Question

$X$ and $Y$ are partners sharing profits and losses in the ratio of $2:3$ with capitals of $Rs.2,00,000$ and $Rs.3,00,000$ respectively. On 1st October, 2017, $X$ and $Y$ granted loans of $Rs.80,000$ and $Rs.40,000$ 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.

Answer 1

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= 80,000*6%*1/2 = 2400

Y = 40,000*6%*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)