Question 5 Chapter 2 of +2-A
5. Harshad and Dhiman are in partnership since 1st April, 2018. No partnership agreement was made. They contributed ₹ 4,00,000 and ₹ 1,00,000 respectively as capital. In addition, Harshad advanced an amount of ₹ 1,00,000 to the firm on 1st October, 2018. Due to long illness, Harshad could not participate in business activities from 1st August, 2018 to 30th September, 2018. Profit for the year ended 31st March, 2019 was ₹ 1,80,000. Dispute has arisen between Harshad and Dhiman.
Harshad Claims :
(i) He should be given interest @ 10% per annum on capital and loan;
(ii) Profit should be distributed in the ratio of capital;
Dhiman Claims :
(i) Profit should be distributed equally;
(ii) He should be allowed ₹ 2,000 p.m. as remuneration for the period he managed the business in the absence of Harshad;
(iii) Interest on Capital and loan should be allowed @ 6% p.a.
You are required to settle the dispute between Harshad and Dhiman. Also prepare Profit and Loss Appropriation Account.
The solution of Question 5 Chapter 2 of +2-A:
| Partnership Deep Missing |
|
| Disputes |
The explanation according to the Provision of Act – if Deed missing |
| Harshad Claims : | |
| (i) He should be given interest @ 10% per annum on capital and loan; | As per the Partnership Act, no interest in Capital will be allowed. |
| (ii) Profit should be distributed in the ratio of capital; | No, Profit will be shared equally and not in the capital ratio. |
| Dhiman Claims : | |
| (i) Profit should be distributed equally; | Yes, Profit will be shared equally and not in the capital ratio. |
| (ii) He should be allowed ₹ 2,000 p.m. as remuneration for the period he managed the business in the absence of Harshad; | No salary will be allowed for any partner. |
| (iii) Interest on Capital and loan should be allowed @ 6% p.a. | No interest on Capital but Interest on partner’s loan (C’s loan) will be allowed at 6% p.a. |
| Profit and Loss Adjustment Account A/c for the year ended 31st March 2019 |
||||
| Particulars |
Amount | Particulars |
Amount | |
| To Interest on Harshad’s Loan | 3,000 | By Profit and Loss A/c | 1,80,000 | |
| 1,00,000 × (6/100) × (6/12) | ||||
| To Profit and Loss Appropriation A/c (B. fig) | 1,77,000 | |||
| 1,80,000 | 1,80,000 | |||
| Profit and Loss Appropriation Account A/c for the year ended 31st March 2019 |
||||
| Particulars |
Amount | Particulars |
Amount | |
| To Harshad’s Capital A/c | 88,500 | By Profit and Loss Adjustment Account A/c | 1,77,000 | |
| 1,80,000 × 1/2 | ||||
| To Dhiman’s Capital A/c | 88,500 | |||
| 1,80,000 × 1/2 | ||||
| 1,77,000 | 1,77,000 | |||
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Also, Check out the solved question of previous Chapters: –
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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