Question

2. A and B commenced business in partnership on 1st January, 2021. No partnership
agreement was made either oral or written. They contributed * 4,00,000 and 1,00,000
respectively as Capital. In addition, A also advanced * 50,000 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 *
1,66,000. 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) Profits should be distributed equally.
(ü) He should be allowed 2,000 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.​

Answer 1

Explanation:

Answer:

Profit and loss Appropriation A/c Dr. 4,25,000

To A's capital A/c 2,12,500

To B's capital A/c 2,12,500

(Being profit distributed equally)

PARTNERS CAPITAL ACCOUNTS

Particulars A B Particulars A B

To bal c/d 7,12,500 5,12,500 By bank a/c 5,00,000 3,00,000

By profit and loss App A/c 2,12,500 2,12,500

Total 7,12,500 5,12,500 Total 7,12,500 5,12,500

A's Loan Account

Particulars Amount Particulars Amount

To bal c/d 2,05,000 By bank A/c 2,00,000

By interest on A's loan 5000

Total 2,05,000 Total 2,05,000

Calculation of Interest on Loan

Interest on A's loan = 2,00,000*6%*5/12=5000

Interest on A's Loan A/c Dr. 5000

To A's loan A/c 5000

(Being interest on loan paid)

Profit and loss A/c Dr. 5000

To Interest on A's loan A/c 5000

(Being interest transferred to p&l A/c)

Answer 2

Given:

Profits for the year ended 31st December 2021 amounted to Rs 1,66,000.

A advanced Rs 50,000 on 1st July 2021 as loan.

To find:

1. how profit should be distributed

2. interest on A's loan

3. settlement of disputes

Solution:

According to the provisions of the partnership act in absence of the partnership deed, the following steps are to be taken in order to settle any disputes between the partners:

• Profits: profits are to be shared equally
• Interest on capital: no interest on capital is allowed
• Interest on drawings: no interest on drawings is charged from partners,
• remuneration/salary: no remuneration or salary is paid to the partner
• Interest on partners loan: interest on partners loan is allowed at 6% per annum

Hence, on the absence of any deed, the following action are to be taken:

Distribution of profit:

A' s share in profit = 166000 * 1/2 = 83000

B' s share in profit = 166000 * 1/2 = 83000

Interest on capital:

not provided to partners in absence of a partnership deed

Partners remuneration:

not provided to partners in absence of a partnership deed

Interest on partner's loan:

provided @ 6% per annum.

interest on A's loan = 50000* 6/100 * 6/12

=Rs 1500

Therefore, a and B will get profits of Rs 83000 each, no remuneration will be paid to B, A will be allowed interest on loan Rs 1500.

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