MyQuestionIcon

1

You visited us 1 times! Enjoying our articles? Unlock Full Access!

Introduction to Banking

A Partnership...

Question

A Partnership Deed provides for the payment of interest on capital but there was a loss instead of profit during the year 2010-11. At what rate will the interest on capital be allowed?

Open in App

Solution

A partnership deed is a legal document containing the terms and conditions on which the partnership is based. It is signed by all the partners. Some provisions cannot be carried out ,if the partnership deed is silent regarding the Interest on capital cannot be paid if the partnership deed does not contain any provision regarding that.
Interest on capital can be paid if there is provision regarding it in the partnership deed but only in case of profits.
So,For the year 2010-11, interest on capital cannot be paid to partners.

Suggest Corrections

thumbs-up

0

Similar questions

X

Y

are partners sharing profits and losses in the ratio of

2 : 3

with capitals of

R s . 2, 00, 000

R s . 1, 00, 000

respectively. Pass the necessary Journal entry or entries for distribution of profit/loss for the year ended 31st March, 2018 in each of the alternative cases:
Case 1. If Partnership Deed is silent as to the interest on capital and the profit for the year is

R s . 20, 000

.
Case 2. If Partnership Deed provides for interest on capital @

6 %

p.a. and loss for the year is

R s . 15, 000

.
Case 3. If Partnership Deed provides for-interest on capital @

6 %

p.a. and the profit for the year is

R s . 21, 000

.
Case 4. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 20, 000

.
Case 5. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 2, 000

.
Case 6. If Partnership Deed provides for interest on capital @

6 %

p.a. as a charge on profit and the profit for the year is

R s . 18, 000

Q. Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both Reema and Seema will get monthly salary of

R s . 15, 000

each, Interest on Capital will be allowed @ 5% p.a. and Interest on Drawings will be charged @ 10% p.a. Their capitals were

R s . 5, 00, 000

each and drawings during the year were

R s . 60, 000

each.
The firm incurred a loss of

R s . 1, 00, 000

during the year ended 31st March, 2018.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.

Q. Capitals of A, B and C as on 31st March, 2019 amounted to ₹ 90,000, ₹ 3,30,000 and ₹ 6,60,000 respectively. Profit of ₹ 1,80,000 for the year ended 31st March, 2019 was distributed in the ratio of 4 : 1 : 1 after allowing interest on Capital @ 10% p.a. During the year, each partner withdrew ₹ 3,60,000. The Partnership Deed was silent as to profit-sharing ratio but provided for interest on capital @ 12%.
Pass the necessary adjustment entry showing the working clearly.

Q. In case the deed provides the payment of interest on capital but does not specify the rate, the interest will be paid at the rate of ____ percent per annum.

Q. X, Y and Z are partners in a firm sharing profits in 2 : 2 : 1 ratio. The fixed capitals of the partners were : X ₹5,00,000; Y ₹ 5,00,000 and Z ₹ 2,50,000 respectively. The Partnership Deed provides that interest on capital is to be allowed @ 10% p.a. Z is to be allowed a salary of ₹ 2,000 per month. The profit of the firm for the year ended 31st March, 2018 after debiting Z's salary was ₹ 4,00,000.
Prepare Profit and Loss Appropriation Account.

View More

Join BYJU'S Learning Program

similar_icon

Related Videos

lock

Introduction to Banking

MATHEMATICS

Watch in App

explore_more_icon

Explore more

Introduction to Banking

Standard X Mathematics

Join BYJU'S Learning Program

CrossIcon