Question

Q24. Sania , Garima and Arsah are the partners in the ratio of 5:3:2. On 31*' March, 2021, their books reflected a net profit of 12,10,000. As per the terms of the partnership deed they were entitled for interest on capital which amounted to 160,000, D80,000 and 40,000 respectively. Besides this a salary of 50,000 each was payable to Arash and Garima. Calculate the ratio in which the profits would be appropriated. a) 6:13:9 b) 1:1:1 d) 13:11:4 c) 7:6:2​

Answer 1

Correct question:

Sania, Garima and Arsah are partners in a firm, sharing profits and losses in the ratio 5:3:2. On 31st March, 2021, their books reflected a net profit of Rs 2,10,000. As per the terms of the partnership deed, they were entitled to an interest on capital which amounted to Rs 60,000, Rs 80,000 and Rs 40,000 respectively. Besides this, a salary of Rs 50,000 each was payable to Arsah and Garima. Calculate the ratio in which the profits would be appropriated.

a) 6:13:9

b) 1:1:1

c) 7:6:2​

d) 13:11:4

Given:

• Sania, Garima and Arsah were partners in a firm, sharing profits and losses in the ratio 5:3:2.
• Their net profit was Rs 2,10,000.
• Interests on capitals amounted to Rs 60,000, Rs 80,000 and Rs 40,000 respectively.
• A salary of Rs 50,000 was entitled to both Garima and Arsah.

To find: The ratio in which the profits would be distributed.

Answer:

The net profit for the year will be recorded on the credit side of the appropriation account i.e., Rs 2,10,000.

The interests on capitals will be recorded on the debit side of the appropriation account, i.e., S - Rs 60,000,  G - Rs 80,000, A - Rs 40,000.

The salaries will be recorded on the debit side of the appropriation account, i.e., Rs G - 50,000, A - Rs 50,000.

Once all the entries are posted, we observe that the debit side is higher than the credit side. In such cases, the profit is to be appropriated in accordance with the appropriations made to each partner.

• Appropriations to Sania = Rs 60,000
• Appropriations to Garima = Rs 80,000 + Rs 50,000 = Rs 1,30,000
• Appropriations to Arsah = Rs 40,000 + Rs 50,000 = Rs 90,000

60000:130000:90000

6:13:9

Therefore, the profit would be distributed in the ratio (a) 6:13:9.