Q5. A and B contribute 20,0000 and 1200,000 repectively by way of capital on which they agre to
allow interes at 6 p.a. Their respective share of proft is3:2 and the profit for the year is1,60,000 before
allowing interest on capital. Prepare the necessary account to allocate interest on capitals:
(i) When partnership deed is silent in treating interest as a charge or appropriation, and
(ii) When interest is to be allowed irrespective of proft
Answers
A - 200,000
B - 12,00,000
3:2/5 ,HERE I.O.C= 6% p.a.
profit for the year = 1,60,000 before allowing I.o.c.
a's capital= 2,00,000×6/100= 12000
(but when the deed is silent I.o.c is not charged).
so, distribution of profit= A = 1,60,000×3/5= 96000.
1,60,000×2/5= 64000.
profit & loss appropriation a/c
particulars amount part. amount
by net
profit a/c 1,60,000
to profit
tranff. to
A - 96000
B -64, 000 1,60,000
160000 160000
2).WHEN PARTNERSHIP DEED IS NOT SILENT.
particulars amount part. amount
to I. O. c
A - 12000
B-72000 94000 by net 160000
pro. a/c
to pro. a/c
A- 39600
B-26400 66000
160000 160000
W. NO-
200000× 6/100= 12000
ACC. TO CONCEPT IF TIME IS IRRESPECTIVE WE HAVE TO IGNORE TIME, SO P×R
I. OC. = 200000×6/12=12000 (A)
I. O. C = 12,00,000×6/12 = 72000(B)
THE PROFIT DIST. AS :-
(A) - 66,000×3/5= 39600
(B) -66000×2/5= 26400.
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