NOTES

Partnership and joint venture.

Notes of Partnership Accounts - Introduction to Partnership Accounts & LPP (Old & New)

1. Fixed capital and Fluctuating Capital.
   
   see in detail
   
   
2. Partnership and joint venture.
   
   see in detail
   
   

3. Weak, Able and Lazy are in partnership sharing profits and losses in the ratio 2:1:1. It is agreed that interest on capital will e allowed @ 10% per annum and interest on drawings will be charged @8% per annum.(No interest will be charged/allowed on current accounts).

   The following are the particulars of the capital and drawings Accounts of the partners:

   	Weak Rs.	Able Rs.	Lazy Rs.
   Capital (1.1.2016)	75,000	40,000	30,000
   Current account (1.1.2016)	10,000	5,000	(Dr.) 5,000
   Drawings	15,000	10,000	10,000

    The draft accounts for 2016 showed a net profit of Rs. 60,000 before taking into account interest on capitals and drawings and subject to following rectification of errors:

   (a)Life Insurance premium of weak amounting to Rs.750 paid by the firm on 30^th june,2016 has been charged to miscellaneous expenditure A/c.

   (b) Repairs of machinery amounting to Rs.10,000 has been debited to plant account and depreciation thereon charged @20%.

   (c)Travelling expenses of Rs.3,000 of able for a pleasure trip to U.K. paid by the firm on 30^th june,2016 has been debited to travelling expenses account.

   You are required to prepare the profit and loss appreciation account, current accounts of partners weak,  able and lazy for the year ended 31^st December,2016.

   
   see in detail
   
   

4. Ram and Rahim are in partnership sharing profits and losses in the ratio of 3:2. As, Ram, on account of his advancing years,feels he cannot work as hard as before, the chief clerk of the firm, Ratan, is admitted as a partner with effect from 1^st January,2016, and becomes entitled to 1/10^th of the net profits and nothing else, the mutual ratio between Ram and Rahim remaining unaltered.

   Before becoming a partner, Ratan was getting a salary of Rs.500 p.m together with a commission of 4% on the net profits after deducting his salary and commission.

   It is provided in the partnership deed that thee share of Ratan’s profits as a partner in excess of the amount to which he would have been entitled if he had continued as the chief clerk,should be taken out of Ram’s share of profits.

   The net profit of the year ended December 31,2016 is Rs.1,10,000. Show the distribution of net profit amongst the partners.

   
   see in detail
   
   

5. X and Y are partners. As per terms of agreement interest is allowed on capital at 8% p.a. and charge on drawing at 10% p.a. X withdrew Rs.40,000 pm at the end of each month and Y withdrew Rs.1,20,000 at the end of each quarter. You are required to fill the missing figures in the following accounts:

   Profit and Loss Appreciation Account for the year ended March 31, 2017

   Particulars	Rs.	Particulars	Rs.
   To...?		By profit and loss A/c(Net profit)	?
   To Interest on capital A/c		By interest on Drawing A/c
   X          1,60,000		X                  ?	?
   Y                     ?	2,88,000	Y                  ?
   To profit transferred to capital A/c
   X(2/3)                 ?
   Y(1/3)      2,80,000	?
   	?

    Partner’s Capital Accounts

   Particulars	X	Y	Particulars	X	Y
   To...?	?	?	By ....?	?	?
   To...?	?	?	By Salary A/c	3,60,000	?
   To...?	?	?	By.....?	?
   			By.....?	?	?
   	?	?		?	?

   
   see in detail