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Question 2 Chapter 2 - Unimax Class 12 Part 1
2. A and B commenced business in partnership on 1st January, 2021. No partnership agreement was made either oral or written. They contributed Rs. 400000 and Rs. 100000 respectively as Capital. In addition, A also advanced Rs. 50000 on 1st July, 2021 as loan.
A met with an accident on 1st May, 2021 and could not attend to the firm’s business upto 30th September, 2021. The Profits for year ended 31st December, 2021 amounted to Rs. 166000. Disputes having been arisen between them for sharing of profits.
A Claims :
(i) He should be given interest @ 10% per annum on Capital and loan.
(ii) Profit should be distributed in proportion of Capital.
B Claims :
(i) Profit should be distributed equally.
(ii) He should be allowed Rs. 2000 per month as remuneration during the absence of A from the business of firm.
(iii) Interest on Capital and Interest on loan should be given @ 6% per annum.
You are required to settle the disputes between them and distribute the profits according to law. State reasons for your answer.
In the absence of any partnership deed :
(i) No interest on capital is allowed.
(ii) No remuneration is allowed.
(iii) Interest on loan is allowed @ 6% p.a.
(iv) Profits should be shared equally.
Profit & Loss Account For the year ending Dec. 31, 2021.
| Particulars | Rs. | Particulars | Rs. | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| To Interest on A’s loan @ 6% p.a. | 1500 | By Net Profit | 1,66,000 | ||||||||
|
|||||||||||
| To Profit and Loss Appropriation A/c | 1,64,500 | ||||||||||
| 1,66,000 | 1,66,000 |
Profit & Loss Appropriation Account For the year ending Dec. 31, 2021.
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To Profit transferred to capital A/c | By Profit & Loss A/c | 1,64,500 | |
| A 1,64,500 x1/2= 82,250 | |||
| B 1,64,500 x1/2= 82,250 | 1,64,500 | ||
| 1,64,500 | 1,64,500 |
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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4 May 2022