The total income of a AOP in which AB, and C are members share profit and losses in the ratio of 1:2:2 was assessed at Rs 16,000 in computation of total income of Rs 16,000 the income tax officer has made the necessary adjustment in respect of the following sums.
Salaries of Rs 12,000 and Rs 8.000 to A, and B Respectively Interest of Rs 1,000 Rs 6000 and Rs 25,000 to A, B and C Respectively.
Commission of Rs 2000 Rs 5,000 and Rs.7,000 to A, B and C Respectively
Answers
Answer:
To determine the profit and loss share of each member, we first need to calculate their individual incomes.
Let's start with A:
Salary of A = 12,000
Interest of A = 1,000
Commission of A = 2,000
Total Income of A = Salary + Interest + Commission = 12,000 + 1,000 + 2,000 = 15,000
Next, let's calculate B's income:
Salary of B = 8,000
Interest of B = 6,000
Commission of B = 5,000
Total Income of B = Salary + Interest + Commission = 8,000 + 6,000 + 5,000 = 19,000
Finally, let's calculate C's income:
Interest of C = 25,000
Commission of C = 7,000
Total Income of C = Interest + Commission = 25,000 + 7,000 = 32,000
Now that we have the individual incomes, we can determine their profit and loss share ratio by 1:2:2:
A's share = 15,000 / (15,000 + 19,000 + 32,000) * 16,000 = 4,800
B's share = 19,000 / (15,000 + 19,000 + 32,000) * 16,000 = 6,400
C's share = 32,000 / (15,000 + 19,000 + 32,000) * 16,000 = 10,800
So, the profit and loss share of A, B, and C is 1:2:2 ratio or 4,800:6,400:10,800 respectively