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Appropriation of Profits

A, B and C ha...

Question

A, B and C have capitals of Rs. 50,000, Rs. 40,000 and Rs. 30,000 respectively who were carrying on a business in partnership. The firm reported profit for the year was Rs. 79,200. Find out the share of each partner in the above amount after taking into account that no interest has been provided on advance given by A of Rs. 20,000, in addition to his capital contribution.

A

Rs. 26,400 to each partner

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B

Rs. 33,000 for A, Rs. 26,400 for B and Rs. 19,800 for C

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C

Rs. 26,000 for partner B & C and Rs. 27,200 for A

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D

None of these

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Solution

The correct option is C
Rs. 26,000 for partner B & C and Rs. 27,200 for A

Interest on Advance made by A = Rs. 20,000*6% = Rs.1,200

Balance profit after interest on advance = Rs. 79,200-Rs. 1,200 = Rs. 78,000

Remaining profit to be distributed equally

Each share of profit = Rs. 78,000/3 = Rs. 26,000

Share of A: Rs. 26,000 + Rs. 1,200 = Rs. 27,200

Share of B: Rs. 26,000

Share of C: Rs.26,000

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Similar questions

Q. A, B and C were capitals of Rs. 50,000; Rs. 40,000 and Rs. 30,000 respectively carrying on business in partnership. The firm's reported profit for the year was Rs. 79,200. As per provisions of the Indian Partnership Act, 1932, find out the share of each partner in the above amount after taking into account that no interest has been provided on an advance by A of Rs. 20,000, in addition to his capital contribution?

A

B

are partners in a business and their capitals at the end of the year were

R s . 7, 00, 000

R s 6, 00, 000

respectively. Calculate their opening capitals considering the following information:
(a) Drawings of

A

B

for the year were

R s . 75, 000

R s . 50, 000

respectively.
(b)

B

introduced capital of

R s .1, 00, 000

during the year.
(c) Interest on capital credited to the Capital Accounts of

A

B

R s .15, 000

R s . 10, 000

respectively.
(d) Interest on drawings debited to the Capital Accounts of

A

B

R s .7, 500

R s . 5, 000

respectively.
(e) Share of profit credited to Capital Accounts was

R s . 1, 00, 000

X, Y and Z commenced business on 1st April, 2013 with capitals of Rs. 1,00,000, Rs. 80,000 and Rs. 60,000 respectively. Profit & losses were shared in the ratio of 4 : 3 : 3 respectively. Capitals carried interest at 5% p.a.

During the years ended 31st March 2014 and 2015, they made profits of Rs. 40,000 and Rs. 50,000 before allowing interest on capitals. Drawings of each partner were Rs. 10,000 per year.

On 31st March, 2015 the firm was dissolved. Creditors on that date were Rs. 24,000. The assets realised a net amount of Rs. 2,60,000.

Prepare capital accounts of partners for two years till the books are finally closed and the realisation account.

A

B

are partners in a business and their capitals at the end of the year were

R s . 7, 00, 000

6, 00, 000

respectively. Calculate their opening capitals considering the following information:
(a) Drawings of

A

B

for the year were

R s . 75, 000

R s . 50, 000

respectively.
(b)

B

introduced capital of

R s .1, 00, 000

during the year.
(c) Interest on capital credited to the Capital Accounts of

A

B

R s .15, 000

R s . 10, 000

respectively.
(d) Interest on drawings debited to the Capital Accounts of

A

B

R s . 7, 500

R s . 5, 000

respectively.
(e) Share of loss debited to Capital Accounts was

R s . 20, 000

On March 31, 2006 the balance in the capital accounts of Eluin, Monu and Ahmed, after making adjustments for profits, drawing, etc were Rs 80,000, Rs 60,000 and Rs 40,000 respectively. Subsequently, it was discovered that interest on capital and interest on drawings has been omitted.

The partners were entitled to interest on capital @ 5% pa. The drawings during the year Eluin Rs 20,000; Monu, Rs 15000 and Ahmed, Rs 9,000. Interest on drawings chargeable to partners were Eluin Rs 500, Monu Rs 360 and Ahmed Rs 200. The net profit during the year amounted to Rs 1,20,000. The profit sharing ratio was 3:2:1. Pass necessary adjustment entries.

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