Question

A and B are partners with ratio 3:2 with capitals of 2lac and 1lac respectively.show the distribution of profits in each of the following .alternative cases

Case 1- if the partnership deed is silent as to the int on capital and the profits for the yr are 50,000

Case 2-if if the partnership deed provides for int on capital @ 8% p.a and the losses for the year are 50,000

Case 3- if the partnership deed provides for int on capital @ 8% p.a and the profits for the yr 50,000

Case 4-if the partnership deed provides for int on capital @ 8% p.a and the profits for the yr 15,000

Case 5-if the partnership deed provides for int on capital @ 8% p.a even if it involves the firm in loass and the profits for the yr are 15,000.

Answer 1

CASE 1.

Profit and the loss appropriation account

CASE 3 profit and the loss appropriation account

NOTE-int on capital will be allowed even if the firm incurs loss .it means int on capital is a charge against profits.