Question

Ram, Mohan and Sohan are partners with capitals of Rs 5,00,000, Rs 2,50,000 and 2,00,000 respectively. After providing interest on capital @ 10% p.a. the profits are divisible as follows: Ram 1/2 , Mohan 1/3 Sohan 1/6 . But Ram and Mohan have guaranteed that Sohan’s share in the profit shall not be less than Rs 25,000, in any year. The net profit for the year ended March 31, 2017 is Rs 2,00,000, before charging interest on capital. You are required to show distribution of profit.

Answer 1

Answer:

2,00,000

Explanation:

Interest on Capital

Ram  - 50,000

Mohan  - 25,000

Sohan  - 20,000

             = 95,000

Profit Transferred to

Ram’s Capital  --- 52,500

Less: Share of deficiency {7,500 × (3/5)}  - (4,500)

= 48,000

Mohan’s Capital  ---35,000

Less: Share of deficiency {7,500 × (2/5)}  (3,000)

= 32,000

Sohan’s Capital  --- 17,500

Add: Deficiency received from  Ram  -- 4,500

Mohan  --- 3,000

= 25,000

Therefore, Profit and Loss = 2,00,000