Advertisements
Advertisements
Question
Mango and Banana are partners sharing profits in 3 : 2. Their capitals were ₹ 5,00,000 and ₹ 3,00,000, respectively. As per their partnership deed, Mango was entitled to a salary of ₹ 10,000 p.a. Banana was entitled to a rent of ₹ 20,000 p.a. for his personal property that he had let out to the firm. They were also entitled to interest on their capitals @ 10% p.a. The firm earned a profit of ₹ 1,60,000 before the above adjustments. What amounts will be credited to Mango and Banana’s capital A/c if they follow a fluctuating capital system?
Options
Mango ₹ 90,000, Banana ₹ 50,000
Mango ₹ 1,10,000, Banana ₹ 50,000
Mango ₹ 96,000, Banana ₹ 64,000
Mango ₹ 87,500, Banana ₹ 52,500
Advertisements
Solution
Mango ₹ 90,000, Banana ₹ 50,000
Explanation:
Banana’s rent of ₹ 20,000 is a charge against the profit and is deducted before calculating the distributable profit.
Profit available for appropriation:
The profit after deducting rent = ₹ 1,60,000 − ₹ 20,000
= ₹ 1,40,000
Mango’s salary = ₹ 10,000
Mango’s interest on capital = `5,00,000 xx 10/100`
= ₹ 50,000
Banana’s interest on capital = `3,00,000 xx 10/100`
= ₹ 30,000
Total appropriations = ₹ 10,000 + ₹ 50,000 + ₹ 30,000
= ₹ 90,000
Remaining profit for distribution = ₹ 1,40,000 − ₹ 90,000
= ₹ 50,000
