Accounting for Partnership Basic Concepts - Class 12 Accountancy - Chapter 1 - Notes, NCERT Solutions & Extra Questions
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Extra Questions - Accounting for Partnership Basic Concepts | NCERT | Accountancy | Class 12
Is like a loan received by the company from the shareholders.
A) Calls in advance
B) Calls in arrears
C) Share allotment
The correct option is A) Calls in advance. Calls in advance refers to the scenario where shareholders pay their part of the call money before it is actually due. This situation can indeed be likened to a loan received by the company from the shareholders, as the company has use of the funds before they are technically required to receive them. Moreover, the company pays interest on such amounts, further emphasizing the loan-like aspect of calls in advance.
Pinky, Qumar, and Roopa are partners in a firm sharing profits and losses in the ratio of 3:2:1. Seema is admitted as a new partner for $\frac{1}{4}$ share in the profits of the firm, from which he gets $\frac{1}{8}$ from Pinky and $\frac{1}{16}$ each from Qumar and Roopa. The total capital of the new firm after Seema's admission will be Rs. 2,40,000. Seema is required to bring in cash equal to $\frac{1}{4}$ of the total capital of the new firm. The capitals of the old partners also have to be adjusted in the proportion of their profit-sharing ratio. The capitals of Pinky, Qumar, and Roopa after all adjustments in respect of goodwill, revaluation of assets, and liabilities have been made are Pinky Rs. 80,000, Qumar Rs. 30,000, and Roopa Rs. 20,000. Calculate the capitals of all the partners and record the necessary journal entries for doing adjustments in respect of capitals according to the agreement between the partners.
Let's calculate the new profit-sharing ratio and the required capital contributions based on the information provided.
Calculation of New Profit-Sharing Ratio:
Pinky, Qumar, and Roopa initially shared profits in the ratio of $3:2:1$. This translates to the fractions $\frac{3}{6}, \frac{2}{6}, \frac{1}{6}$ respectively.
Seema is introduced with a $\frac{1}{4}$ share, which she acquires as $\frac{1}{8}$ from Pinky's original share, and $\frac{1}{16}$ from both Qumar's and Roopa's shares.
Reduction from Pinky's share: $$ \frac{3}{6} - \frac{1}{8} = \frac{12}{24} - \frac{3}{24} = \frac{9}{24} $$
Reduction from Qumar’s share: $$ \frac{2}{6} - \frac{1}{16} = \frac{8}{24} - \frac{3}{48} = \frac{13}{48} $$
Reduction from Roopa’s share: $$ \frac{1}{6} - \frac{1}{16} = \frac{4}{24} - \frac{3}{48} = \frac{5}{48} $$
Seema's share: $$ \frac{1}{4} = \frac{12}{48} $$
Hence, the new profit-sharing ratio becomes: $$ 18:13:5:12 \quad \text{(Simplifying all shares to a common denominator)} $$
Calculation of Capital Required:
The total capital of the newly formed firm is stated to be Rs. 2,40,000. The capital contributions based on the new profit-sharing ratio are then given by:
Pinky: $$ 2,40,000 \times \frac{18}{48} = Rs. 90,000 $$
Qumar: $$ 2,40,000 \times \frac{13}{48} = Rs. 65,000 $$
Roopa: $$ 2,40,000 \times \frac{5}{48} = Rs. 25,000 $$
Seema: $$ 2,40,000 \times \frac{12}{48} = Rs. 60,000 $$
Adjustment requirement:
The difference (short/excess) between actual capitals after adjustments and the required new capitals for Pinky, Qumar, and Roopa are:
Pinky: $10,000$ short
Qumar: $35,000$ short
Roopa: $5,000$ short
Seema needs to bring in his share of Rs. 60,000.
Necessary Journal Entries:
To record Seema's capital contribution:
Bank A/c...................Debit Rs. 60,000 To Seema’s Capital A/c............Credit Rs. 60,000 (Seema brings in her share of capital for $\frac{1}{4}$ share in profits.)
To adjust the shortfall in capital for existing partners:
Bank A/c...................Debit Rs. 50,000 To Pinky’s Capital A/c...........Credit Rs. 10,000 To Qumar’s Capital A/c...........Credit Rs. 35,000 To Roopa’s Capital A/c...........Credit Rs. 5,000 (Cash brought in by existing partners to adjust capital to required levels.)
These adjustments ensure that all partners' capital accounts are aligned with their new shares in the profit and the total capital of the firm.
Kellogg and Wilmar were able to establish a successful business in India because the strengths of each company complemented the other perfectly.
A. True
B. False
The correct answer is B. False.
This statement is false because Kellogg and Wilmar actually established a successful business in China, not India. Their success was due to the complementary strengths of each company.
Three persons start a business and spend rupees 45,000, Rs 15,000, and Rs 40,000 respectively. Find the share of each out of a profit of rupees 14,400 in a year.
