Question

Mahesh and Ramesh were partners in a firm sharing Profits in the ratio of 5; 3. Their
capitals were 3,00,000 and 2,00,000 respectively. The partnership deed provided that: (a) Interest on capital to be allowed @ 12% per annum. (b) A commission of 5% of net profit to be allowed to Ramesh. The profit for the year was 1,23,000. Prepare Profit and Loss Appropriation Account.​

Answer 1

Explanation:

Partnership deed is the legal document containing all the terms and conditions on which the partnership is based and is signed by all the partners. If there is no partnership deed,partners are still entitled to share profits and losses. The ratio of sharing shall be equal even if they contribute different amount of capital.

So, the contention of Ramesh to share profits in the ratio of capital is invalid. Somesh and Ramesh have to share profits and losses equally in absence of a partnership deed....