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On 1st April 2023 A and …



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On 1st April 2023 A and b comments to business with capital of ₹600000 and ₹200000 respectively on 31st March 2024 the net profit (before taking into account the provisions of deed) was ₹240000 interest on capital is to be allowed at 6% per annum b was entitled to a salary of ₹60000 per annum the drawings of the partners A and b were ₹60000 and ₹40000 respectively the interest on drawings for a being ₹2000 and b ₹1000 assuming that A and b are equal partners prepare the profit and loss appropriation account and partners capital account as at 31st March 2024
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Rajan Vaishy 1 week ago

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Related Questions

1. 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. [Ans.: Goodwill—` 69,000; Ramesh shall bring 1/4th of ` 69,000, i.e., ` 17,250 as Goodwill.] 2. Manbir and Nimrat are partners and they admit Anahat into partnership. It was agreed to value goodwill at three years’ purchase on Weighted Average Profit Method taking profits of last five years. Weights assigned to each year as 1, 2, 3, 4 and 5 respectively to profits for the year ended 31st March, 2015 to 2019. The profits for these years were: ` 70,000, ` 1,40,000, ` 1,00,000, ` 1,60,000 and ` 1,65,000 respectively. Scrutiny of books of account revealed following information: (i) There was an abnormal loss of ` 20,000 in the year ended 31st March, 2015. (ii) There was an abnormal gain (profit) of ` 30,000 in the year ended 31st March, 2016. (iii) Closing Stock as on 31st March, 2018 was overvalued by ` 10,000. Calculate the value of goodwill. [Ans.: Value of Goodwill—` 4,17,000.] 3. Mahesh and Suresh are partners and they admit Naresh into partnership. They agreed to value goodwill at three years’ purchase on Weighted Average Profit Method taking profits for the last five years. They assigned weights from 1 to 5 beginning from the earliest year and onwards. The profits for the last five years were as follows: Year Ended 31st March, 2015 31st March, 2016 31st March, 2017 31st March, 2018 31st March, 2019 Profits (`) 1,25,000 1,40,000 1,20,000 55,000 2,57,000 Scrutiny of books of account revealed the following: (i) A second-hand machine was purchased for ` 5,00,000 on 1st July, 2017 and ` 1,00,000 were spent to make it operational. ` 1,00,000 were wrongly debited to Repairs Account. Machinery is depreciated @ 20% p.a. on Written Down Value Method. (ii) Closing Stock as on 31st March, 2018 was undervalued by ` 50,000. (iii) Remuneration to partners was to be considered as charge against profit and remuneration of ` 20,000 p.a. for each partner was considered appropriate. Calculate the value of goodwill. [Ans.: Goodwill—` 3,75,000.] 4. Calculate the goodwill of a firm on the basis of three years’ purchase of the weighted average profit of the last four years. The appropriate weights to be used and profits are: Year 2015–16 2016–17 2017–18 2018–19 Profits (`) 1,01,000 1,24,000 1,00,000 1,40,000 Weights 1 2 3 4 On a scrutiny of the accounts, the following matters are revealed: (i) On 1st December, 2017, a major repair was made in respect of the plant incurring ` 30,000 which was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% p.a. on Reducing Balance Method.
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