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Akhil and Bimal are partners sharing profits in the ratio of 3 : 2. Akhil gave a loan to the firm of ₹1,00,000 on 1st January, 2025. On the same date, the firm gave a loan to Bimal of ₹1,00,000. They do not have an agreement as to interest. Akhil had also given his personal property to be used as the firm’s godown at a monthly rent of ₹5,000. The firm earns a profit of ₹1,03,000 (before the above adjustments) for the year ended 31st March, 2025. Show the distribution of profit for the year.
In the absence of an agreement: interest on Akhil’s loan to the firm is allowed @ 6% p.a. for 3 months (1st January to 31st March, 2025); no interest is charged on the firm’s loan to Bimal (interest on a loan to a partner is not charged without an agreement); and rent to Akhil is a charge against profit.
Profit & Loss Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Interest on Akhil’s Loan (1,00,000 × 6% × 3/12) | 1,500 | By Net Profit b/d | 1,03,000 |
| To Rent (Akhil) [₹5,000 × 12] | 60,000 | ||
| To Profit transferred to P & L Appropriation A/c | 41,500 | ||
| Total | 1,03,000 | Total | 1,03,000 |
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Profit transferred to Capital A/cs: | By Profit & Loss A/c | 41,500 | |
| Akhil (41,500 × 3/5) | 24,900 | ||
| Bimal (41,500 × 2/5) | 16,600 | ||
| Total | 41,500 | Total | 41,500 |
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