$X$ and $Y$ are partners sharing profits and losses in the ratio of $2 : 3$ with capitals of $R s . 2, 00, 000$ and $R s . 3, 00, 000$ respectively. On 1st October, 2017, $X$ and $Y$ granted loans of $R s . 80, 000$ and $R s . 40, 000$ respectively to the firm. Show distribution of profits/losses for the ended 31st March, 2018 in each of the following alternative cases:
Case 1. If the profits before interest for the year amounted to Rs. 21,000.
Case 2. If the profits before interest for the year amounted to t Rs. 3,000.
Case 3. If the profits before interest for the year amounted to Rs. 5,00,0.
Case 4. If the loss before interest for the year amounted to Rs. 1,400.

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Solution

Assuming that there is existence of partnership deed among the partners.
Interest on capital and loan @ 6%p.a is to be paid. But as there is no enough profits,interest on capital cannot be provided for.
Case 1.
Net profit = 21,000
less:Interest on loan
X= 80,0006%1/2 = 2400
Y = 40,0006%1/2=1200 3,600
Share of profits 17,400
X = 6,960
Y= 10,440

Case 2.
Net profit = 3,000
Less:- interest on loan =( 3,600)
Loss =(600)

Interest on loan is to be provided even if there is loss.

Case 3.
Net profit = 5000
Less: Interest on loan = 3,600
Remaining profit = 1,400
Share of profit
X = 560
Y = 840
Case 4.
Net Loss = 1,400
Less:Interest on Loan = (3,600)
Loss = (5,000)

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