Question

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ed
A and B are partners from January, 2017 without partnership agreement and they
introduced capitals of 3,500 and 2,000 respectively. On 31st July, 2017, A
advances 750 by way of loan to the firm without any agreement as to interest. The
P & L Account for the year 2017 discloses a profit of 1,350.75. But the partners do
not agree upon question of interest and upon the basis of division of profits. You are
required to divide the profit between them giving reasons for your method.​

Answer 1

Answer:

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

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