Yadu, Madhu and Vidu are partners, sharing profit and losses in the ratio of 2:2:1. Their fixed capitals on April 01,2018 were:
Yadu Rs. 5,00,000, Madhu Rs. 4,00,000 and Vidu is 3,50,000. As per a partnership deed, partners are entitled to interest on capital of @5% p.a. and Yadu has to be paid a salary of Rs. 2000 per month. The net loss of the firm as per profit and loss account for the year ending March 31, 2019, amounted to Rs. 75,000. On the basis of the profit and loss appropriation account, Partners' distribution of loss would be:
Yadu, Madhu and Vidu are partners, sharing profit and losses in the ratio of 2:2:1. Their fixed capitals on April 01,2018 were:
Yadu Rs. 5,00,000, Madhu Rs. 4,00,000 and Vidu is 3,50,000. As per a partnership deed, partners are entitled to interest on capital of @5% p.a. and Yadu has to be paid a salary of Rs. 2000 per month. The net loss of the firm as per profit and loss account for the year ending March 31, 2019, amounted to Rs. 75,000. On the basis of the profit and loss appropriation account, Partners' distribution of loss would be:
Solution
✅ Correct Option: 1
Correct answer: Yadu Rs. 30,000, Madhu Rs. 30,000, Vidu Rs. 15,000
Working
- Interest on capital is not allowed. It is payable only out of profits. The firm made a net loss of Rs 75,000, so no interest on capital is charged, even though the deed provides for it.
- Yadu's salary is not allowed. Salary, like interest on capital, is an appropriation of profit. With no profit available, it is not charged unless the deed explicitly guarantees it, and this question gives no such stipulation.
The net loss of Rs 75,000 is therefore shared in the ratio 2:2:1:
- Yadu: 75,000 × 2/5 = Rs 30,000
- Madhu: 75,000 × 2/5 = Rs 30,000
- Vidu: 75,000 × 1/5 = Rs 15,000
Profit and Loss Appropriation A/c
| Particulars | Rs | Particulars | Rs |
|---|---|---|---|
| Net loss (from P&L A/c) | 75,000 | Yadu's capital (loss share) | 30,000 |
| Madhu's capital (loss share) | 30,000 | ||
| Vidu's capital (loss share) | 15,000 | ||
| Total | 75,000 | Total | 75,000 |
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