Mohan, Naresh and Om in partnership sharing profits and losses in the ratio of 10: 4: 1. On 1st April, 2015 their capitals were Rs3,00,000; Rs1,50,000 and Rs50,000 respectively. On this date they admit Piyush as a new partner and
new profit-sharing ratio is agreed at 5: 4: 4:2. The following terms were also agreed upon:
(1) Piyush will bring in Rs 40,000 as his capital.
(II) He will also bring in his share of goodwill in cash. Goodwill is to be valued on the basis of capitalisation at 10%
of the average profits of the last three years were:
Year ended 31st March 2013
Year ended 31st March 2014
Year ended 31st March 2015
Rs
48,000
75,000
72,000
(III) The new partner is entitled to an annual salary of Rs 7,500 in addition to his share of profit. Om personally guaranteed that Piyush's of profit shall not be less than R$30,000.
Profits for the year ended 31 March 2016 amounted to Rs 2,10,000 before charging Piyush's salary. Prepare necessary entries at the time of admission of the new partner and show the distribution of profits for the year ended 31st March, 2016
Answers
Answer:
Solution
wrest on capital:
(i) Interest on Mohan's Capital: Rs.
From 1st April, 2017 to 30th June, 2017 =Rs.1,50,000×
100
8
×
12
3
3,000
From 1st July, 2017 to 31st March, 2018 =Rs.2,00,000×
100
8
×
12
9
12,000
15,000
(ii) Interest on Naresh's Capital:
From 1st April, 2017 to 30th June, 2017 =Rs.1,50,000×
100
8
×
12
3
3,000
From 1st July, 2017 to 31st March, 2018 =Rs.2,00,000×
100
8
×
12
9
12,000
15,000
Answer:
The correct answer is
i) 15000
ii)15000
Explanation:
Calculation of interest on capital:
(i) Interest on Ramesh's Capital: Rs.
From 1st April, 2017 to 30th June, 2017 =Rs.1,50,000×1008×123 3,000
From 1st July, 2017 to 31st March, 2018 =Rs.2,00,000×1008×129 12,000
15,000
(ii) Interest on Naresh's Capital:
From 1st April, 2017 to 30th June, 2017 =Rs.1,50,000×1008×123 3,000
From 1st July, 2017 to 31st March, 2018 =Rs.2,00,000×1008×129 12,000
15,000
Interest on capital is the interest paid to owners for providing a firm with the required capital to start a business. It is considered as an expense for the business and is added to the owners capital, which increases the overall capital of the owner in the business.
interest on capital is the constant return quantity that the business owner is eligible to acquire from their investment. it's miles the hobby on share capital paid to the investor for the quantity they agree to begin their business. The partner is eligible to acquire the interest for the amount exceeding the total amount employed by using them. It generally takes place in partnership enterprise. but, the employer does not pay interest on capital in coins but increases the accomplice’s capital. interest on capital is deducted from the income and loss statement of the commercial enterprise and is recorded as an price on the debit side and brought to the accomplice’s capital account.
what's interest on Capital?
interest on capital is the hobby allowed on capital allotted by the partners. generally, if the accomplice’s capital is unequal to the profit-sharing ratio, then the partners can also comply with allow interest on capital. it will compensate the partners who have invested a high quantity closer to the capital. The price of interest on capital is commonly agreed upon via the companions of the business company and is usually mentioned within the partnership deed. it's miles authorised handiest whilst the commercial enterprise earns a profit and it's far supplied earlier than the department of income most of the companions. No hobby is permitted on the capitals of companions if it is not in particular noted within the partnership deed.
Mohan, Naresh and Om in partnership sharing profits and losses in the ratio of 10: 4: 1.
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Interest On Capital
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