Aakriti and Bindu entered into partnership for making garment on April 01, 2016 without any Partnership agreement. They introduced Capitals of Rs 5,00,000 and Rs 3,00,000 respectively on October 01, 2016. Aakriti Advanced. Rs 20,000 by way of loan to the firm without any agreement as to interest. Profit and Loss account for the year ended March 2017 showed profit of Rs 43,000. Partners could not agree upon the question of interest and the basis of division of profit. You are required to divide the profits between them giving reason for your solution.
Answers
Given : Aakriti and Bindu entered into partnership for making garment on April 01, 2016 without any Partnership agreement.
They introduced Capitals of Rs 5,00,000 and Rs 3,00,000 respectively on October 01, 2016. Aakriti Advanced. Rs 20,000 by way of loan to the firm without any agreement as to interest. Profit and Loss account for the year ended March 2017 showed profit of Rs 43,000
Solution :
Profit and Loss Appropriation account is in the attachment below.
Reason :
(1) In the absence of any partnership deed, the provisions of partnership Act, 1932 is applied . According to the provisions no interest on capital, no salary , no commission will be allowed to the partners. They will also share the profit equally. The interest on loan also will be provided at 6% per annum.
(2) Since interest on loan is charged against the profit, it can be shown on the debit side of profit and loss account or as a deduction from the profit on the credit side of Profit and Loss Appropriation account.
Hope this answer will help you….
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