InterviewSolution
Saved Bookmarks
InterviewSolution
| 1. |
X and Y contribute ₹ 20,000 and ₹ 10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2 : 3 and the net profit for the year is ₹ 1,500. Show distribution of profits: (i) where there is no agreement except for interest on capitals; and (ii) where there is an agreement that the interest on capital as a charge. |
|
Answer» n:Calculation of INTEREST en Capital:Interest on X's Capital Interest on Y's Capial = Total AMOUNT of interest on capital = 1,200+600=1,800.Case (a)Where there is no clean agreement EXCEPT for interest on capitals Profit for the year ended = Rs.1.500.Total amount of interest = R s, 1,800. Here, Interest on capital > the profits AVAILABLE for distribution. Therefore, profit of Rs. 1.500 is distributed between X and Y in the ratio of their interest on capital.X will get interest on Capital Y will get interest on Capital = Case (b) In case, there is an agreement that the interest on capital as a charge, then the whole amount of interest on capital is to be allowed to the partners.Total Profit of the firm = Rs 1,500Total amount of Intereat on Capital = Rs.1, 800 (i.e. Rs. 1,200+ Rs 600) Therefore, loss to the firm amounts to Rs. 300 . This loss is to be SHARED by X and Y in their profit sharing ratio that is 2.3 . |
|