A & B are partners in a partnership firm without any agreement. A has given a loan of ₹ 50,000 to the firm in the beginning of the year. At the end of year, the firm incurred a loss. State the amount of interest on loan to be charged
Answers
Explanation:
As there is no partnership deed,some provisions of the Indian Partnership Act,1932 shall apply. Partners are not entitled to any interest on the capital contributed by them and cannot withdraw any salary for the work done by them for the business. They are eligible for interest on any loan advanced by them to the firm @ 6%p.a.
Profits should be shared equally irrespective of the amount of capital contributed.
Hence,the distribution of profits should be carried out in the following ways:-
Net profit as per profit& loss Account = 15,000
Less: interest on A's loan = 8,000*6%*6/12 = 240
profits remaining = 14,760
Share of profits
A = 7,380
B= 7,380