V K Accountancy Class 12-2021-22 - NPO and Partnership-Solution Solutions Chapter No. 2 Accounting for Partnership Firms Fundamentals VK Publication

Question 44 Chapter 1 of Class 12 Part - 1

1. Om Parkash and Som Parkash commenced business in partnership on 1st April, 2017. No agreement was made either oral or written. They contributed Rs. 20,000 and Rs. 15,000 respectively as capital. On 1st October, 2017 Om Parkash advanced to the firm Rs. 10,000 as loan.
On 15th November, 2017 Om Parkash met with an accident and could not attend the partnership business up to 15th February, 2018. The firm made a profit of Rs. 8,300 for the year ended 31st March, 2018, prior to the following claims, disputes having arisen between them for sharing profits:
Om Parkash Claims: (i) Interest on capital and on loan @10% p.a. (ii) Profit sharing in capital ratio.
Som Parkash Claims: (i) Profit sharing in equal ratio.
(ii) He should be allowed salary of 1,000 p.m. for the period of Om Parkash's illness.
(iii) Interest on capital and on loan should be given only @6% p.a.
You are required to settle the dispute between them and distribute the profits according to the provisions of Partnership Act. State reasons for your answer.

The solution of Question 1 Chapter 2 of Class 12 Part - 1: -

Om Prakash’s claims are not valid because:
(i) Interest on capital is not provided in the absence of in the absence of partnership deed and interest on loan is to be provided @6% p.a.
(ii) Profit sharing should be in equal ratio in the absence of partnership deed.
Som Prakash’s claims
(i) Profit-sharing in equal ratio- he is right in his claim.
(ii) No salary will be allowed to partners in the absence of partnership deed
(iii) Interest on capital is not provided in the absence of deed. Interest on loan is to be provided 6% p.a.
The appropriate Profit and Loss Appropriation Account is given below:

Profit and Loss Appreciation Account

For the year ended on 31st March, 2017