Accounting Case Study – Fundamental of Partnership

Case Study Accountancy – Fundamental of Partnership

Read the following Accounting Case Study and answer the following questions on the basis of the same:

Amit, Babu, and Charu set up a partnership firm on April 1, 2020. They contributed ₹ 50,000, ₹ 40,000, and ₹ 30,000, respectively as their capitals and agreed to share profits and losses in the ratio of 3: 2 :1. Amit is to be paid a salary of ₹ 1,000 per month and Babu, a Commission of ₹ 5,000. It is also provided that interest to be allowed on capital at 6% p.a. The drawings for the year were Amit ₹ 6,000, Babu ₹ 4,000, and Charu ₹ 2,000. Interest on drawings of ₹ 270 was charged on Amit’s drawings, ₹ 180 on Babu’s drawings, and ₹ 90, on Charu’s drawings. The net profit as per the Profit and Loss Account for the year ending March 31, 2021, was ₹ 35,660.

Answer the following Accounting Case Study questions:

Qus 1: Amit’s Salary will be Debited to Profit and Loss A/c will be:

Qus 2: Commission of Babu will be Debited to:

(a) Revaluation Account

(b) Partner’s Capital Account

(c) Profit and Loss Account

(d) Profit and Loss Appropriation Account

Qus 3: Total Interest on Capital Debited o Profit and Loss Appropriation Account will be:

(a) ₹ 6,000

(b) ₹ 7,200

(c) ₹ 2,700

(d) ₹ 3,000

Qus 4: Journal Entry for Allowing Interest on Capital to Partners is:

(a) Interest on Capital A/c………………Dr.

     To Partner’s Capital/Current A/cs (individually)

(b) Profit and Loss Appropriation A/c Dr.

    To Interest on Capital A/c

(c) Interest on Capital A/c……………Dr.

            To Profit and Loss Appropriation A/c

(d) Partner’s Capital A/c……………..Dr.

    To Interest on Capital A/c

Qus 5: Journal Entry for For charging interest on drawings to partners’ capital accounts:

(a)Interest on Drawings A/c…………… Dr.

           To Partners Capital/Current A/c’s (individually) A/c

(b) Interest on Drawings A/c Dr.

    To Profit and Loss Appropriation A/c

(c) Partners Capital/Current A/c’s (individually) Dr.

           To Interest on Drawings A/c

(d) Profit and Loss Appropriation A/c………….. Dr.

    To Interest on Drawings A/c

Qus 6: Divisible profit will be

(a) ₹ 5,000

(b) ₹ 12,000

(c) ₹ 35,600

(d) ₹ 7,000

Also Read : Money and Banking Multiple Choice Questions

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