Question

A, B and C entered into a partnership on 1st April 2023 with capitals of ₹ 10,00,000, ₹ 8,00,000 and ₹ 5,00,000, respectively. On 1st July 2023, B advanced ₹ 2,00,000, and on 1st December 2023, C advanced ₹ 1,00,000 by way of loans to the firm. The Profit and Loss Account for the year ended 31.3.2024 disclosed a profit of ₹ 7,70,000, but the partners could not agree upon the rate of interest on loans and the profit-sharing ratio. Prepare partner’s Capital A/cs and Loan A/cs.

Hint: In the absence of agreement, interest on the loan is to be paid @ 6% p.a., and profit will be shared equally.

Answer 1

Dr.	Partners Capital Account						Cr.
Particulars	A	B	C	Particulars	A	B	C
To Balance c/d	12,53,000	1,05,300	7,53,000	By Bank A/c	10,00,000	8,00,000	5,00,000
				By Profit and Loss Appropriation A/c	2,53,000	2,53,000	2,53,000
	12,53,000	1,05,300	7,53,000		12,53,000	1,05,300	7,53,000

 

Dr.	B’s Loan A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance c/d	2,09,000	By Bank A/c	2,00,000
		By Interest on loan by B’s A/c	9,000
	2,09,000		2,09,000

 

Dr.	C’s Loan A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance c/d	1,02,000	By Bank A/c	1,00,000
		By Interest on loan by C’s A/c	2,000
	1,02,000		1,02,000

Working Note:

1. Interest on loan:

Interest on B’s loan (1st July 2023 to 31.3.2024 = 9 months):

= `2,00,000 xx 6/100 xx 9/12`

= 9,000

Interest on C’s loan (1st Dec 2023 to 31.3.2024 = 4 months):

= `1,00,000 xx 6/100 xx 4/12`

= 2,000

2.

Profit for the year		7,70,000
Less: Interest on loan:		11,000
B	9000
C	2000
Net divisible profit		7,59,000

Share of Profit:

A = `7,59,000 xx 1/3`

= 2,53,000

B = `7,59,000 xx 1/3`

= 2,53,000

C = `7,59,000 xx 1/3`

= 2,53,000