Question

X and Y are partners sharing profits and losses in the ratio of 2 : 3 with capitals ₹ 2,00,000 and ₹ 3,00,000 respectively. On 1st October, 2017, X and Y granted loans of ₹ 80,000 and ₹ 40,000 respectively to the firm. Show distribution of profits/losses for the year ended 31st March, 2018 in each of the following alternative cases:
Case 1 : If the profits before interest for the year amounted to ₹ 21,000.
Case 2 : If the profits before interest for the year amounted to ₹ 3,000.
Case 3 : If the profits before interest for the year amounted to ₹ 5,000.
Case 4 : If the loss before interest for the year amounted to ₹ 1,400.

Answer 1

Distribution of profits and losses are given:

Explanation:

Interest on the loan of X

$= 80,000 \times \frac {6}{100} \times \frac{6}{12}= Rs. 2400$

Interest on the loan of Y

$= 40,000 \times \frac{6}{100} \times \frac{6}{12}=Rs.1200$

Case 1:

If profits at the end of the year will be Rs.21,000

Profit transferred to X’s account

$= 17,400 \times \frac{2}{5} = 6,960$

Profit transferred to Y’s account

$= 17,400 \times \frac {3}{5} = 10, 440$

$(6,960+10,440=17,400)$

$17,400+ 2,400+1200= 21,000$

Case 2:

If the profit is 3,000

X’s profit = 2400

Y’s profit = 1200

$2400+1200=3600$

Profit before Interest is 3,000

By loss

X’s account $= 600\times \frac{2}{5}=240$

Y’s account $= 600 \times \frac {3}{5}= 360$

$3000+600=Rs. 3600$

Case 3:  

When profit is Rs.5000  

2400 and 1200 are calculated above for X and Y  

$2400+1200 +1400= 5000$

X’s capital

$=14,000 \times \frac {2}{5}=560$

Y’s capital

$=14,000 \times \frac {3}{5}=840$

Case 4:

When loss is 14,00

Loss transferred to X’s account = Rs. 2000

Loss transferred to Y’s account = Rs. 3000

Total $= 2,000+3,000= Rs. 5,000$

Answer 2

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