Question

.Calculate Interest on Capital in each of following cases:
a) A and B have capital balances of Rs 20,000 and Rs 15,000 on January 01, 2010.
b) On January 01, 2010, balances in the capital accounts of A and B were Rs 20,000 and Rs 15,000. From October 01, 2010 they decided that capital of each partner will be Rs 12,000.
c) On December 31, 2010, the capital accounts of A and B showed balances of Rs 30,000 and 20,000 respectively. These balances were ascertained after adjusting profit and drawings. On January 01, 2010, drawings made by A and B amounted Rs 2,000 and Rs 4,000 respectively. Profit earned during the year 2010 was Rs 12,000.
d) On January 01, 2010, A and B have capital balances Rs 10,000 each. On April 01, 2010, A and B withdrew capital of Rs 2,000 and Rs 3,000. On October, 01, 2010, Rs 4,000 and Rs 5,000 were introduced by A and B as fresh capitals.
Interest on Capital is to be allowed at10% p.a. in each of the above cases with the assumption that accounts are closed on December 31 every year.(4​

Answer 1

Answer:

(c) Interest on partners’ loan

(d) Division of profit, and

(e) Interest on partners’ drawings

ANSWER:

Items (Points) Provision in the Absence of Partnership Deed

(a) Salaries of Partners No Salary will be allowed to Partners.

(b) Interest on Partners’ Capitals No interest will be allowed to Partners on Capital

(c) Interest on Partners’ Loan 6% p.a. Interest will be allowed on the amount given by

partners in the form of Loans and Advances to firm.

(d) Division of Profit Profits will be shared equally, it is irrespective the

amount of capital contributed by partners

(e) Interest on Partners’ Drawings No Interest will be charged on the Drawings of Partners