Question

Bat and Ball are partners sharing the profits in the ratio of 2 : 3 with capitals of ₹ 1,20,000 and ₹ 60,000 respectively. On 1st October, 2018, Bat and Ball gave loans of ₹ 2,40,000 and ₹ 1,20,000 respectively to the firm. Bat had allowed the firm to use his property for business for a monthly rent of ₹ 5,000. The loss for the year ended 31st March, 2019 before rent and interest amounted to ₹ 9,000. Show distribution of profit/loss.

Answer 1

Profit and Loss Account for the year ended March 31, 2019
Dr.				Cr.
Particulars	Amount (₹)	Particulars		Amount (₹)
Loss (before interest)	9,000
Rent (5,000$\times$12)	60,000	Loss transferred to:
Interest on Bat’s loan	7,200	Bat’s Capital A/c	31,920
Interest on Ball’s loan	3,600	Ball’s Capital A/c	47,880	79,800
	79,800			79,800

Working Notes:
WN 1 Interest on Partner’s Loan

WN 2 Distribution of Loss to the Partners

Loss after Interest on Partners’ Loan = 9,000 + 60,000 + 7,200 + 3,600 = ₹ 19,800
$$\begin{gathered} \mathrm{Bat}\text{'}\mathrm{s}\mathrm{Share}\mathrm{of}\mathrm{Loss}=79,800\times \frac{2}{5}=\mathrm{Rs}31,920 \\ \mathrm{Ball}\text{'}\mathrm{s}\mathrm{Share}\mathrm{of}\mathrm{Loss}=79,800\times \frac{3}{5}=\mathrm{Rs}47,880 \end{gathered}$$