Question

50. Moli and Bholi contribute ? 20,000 and 10,000 respectively towards capital
. They decide to allow interest
on capital @ 6% pa. Their respective share of profits is 2: 3 and profit for the year is 1,500. Show
distribution of profits:
( When there is no agreement except for interest on capitals; and
Go When there is an agreement that the interest on capital is a charge.
[Ans.: (i) Interest on Capital: Moli- 1,000; Bholi-500; (ii) Loss: Moli-120; Bholi — 180.]​

Answer 1

Given:

Contribution of Moli = Rs 20,000

Contribution of Bholi = Rs 10,000

Interest  on capital @ 6% pa

Share of profit = 2:3

Profit for the year = Rs 1,500

To find:

(i) where there is no agreement except for interest on capitals and

(ii) where there is an agreement that the interest on capital is a charge.

Solution:

Interest on the capital of Moli = 20,000 × 6 / 100 = Rs 1,200

Interest on the capital of Bholi = 10,000 × 6 / 100 = Rs 600

Total interest = 1,200 + 600 = Rs 1,800

Profit for the year = Rs 1,500

i) where there is no agreement except for interest on capitals

Interest on capital = 1200:600 = 2:1    

Share of Moli = 1500 × 2 / 3 = Rs 1000

Share of Bholi = 1500 × 1 / 3 = Rs 500

ii) where there is an agreement that the interest on capital is a charge.

Total interest = Rs 1,800

Total profit = Rs 1,500

Loss = 1,800 - 1,500 = Rs 300

Share of loss of Moli = 300 × 2 / 5 = Rs 120

Share of loss of Bholi = 300 × 3 / 5 = Rs 180