P = ₹35000, Q = ₹10,000, R = ₹25,000

C
P =₹39000, Q = ₹26,000, R = ₹25,000

D
P= Rs.35000, Q= Rs.30,000, R= Rs.25,000

Solution

New Profit Sharing Raio = 3:2:1
P’s Share of Profit = 90,000 × 3/6 = 45,000
Q’s Share of Profit = 90,000 × 2/6 = 30,000
R’s Share of Profit = 90,000 × 1/6 = 15,000
R should get 25,000 but he is getting only Rs.15,000 (deficiency Rs.10,000 will be met by P)
Now P’s Share will be = 45.000 – 10,000 = Rs. 35,000
Question 9
1 / -0

A,B and C are partners sharing profits and losses in the ratio of 2:2:1 respectively. A is entitled to a commission of 10 % on net profit before charging such commission. Net profit before charging commission is Rs.1,20,000.Find out commission payable to A.

A
₹12200

B
₹20000

C
₹1200

D
Rs.12000

Solution

There are two ways to provide commission:
1. Before charging such commission = Profit ×Rate/100
2. After charging such commission = Profit ×Rate/100 +Rate
In the above case commission will be calculated as : 1,20,000 × 10/100 = 12,000
Question 10
1 / -0

R, S and T are partners in a firm. They decided to share profits up to Rs. 10,000 in the ratio 30%, 50% and 20% respectively. Above this amount profits are shared equally. If the profits of the firm for the year was Rs. 25,600.Distribute the profit.

A
R= ₹12,200, S= ₹8,200 and T= ₹7,200

B
R= ₹9,200, S= ₹7,200 and T= ₹8,200

C
R= ₹10,200, S= ₹9,200 and T= ₹7,200

D
R= Rs. 8,200, S= Rs. 10,200 and T= Rs.7,200

Solution

Distribution of Profits:
First 10,000 of profit in 30%, 50% and 20% i.e. 3,000; 5,000 and 2,000
Next 15,600 (25,600 – 10,000) in equal ratio i.e. 5,200 each.
R’s Share of Profit = 3,000 + 5,200 = 8,200
S’s Share of Profit = 5,000 + 5,200 = 10,200
T’s Share of Profit = 2,000 + 5,200 = 7,200

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Fundamentals of partnership and Goodwill Test - 7

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Fundamentals of partnership and Goodwill Test - 7

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SHARING IS CARING

Question 1

8,000

30,000

10,000

22,000

Solution

Question 2

Partner’s Capital A/c

Partner’s Current A/c

Partners Loan A/c

Interest on Partner's Loan Account

Solution

Question 3

After calculating Net Profit

Before calculating Gross Profit

Before calculating Net Profit

After calculating Gross Profit

Solution

Question 4

₹1200

₹1100

₹1400

Rs. 1300

Solution

Question 5

₹1418.93

₹1418.33

Rs.1408.33

₹1408.93

Solution

Question 6

Rs.900

Rs. 950

Rs. 1,800

Rs. 975

Solution

Question 7

₹12000

₹14050

Rs.14000

₹12050

Solution

Question 8

P = ₹40000, Q = ₹25,000, R = ₹25,000

P = ₹35000, Q = ₹10,000, R = ₹25,000

P =₹39000, Q = ₹26,000, R = ₹25,000

P= Rs.35000, Q= Rs.30,000, R= Rs.25,000

Solution

Question 9

₹12200

₹20000

₹1200

Rs.12000

Solution

Question 10

R= ₹12,200, S= ₹8,200 and T= ₹7,200

R= ₹9,200, S= ₹7,200 and T= ₹8,200

R= ₹10,200, S= ₹9,200 and T= ₹7,200

R= Rs. 8,200, S= Rs. 10,200 and T= Rs.7,200

Solution

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