Student Community

Archives Answers

Answer

Saloni and Shrishti are partners sharing profits and losses in the ratio of 2:3 with capitals of ₹ 20,000 and ₹ 10,000 respectively. The partnership deed provides for interest on capital @ 6% p.a. and the profit for the year was ₹ 1,500. State giving reason, how much interest on capital will be allowed.

Answer:- Interest on Saloni’s Capital = ₹ 20,000 * 6/100 = ₹ 1,200 Interest on Shrishti’s Capital = ₹ 10,000 * 6/100 = ₹ 600 Since the amount of available profit ₹ 1,500 is less than the total amount of…

Anurag Pathak
April 9, 2023

In what way would you deal with rent paid to a partner for the use of his premises by the firm in which he is a partner and why?

Answer:- Rent paid to a partner for the use of his premises is a charge against profit and thus, is treated as an expense of the firm to be debited to the Profit and Loss Account and credited to his…

Anurag Pathak
April 9, 2023

State giving reasons to which account interest on loan by partner is debited and credited if partner’s capitals are fixed.

Answer:- Interest on a Loan by the Partner is debited to the Profit and Loss Account since it is a charge against profit and credited to Partner’s Loan Account since it is a gain to a partner as a lender…

Anurag Pathak
April 9, 2023

State giving reason to which account interest on loan taken by a partner from the firm is debited and credited if partner’s capitals are fixed.

Answer:- Interest on Loan taken by a partner from the firm is debited to Partner’s Current Account since partner’s capitals are fixed and credited to Profit and Loss Account since it is a gain to a firm.

Anurag Pathak
April 9, 2023

State one difference between Partner’s Loan Account and Partner’s Capital Account.

Partner’s Loan Account is an account to which loan given by a partner and interest due thereon is credited Partner’s Capital Account is an account to which capital contributed by the partner is credited.

Anurag Pathak
April 9, 2023

Give the adjusting entry and closing entry for interest on loan taken by a partner from the firm, when the firm follows the Fluctuating Capital Method.

Answer:- a) Adjusting Entry: Concerned Partner’s Capital A/c …Dr. To Interest on Loan A/c ( Being the interest due on loan to partner) b) Closing Entry: Interest on Loan A/c …Dr. To Profit and Loss A/c

Anurag Pathak
April 9, 2023

The firm with X, Y and Z as partners earned a profit of ₹ 3,00,000 during the year ended 31st March, 2011. 20% of this profit was to be transferred to General Reserve. Pass the necessary Journal entry for the same.

Solution:- Date Particulars Dr. (₹) March 31 Profit and Loss Appropriation A/c …Dr. To General Reserve A/c (Being 20% of the profit transferred to the General Reserve) 60,000 60,000

Anurag Pathak
April 9, 2023

When and why is it that the Capital Account of a partner does not show a Debit Balance in spite of regular and consistent losses year after year?

Answer:- When the Capitals are fixed, the Capital Account of a partner will not sow debit balance since all transactions, except those of capital, between the firm and the partner are shown in the current account.

Anurag Pathak
April 9, 2023

Give one reason why partners are charged interest on drawings.

Partners are charged interest on Drawings because drawings are made against anticipated share of profit for the year and share of profit becomes due at the end of the financial year.

Anurag Pathak
April 9, 2023

State the provisions of the Indian Partnership Act, 1932, regarding charging of interest on drawings from a partner when:

Answer:- a) If the Partnership Deed provides for interest to be charged on drawings from the partners, it is charged at the rate of interest stated in the Partnership Deed. b) If firm does not have a Partnership Deed, interest…

Anurag Pathak
April 9, 2023

Telegram Channel