To determine the share of profit for each of the three partners, we must first calculate the total investment made by them. Adding up the individual investments:
$$ \text{Total Investment} = 45,000 + 15,000 + 40,000 = 100,000 \text{ rupees} $$
Next, calculate the ratio of their investments:
For the first person: $$ \text{Ratio} = \frac{45,000}{100,000} = 0.45 $$
For the second person: $$ \text{Ratio} = \frac{15,000}{100,000} = 0.15 $$
For the third person: $$ \text{Ratio} = \frac{40,000}{100,000} = 0.4 $$
The profit amounted to Rs. 14,400. Thus, each person's share of the profit can be calculated as follows:
First person's share: $$ \text{Share} = 0.45 \times 14,400 = \text{Rs. 6,480} $$
Second person's share: $$ \text{Share} = 0.15 \times 14,400 = \text{Rs. 2,160} $$
Third person's share: $$ \text{Share} = 0.4 \times 14,400 = \text{Rs. 5,760} $$
In summary:
The first person receives Rs. 6,480
The second person receives Rs. 2,160
The third person receives Rs. 5,760
During the financial year, Rajan had cash sales of Rs. 4,50,000 and credit sales of Rs. 3,00,000. Expenses incurred for the year were Rs. 3,50,000 out of which Rs. 1,50,000 are still to be paid. Find out Rajan's income following: (i) Cash Basis of Accounting (ii) Accrual Basis of Accounting.
(i) Cash Basis of Accounting
Under the cash basis of accounting, only actual cash receipts and payments are recorded. Thus, for Rajan's income calculation:
$$ \text{Income} = (\text{Cash Sales}) - (\text{Paid Expenses}) $$
Given, Rajan's cash sales were Rs. 4,50,000, and the actual expenses paid (total expenses minus unpaid expenses) were Rs. 2,00,000 (Rs. 3,50,000 - Rs. 1,50,000). Hence,
$$ \text{Income} = 4,50,000 - 2,00,000 = Rs. 2,50,000 $$
(ii) Accrual Basis of Accounting
Under the accrual basis of accounting, income and expenses are recorded when they are earned or incurred, regardless of when the cash is actually exchanged. Therefore, Rajan's income calculation will include:
$$ \text{Income} = (\text{Cash Sales} + \text{Credit Sales}) - (\text{Total Expenses}) $$
Here, the total sales (cash plus credit) amount to Rs. 7,50,000 (Rs. 4,50,000 + Rs. 3,00,000), and the total expenses were Rs. 3,50,000. Therefore,
$$ \text{Income} = 7,50,000 - 3,50,000 = Rs. 4,00,000 $$
In conclusion, Rajan's income under:
- Cash Basis is Rs. 2,50,000
- Accrual Basis is Rs. 4,00,000.
Ravi bought a car for Rs. 3,00,000 and sold it to his friend for Rs. 2,80,000. How much profit or loss is incurred by Ravi?
A) Profit
B) Loss
C) Rs. 80,000 Loss
D) Neither Profit nor Loss
Solution The correct answer is B) Loss
- Cost Price (C.P.) of the car is Rs. 3,00,000
- Selling Price (S.P.) of the car is Rs. 2,80,000
Since the Cost Price is greater than the Selling Price:
$$ \text{C.P.} > \text{S.P.} $$
This implies that Ravi incurred a loss calculated as:
$$ \text{C.P.} - \text{S.P.} = Rs.\ (3,00,000 - 2,80,000) = Rs.\ 20,000 $$
Thus, Ravi sold the car at a loss of Rs. 20,000.
Two cars are of the same cost price. One is sold at a profit of 15% and the other for Rs. 23000 more than the first. If the net profit is 20%, find the cost price of each car.
A Rs. 280000
B Rs. 230000
C Rs. 282000
D Rs. 327500
E Rs. 221970
The correct option is B Rs. 230000.
Let the cost price of each car be 'P'.
Since the first car is sold at a 15% profit, its selling price can be written as: [ 1.15P ]
The second car is sold for Rs. 23000 more than the first car. Therefore, the selling price of the second car is: [ 1.15P + 23000 ]
The total selling price of the two cars combined is: [ 1.15P + (1.15P + 23000) = 2 \times 1.15P + 23000 ]
Given that the net profit is 20%, the total selling price for a 20% profit on two cars can be written as: [ 2 \times 1.2P ]
Equating the two expressions for the total selling price, we get: [ 2 \times 1.15P + 23000 = 2 \times 1.2P ]
Simplifying this equation: [ 2.3P + 23000 = 2.4P ]
Subtract (2.3P) from both sides: [ 23000 = 0.1P ]
Solving for P: [ P = \frac{23000}{0.1} = 230000 ]
Hence, the cost price of each car is Rs. 230000, which is option B.