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X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before interest on partner’s capital was Rs. 6,000 and Z demanded minimum profit of Rs. 5,000 as his financial position was not good. However, there was no written agreement on this profit. Profits to be distributed to X, Y and Z will be
  • a)
    Other partners will pay Z the minimum profit and will suffer loss equally.
  • b)
    Other partners will pay Z the minimum profit and will suffer loss in capital ratio.
  • c)
    X & Y will take Rs. 500 each and Z will take Rs. 5000.
  • d)
    Rs. 2,000 to each of the partners.
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
X, Y and Z are partners in a firm. At the time of division of profit f...
Solution:

The given problem is related to the division of profits among three partners where one of them demands a minimum profit. Let us analyze the situation to find the correct answer.

Calculation of Profit:

The profits before interest on partners' capital is Rs. 6,000. Let us assume that the capital ratio of X, Y, and Z is 2:3:4 respectively. Then, the interest on capital for X, Y, and Z will be:

Interest on X's capital = (2/9) * 6,000 = Rs. 1,333.33
Interest on Y's capital = (3/9) * 6,000 = Rs. 2,000.00
Interest on Z's capital = (4/9) * 6,000 = Rs. 2,666.67

Therefore, the profits after interest on capital will be:

Profit available for distribution = Rs. 6,000 - (1,333.33 + 2,000.00 + 2,666.67) = Rs. 1,000.00

Now, let us consider the options given in the question one by one.

Option A: Other partners will pay Z the minimum profit and will suffer loss equally.

In this option, X and Y will have to pay Rs. 1,000 each to Z to meet his demand for minimum profit of Rs. 5,000. This will result in a loss of Rs. 2,000 for X and Y each. Hence, this option is not feasible.

Option B: Other partners will pay Z the minimum profit and will suffer loss in capital ratio.

In this option, X and Y will have to bear the loss in their capital ratio, i.e. X will bear a loss of (2/9) * 2,000 = Rs. 444.44 and Y will bear a loss of (3/9) * 2,000 = Rs. 666.67. This will result in a reduction of their capital balance. Hence, this option is also not feasible.

Option C: X Y will take Rs. 500 each and Z will take Rs. 5,000.

In this option, X and Y will take an equal share of Rs. 500 each, and Z will take the remaining profit of Rs. 5,000. However, this option does not consider the capital ratio of the partners. Hence, this option is also not correct.

Option D: Rs. 2,000 to each of the partners.

In this option, each partner will get an equal share of Rs. 2,000. This option is feasible because it does not violate the capital ratio of the partners and also meets the demand of Z for a minimum profit of Rs. 5,000. Hence, the correct answer is option D.

Conclusion:

Thus, we can conclude that the correct option is D, i.e. each partner will get an equal share of Rs. 2,000.
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Community Answer
X, Y and Z are partners in a firm. At the time of division of profit f...
Since there's no agreement, hence profits are to be distributed equally. plus Z's financial status is not a concern from law and accounting basis.
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X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before interest on partner’s capital was Rs. 6,000 and Z demanded minimum profit of Rs. 5,000 as his financial position was not good. However, there was no written agreement on this profit. Profits to be distributed to X, Y and Z will bea)Other partners will pay Z the minimum profit and will suffer loss equally.b)Other partners will pay Z the minimum profit and will suffer loss in capital ratio.c)X & Y will take Rs. 500 each and Z will take Rs. 5000.d)Rs. 2,000 to each of the partners.Correct answer is option 'D'. Can you explain this answer?
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X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before interest on partner’s capital was Rs. 6,000 and Z demanded minimum profit of Rs. 5,000 as his financial position was not good. However, there was no written agreement on this profit. Profits to be distributed to X, Y and Z will bea)Other partners will pay Z the minimum profit and will suffer loss equally.b)Other partners will pay Z the minimum profit and will suffer loss in capital ratio.c)X & Y will take Rs. 500 each and Z will take Rs. 5000.d)Rs. 2,000 to each of the partners.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before interest on partner’s capital was Rs. 6,000 and Z demanded minimum profit of Rs. 5,000 as his financial position was not good. However, there was no written agreement on this profit. Profits to be distributed to X, Y and Z will bea)Other partners will pay Z the minimum profit and will suffer loss equally.b)Other partners will pay Z the minimum profit and will suffer loss in capital ratio.c)X & Y will take Rs. 500 each and Z will take Rs. 5000.d)Rs. 2,000 to each of the partners.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before interest on partner’s capital was Rs. 6,000 and Z demanded minimum profit of Rs. 5,000 as his financial position was not good. However, there was no written agreement on this profit. Profits to be distributed to X, Y and Z will bea)Other partners will pay Z the minimum profit and will suffer loss equally.b)Other partners will pay Z the minimum profit and will suffer loss in capital ratio.c)X & Y will take Rs. 500 each and Z will take Rs. 5000.d)Rs. 2,000 to each of the partners.Correct answer is option 'D'. Can you explain this answer?.
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