Skip to content

Varun and Vivek… (Class 12 Accountancy SQP 2024-25, Q24b)

questionbuddy.in/q/cbse-12-accountancy-2024-25-sqp-q24b-varun-vivek-partners-firm-sharing

AccountancyCBSE Class 12 · Sample paper, session 2024-25 · 6 marks · Long answer

CBSE Class 12 Accountancy sample paper 2024-25: question 24(b)

From the official CBSE sample question paper for 2024-25, section A, question 24(b), for 6 marks. Try it first; the hints and our step-by-step solution are below.

Q24(b) · 6 marks · Long answerAccounting for Partnership: Basic Concepts

Varun and Vivek were partners in a firm sharing profits in the ratio of 3:2. The balance in their capital and current accounts as on 1st April, 2022 were as under:

ParticularsVarun(₹)Vivek(₹)
Capital accounts3,00,000 (Cr.)2,00,000 (Cr.)
Current accounts1,00,000 (Cr.)28,000 (Dr)

The partnership deed provided that Varun was to be paid a salary of ₹ 5,000 p.m. whereas Vivek was to get a commission of ₹ 30,000 for the year. Interest on capital was to be allowed @ 8% p.a. whereas interest on drawings was to be charged @ 6% p.a. The drawings of Varun were ₹ 3,000 at the beginning of each quarter while Vivek withdrew ₹ 30,000 on 1st September, 2022. The net profit of the firm for the year, 2022-23, before making the above adjustments was ₹ 1,20,000.
Prepare Profit and Loss Appropriation Account and Partners' Capital and Current Accounts.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2024-25.

Hints

Open one hint at a time and try again before the next.

Hint 1

Add interest on drawings to the profit before comparing with appropriations.

Hint 2

When profit is short, scale all appropriations down in their own ratio.

Hint 3

With fixed capitals, everything except capital goes through current accounts.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Workings. Salary Varun ₹ 60,000; commission Vivek ₹ 30,000; interest on capital Varun ₹ 24,000, Vivek ₹ 16,000: total ₹ 1,30,000. Interest on drawings: Varun ₹ 12,000 × 6% × 7.5/12 = ₹ 450; Vivek ₹ 30,000 × 6% × 7/12 = ₹ 1,050. Profit available = ₹ 1,20,000 + ₹ 1,500 = ₹ 1,21,500, less than the appropriations, so it is shared in their ratio 84,000 : 46,000 = 42 : 23: Varun ₹ 78,508, Vivek ₹ 42,992.

    1½ marks

  2. Profit and Loss Appropriation Account for the year ended 31st March, 2023

    Particulars₹Particulars₹
    To Varun's Current A/c (salary and interest, scaled down)78,508By Profit and Loss A/c1,20,000
    To Vivek's Current A/c (commission and interest, scaled down)42,992By Interest on Drawings: Varun450
    By Interest on Drawings: Vivek1,050
    1,21,5001,21,500
    2 marks

  3. Partners' Capital Accounts stay at ₹ 3,00,000 and ₹ 2,00,000 (balance b/d carried down unchanged).

    ParticularsVarun (₹)Vivek (₹)ParticularsVarun (₹)Vivek (₹)
    To Balance c/d3,00,0002,00,000By Balance b/d3,00,0002,00,000
    3,00,0002,00,0003,00,0002,00,000
    ½ mark

  4. Partners' Current Accounts

    ParticularsVarun (₹)Vivek (₹)ParticularsVarun (₹)Vivek (₹)
    To Balance b/d28,000By Balance b/d1,00,000
    To Drawings A/c12,00030,000By P&L Appropriation A/c78,50842,992
    To Interest on Drawings A/c4501,050By Balance c/d16,058
    To Balance c/d1,66,058
    1,78,50859,0501,78,50859,050
    2 marks

Answer: Profit available ₹ 1,21,500 shared 42 : 23: Varun ₹ 78,508, Vivek ₹ 42,992; capitals unchanged; current accounts Varun ₹ 1,66,058 (Cr.), Vivek ₹ 16,058 (Dr.)

Where the marks are

  • Interest on drawings and shortfall worked out (1½ marks)
  • P&L Appropriation Account (2 marks)
  • Capital accounts (½ mark)
  • Current accounts (2 marks)

Revise the chapter

Practise this chapterBoard-style questions from Accounting for Partnership: Basic Concepts, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2024-25: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.