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A and B are partners in the firm. Their assets and liabilities as on 31st March 2017 were :stocks.₹5000 machine ₹15000 debtors ₹4000 cash at bank ₹3500 cash in hand ₹500 creditor ₹3000. Their capital accounts as on 1st April 2016 were A ₹12000 B ₹7000 and drawing during the year A₹ 2000 B ₹1000. What will be the net profit for the year 2016-2017? Calculate also the share of the profits of each partner?
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A and B are partners in the firm. Their assets and liabilities as on 3...
Calculation of Net Profit and Partner's Share of Profit


Assets and Liabilities


  • Stocks: ₹5000

  • Machine: ₹15000

  • Debtors: ₹4000

  • Cash at Bank: ₹3500

  • Cash in Hand: ₹500

  • Creditor: ₹3000



Capital Accounts


  • A's Capital Account as on 1st April 2016: ₹12000

  • B's Capital Account as on 1st April 2016: ₹7000

  • A's Drawing during the year: ₹2000

  • B's Drawing during the year: ₹1000



Calculation of Net Profit


  • Total Assets: ₹28000 (₹5000 + ₹15000 + ₹4000 + ₹3500 + ₹500)

  • Total Liabilities: ₹3000

  • Net Assets: ₹25000

  • A's Capital as on 31st March 2017: ₹12000 - ₹2000 = ₹10000

  • B's Capital as on 31st March 2017: ₹7000 - ₹1000 = ₹6000

  • Total Capital as on 31st March 2017: ₹10000 + ₹6000 = ₹16000

  • Net Profit/Loss: Net Assets - Capital = ₹25000 - ₹16000 = ₹9000



Calculation of Partner's Share of Profit


  • A's Share of Profit: (A's Capital / Total Capital) x Net Profit = (₹10000 / ₹16000) x ₹9000 = ₹5625

  • B's Share of Profit: (B's Capital / Total Capital) x Net Profit = (₹6000 / ₹16000) x ₹9000 = ₹3375



Therefore, the net profit for the year 2016-2017 is ₹9000 and A's share of profit is ₹5625 and B's share of profit is ₹3375.
Community Answer
A and B are partners in the firm. Their assets and liabilities as on 3...
Closing Capital = Total Assets - Total Liabilities
= (5000+15000+4000+3500+500) - 3000
= 25000
Net profit = closing capital+drawings-opening capital
= 25000 +(2000+1000)-(12000+7000)
= 28000-19000
= 9000
Assuming that profits are shared equally, the share of profit of each partner is 45000
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A and B are partners in the firm. Their assets and liabilities as on 31st March 2017 were :stocks.₹5000 machine ₹15000 debtors ₹4000 cash at bank ₹3500 cash in hand ₹500 creditor ₹3000. Their capital accounts as on 1st April 2016 were A ₹12000 B ₹7000 and drawing during the year A₹ 2000 B ₹1000. What will be the net profit for the year 2016-2017? Calculate also the share of the profits of each partner?
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