4 (a) K, L & Z are partners sharing profits in the ratio of 4:3:2 respectively . L RETIRED and
surrendered 1/9th of his share of profit to K and remaining in favour of Z . Calculate the new
ratio 2
(b) A & B were partners in a firm sharing equally with FIXED CAPITALS of RS 1,000,00 and
50,000 respectively . Interest on capital provided @5% P.A. had not been credited before the
final accounts were made . It was decided to pass an adjusting entry in the beginning of next
year. Give necessary entry
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Answers
Answer:
A. L's share in favour of K = 3/9×1/9 = 3/81
remaining = 8/9
L's share in favour of Z = 3/9×8/9 = 24/81
K's new share = 4/9 + 3/81 = 39/81
Z's new share = 2/9 + 24/81 = 42/81
new ratio = 39:42 or 13:14
B.
details A B firm
interest given 5000 2500 (7500)
profit/loss (3250) (3250) 7500
net effect 1750 (1750) nil
entry ->
B's capital account ...... Dr. 1750
to A's capital account 1750
Answer:
The answer is 13:14 (K:Z) & the adjusting entries will be Rs. 5000 for A and Rs. 2500 for B.
Explanation:
i) Let us assume the total profit made was 27 units.
ii) L's share of profit = 3/9 x 27 = 9 units
K's share of profit = 4/9 x 27 = 12 units
Z's share of profit = 2/9 x 27 = 6 units
iii) L surrendered 1/9th of his share of profit to K.
Hence,
K's new share of profit = 12 + (1/9 x 9) = 13 units
Z's new share of profit = 6 + (8/9 x 9) = 14 units
iv) Hence, the new ratio of profit shares is 13:14 for K & Z respectively.
v) Interest on fixed capital for A = 1,00,000 x 5% = Rs 5,000
Interest on fixed capital for B = 50,000 x 5% = Rs 2,500
vi) Hence, the adjusting entries will be Rs. 5000 for A and Rs. 2500 for B.
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