Question

A, B and C are partners sharing the profits and losses in the ratio of 2 : 3 : 5. On 1st July, 2023, A and B granted loans of ₹ 2,00,000 and ₹ 1,00,000, respectively, to the firm. Show the distribution of profits/losses for the year ended 31st March, 2024, in the following cases:

Case:

1. If the profits before interest for the year amounted to ₹ 7,500.
2. If the loss before interest for the year amounted to ₹ 7,500.

Answer 1

(a)

Dr.	Profit and Loss Appropriation Account for the year ended 31st March 2024				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Loan:		13,500	By Profit before interest		7,500
A	9,000		By loss transferred to:		6,000
B	4,500		A	1,200
			B	1,800
			C	3,000
		13,500			13,500

(b)

Dr.	Profit and Loss Appropriation Account for the year ended 31st March 2024				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To loss before Interest		7,500	By loss transferred to:		21,000
To interest on loan A/c;		13,500	A	4,200
A	9,000		B	6,300
B	4,500		C	10,500
		21,000			21,000