X, Y and Z are partners in a firm. At the time of division of profit for the year, there was a dispute between the partners. Profits before interest on partners' capital were Rs.12,000. X wanted interest on capital @ 20% as his capital contributions were Rs. 2,00,000 as compared to that of Y and Z which was Rs. 1,50,000 and Rs. 1,00,000 respectively. Calculate amounts payable to X, Y and Z.

Profits of Rs. 12,000 will be distributed equally.

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X will get the interest of Rs.40,000 and loss of Rs.28,000 will be shared equally.

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All the partners will get interest on capital and the loss of Rs. 78,000 will be shared equally.

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None of these

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Solution

The correct option is A Profits of Rs. 12,000 will be distributed equally.
When there is no partnership deed or agreement between the partners no interest on capital, Interest on drawings, remuneration or salary is provided or charged. Hence the profit available will be solely used for distribution of profit. RS-12,000 will be equally distributed among partners.

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X, Y, and Z are partners in a firm. At the time of division of profit for the year, there was a dispute between the partners. Profit before interest on partners' capital was Rs 12,000. X wanted interest on capital @ 20% as his capital contributions were 2,00,000 as compared to that of Y & Z which was 1,50,000 and 1,00,000 respectively. What would be the ideal split of profit/ loss?

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Q. P, Q and R are in a partnership and as at 1st April, 2017 their respective capitals were; Rs. 40,000, Rs. 30,000 and Rs. 30,000. Q is entitled to a salary of Rs. 6,000 and Rs. 4,000 p.a. payable before division of profits. Interest is allowed on capital @ 5% p.a. and is not charged on drawings. Of the divisible profits, P is entitled to 50% the first Rs. 10,000, Q to 30% and R to 20%, rest of the profits are shared equally. Profits for the year ended the 31st March, 2018, after debiting partners' salaries but before charging interest on capital was Rs. 21,000 and the partners had drawn Rs. 10,000 each on account of salaries, interest and profit.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018 showing the distribution of profit and the Capital Accounts of the Partners.

P

and

Q

were partners in a firm sharing profits and losses equally. Their fixed capitals were

R s . 2, 00, 000

and

R s . 3, 00, 000

respectively. The partnership deed provided for interest on capital

@ 12 %

per annum. For the year ended 31

^{s t}

March, 2016, the profits of the firm Rs.60,000 were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error.

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