If A, B and C entered into partnership on 1st April 2016 with capitals of Rs. 10,00,000, Rs. 8,00,000 and Rs. 5,00,000 respectively. On 1st July 2016, B advanced Rs. 2,00,000 and on 1st December 2016 C advanced Rs. 1,00,000 by way of loans to the firm.
The Profit and Loss account for the year ended 31.3.2017 disclosed a profit of Rs. 7,70,000 but the partners could not agree upon the rate of interest on loans and the profit sharing ratio. Prepare partner's Capital A/cs and Loan A/cs.
Dear Student
Since PSR and rate of Interest on Loan is not decided, Provisions of Partnership act in case of absence of Partnership deed shall be applied here and Interest would be given @ 6% and Profit and losses shall be shared equally.
Regards
Since PSR and rate of Interest on Loan is not decided, Provisions of Partnership act in case of absence of Partnership deed shall be applied here and Interest would be given @ 6% and Profit and losses shall be shared equally.
Partner's Capital A/c (Fluctuating Capital) | |||||||
Particulars | A | B | C | Particulars | A | B | C |
Bal B/d | 1,000,000 | 800,000 | 500,000 | ||||
Profit and loss Appropriation | 253,000 | 253,000 | 253,000 | ||||
Bal C/d | 1,253,000 | 1,053,000 | 753,000 | ||||
1,253,000 | 1,053,000 | 753,000 | 1,253,000 | 1,053,000 | 753,000 |
Partner's Loan A/c | |||||||||
Date | Particulars | A | B | C | Date | Particulars | A | B | C |
Balance b/d | 0 | 0 | 0 | ||||||
01-07-16 | Bank A/c | 0 | 200,000 | 0 | |||||
01-12-16 | Bank A/c | 0 | 0 | 100,000 | |||||
31-03-17 | Interest on Loan A/c | 0 | 9,000 | 2,000 | |||||
31-03-17 | Bal C/d | 0 | 209,000 | 102,000 | |||||
0 | 209,000 | 102,000 | 0 | 209,000 | 102,000 |
Calculation | ||
Profit before Interest | 770000 | |
Less: Interest on Loan | ||
B | 2,00,000 x 6% x 9/12 | 9000 |
C | 1,00,000 x 6% x 4/12 | 2000 |
Profit to be distributed to Partners | 759000 | |
Share of Profit : | ||
A | 7,59,000 x 1/3 | 253000 |
B | 7,59,000 x 1/3 | 253000 |
C | 7,59,000 x 1/3 | 253000 |
Regards