Question

On the first January 2012 Manoj and Mukesh started a business contributing 25000 and 15000 respectively towards capital and agreeing to share the profit and losses in the ratio 3:2 as per the agreement partners are entitled to interest on capital@ 10% per annum and Mukesh is entitled to a monthly salary of 200 during the year 2012

Answer 1

Answer:

Explanation:

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