2. G, H and R were partners in a firm sharing profits in the ratio of 7 : 4 : 9. Their fixed capitals were G Rs. 2,00,000, H Rs. 75,000 and R Rs. 3,50,000. Their partnership deed provided for the following (i) Interest on capital @ 9% per annum. (ii) Salary of Rs. 6,000 per month to H. (iii) Interest on drawings @ 6% per annum. During the year ended 31st December, 2009 the firm earned a profit of Rs. 1,70,000. Interest on G’s drawings was Rs. 750, on H’s drawings Rs. 450 and on R’s drawings Rs. 1,250. Prepare profit and loss appropriation account for the year ended 31st December, 2009.
Answers
Answer:
The rules are
(a) Partners will not be allowed any salary
(b) On partner’s capital, no interest will be allowed
(c) Only 6% interest in Partner’s Loan
(d) Profit distribution to be done in equal ratio
(e) In partner’s drawings, no Interest will be charged
Explanation:
a) P will pay ₹20,000 along with ₹ 5,000 profit to the company as the money belongs to the company. It is because of the relation between the principal and agent. Here, P is both the principal and the agent to Q and R and the firm. According to the Partnership Act rules, if an agent makes a profit made by utilising the firm’s assets is due to the company.
(b) Q has to pay the firm ₹ 5,000. The Partnership Act, 1932, all the partnership firm partners’ are liable for all the losses made by their negligence. In this scenario, Q is liable for the loss as he has utilized the company’s property and portrayed himself as a principal and not an agent to the firm and other partners.
(c) A partner can purchase and trade products without discussing with the other partners. The discussion happens only if a partner has some restriction to purchase and trade firm properties and a public notice is issued.
(d) In this scenario, C will not be included in the firm as P, has disagreed to admit C. The Act says, a new partner will not get admission to a firm if the existing partners disagree for his/her admission.
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