Question

In: Accounting

X and Y are partners sharing profits and losses in the ratio of 2:3 with capitals of Rs.2,00,000

$X$ 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.

Expert 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= 80,000*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)

In profit & loss A/c loss transfer to partners capital A/c

X= 2000

Y= 3000

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