39. Moli and Bholi contribute 20,000 and 10,000 respectively towards capital. They decide to allow interest
on capital @ 6% p.a. Their respective share of profits is 2:3 and the net profit for the year is * 1,500. Show
distribution of profits:
(i) where there is no agreement except for interest on capitals; and
(m) where there is an agreement that the interest on capital as a charge.
Answers
Explanation:
Calculation of interest on capital.
Interest on X capital
20,000× 6/100. =Rs1200
Interest on Y's capital
10,000× 6/100 =Rs600
Total interest (1200+600)=Rs1800
Total profits available = Rs.1500
As total interest on capital is more than total profits, so profits of Rs 1500 to be distributed between X & Y as per their interest on capital ratio.X:Y
Interest on capital = 1200:600 or 2:1
∴ X share = 1500× 32
=Rs1000
Y share = 1500× 31 =Rs500
Part (ii)
When interest on capital is charge, complete interest on capital will be charged.
Total interest = Rs. 1800
Total Profit = Rs. 1500
There is loss of Rs. 300. This loss of Rs. 300 will be distributed between X and Y in 2:3 ratio.
X share of loss = 300*2/5 = Rs. 120
Y share of loss = 300*3/5 = Rs. 180.
Answer:
i interest on capital :moli_1000 Bholi_500
ii loss : moli_120 bholi _180
