18 August 2013
Problem 8. Weak, Able and Lazy are in partnership sharing profits and losses in the ratio of 2 : 1 : 1. It is agreed that interest on capital will be allowed @ 5 % per annum and interest on drawings will be charged @ 4% per annum. (No interest will be charged/allowed on current A/cs.) The following are the particulars of the Capital Current and Drawings A/cs of the partners: Particulars Weak Rs. Able Rs. Lazy Rs. Capitals (1 January, 1990) 75,000 40,000 30,000 Current A/c (1 January, 1990) 10,000 5,000 5,000 (Dr.) Drawings 15,000 10,000 10,000 Interest on Drawings (1990) 500 190 That draft A/cs for 1990 showed a net profits of Rs. 60,000 before taking into A/c interest on capital and drawings and subject to following rectification of errors: (a) Life Insurance Premium of Weak amounting to Rs. 750 paid by the firm on 31 December, 1990 has been charged to Miscellaneous Expenditure A/c (b) Repairs of machinery amounting to Rs. 10,000 has been debited to Plant A/c and depreciation thereon charged @ 20 per cent. (c) Travelling expenses of Rs. 3,000 of Able for a pleasure trip to U.K. paid by the firm on 30 June 1990 has been debited to Travelling Expenses A/c . You are required to prepare the profit and Loss Appropriation A/c for the year ended 31 December 1990 and the partners‘ current A/cs for the year. [Ans. Share of Profit: Weak Rs. 24,800, Able Rs. 12,400 Lazy Rs. 12,400; Current A/c Balance Weak Rs. 22,300 (Cr.) Able Rs. 6,150 (Cr.) Lazy Rs. 1,450 (Dr.)]
07 October 2013
You have given Capital and Current A/c balance as of 1st Jan. How about Drawings A/c balance. Is that also as at 1st Jan? Or is at as at 21st Dec?
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