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Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed?
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Aan and Mohan are partners sharing profits and losses in the ratio of ...
Answer:
Introduction:
In a partnership firm, the partners contribute capital to run the business. The profits and losses of the firm are shared among the partners in a predetermined ratio. The capital account of each partner is maintained to keep track of their contributions, withdrawals, and share of profits or losses. In this question, we have to calculate the interest on capital and explain how it is calculated.
Calculation of Interest on Capital:
As per the partnership deed, the partners are entitled to receive interest on their capital at the rate of 10% per annum. The interest on capital is calculated on the opening balance of the capital account. In this case, the opening balance of the capital account of Aan is 4,00,000 and the opening balance of the capital account of Mohan is 3,50,000. The interest on capital for both partners will be:
- Interest on Aan's capital = 4,00,000 * 10% = 40,000
- Interest on Mohan's capital = 3,50,000 * 10% = 35,000
Distribution of Profit:
After calculating the interest on capital, the profits of the firm will be distributed among the partners in the ratio of 3:2. The profit for the year can be calculated as follows:
- Total drawings of each partner = 75,000
- Total interest on capital for both partners = 40,000 + 35,000 = 75,000
- Total amount to be deducted from the profits = 75,000 + 75,000 = 1,50,000
- Net profit for the year = Total income - Total expenses - Total amount to be deducted from the profits
- Net profit for the year = X - Y - 1,50,000
The net profit for the year will be distributed among the partners in the ratio of 3:2.
Conclusion:
In this way, the interest on capital is calculated and the profits are distributed among the partners. The interest on capital is an expense for the firm and is deducted from the profits before distributing them among the partners. It is important for the partners to agree on the rate of interest on capital before starting the business. The partnership deed should clearly mention the rate of interest and the method of calculating it.
Introduction:
In a partnership firm, the partners contribute capital to run the business. The profits and losses of the firm are shared among the partners in a predetermined ratio. The capital account of each partner is maintained to keep track of their contributions, withdrawals, and share of profits or losses. In this question, we have to calculate the interest on capital and explain how it is calculated.
Calculation of Interest on Capital:
As per the partnership deed, the partners are entitled to receive interest on their capital at the rate of 10% per annum. The interest on capital is calculated on the opening balance of the capital account. In this case, the opening balance of the capital account of Aan is 4,00,000 and the opening balance of the capital account of Mohan is 3,50,000. The interest on capital for both partners will be:
- Interest on Aan's capital = 4,00,000 * 10% = 40,000
- Interest on Mohan's capital = 3,50,000 * 10% = 35,000
Distribution of Profit:
After calculating the interest on capital, the profits of the firm will be distributed among the partners in the ratio of 3:2. The profit for the year can be calculated as follows:
- Total drawings of each partner = 75,000
- Total interest on capital for both partners = 40,000 + 35,000 = 75,000
- Total amount to be deducted from the profits = 75,000 + 75,000 = 1,50,000
- Net profit for the year = Total income - Total expenses - Total amount to be deducted from the profits
- Net profit for the year = X - Y - 1,50,000
The net profit for the year will be distributed among the partners in the ratio of 3:2.
Conclusion:
In this way, the interest on capital is calculated and the profits are distributed among the partners. The interest on capital is an expense for the firm and is deducted from the profits before distributing them among the partners. It is important for the partners to agree on the rate of interest on capital before starting the business. The partnership deed should clearly mention the rate of interest and the method of calculating it.
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Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed?
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Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed?.
Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed?.
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Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed?, a detailed solution for Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed? has been provided alongside types of Aan and Mohan are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating Capital Accounts and the balance in their Capital Accounts as on 31st March, 2023 was 4,00,000 and 3,50,000 respectively. Drawings during the year were * 75,000 each. As per Partnership Deed interest on Capital @ 10% p.a. on Opening Capital had been allowed? theory, EduRev gives you an
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