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Question X and Y contribute 20000 and 10000 respectively towards capital. They decided to allow interest on capital @ 6% per annum. Their respective share of profit is 2:3 and the net profit for the year is Rupees 1500 only. Show distribution of profits case 1 where there is no agreement except for interest on capitals and 2 where there is an agreement that the interest on capital as a charge?
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Case 1: No Agreement Except for Interest on Capitals


  • X's capital contribution: 20000

  • Y's capital contribution: 10000

  • Interest on capital @ 6% per annum:


    • X's interest on capital: 1200

    • Y's interest on capital: 600


  • Total interest on capital: 1800

  • Net profit for the year: 1500

  • Total available for distribution: 3300

  • Ratio of profit sharing: 2:3 (X:Y)

  • X's share of profit: 1320

  • Y's share of profit: 1980



Case 2: Agreement on Interest on Capital as a Charge


  • X's capital contribution: 20000

  • Y's capital contribution: 10000

  • Interest on capital @ 6% per annum:


    • X's interest on capital: 1200

    • Y's interest on capital: 600


  • Total interest on capital: 1800

  • Net profit for the year: 1500

  • Interest on capital charged:


    • X's interest on capital charged: 1200

    • Y's interest on capital charged: 600


  • Net profit after interest on capital charged: 300

  • Total available for distribution: 2100

  • Ratio of profit sharing: 2:3 (X:Y)

  • X's share of profit: 720

  • Y's share of profit: 1080



Explanation:

In both cases, X contributes 2/3 of the capital and Y contributes 1/3 of the capital. They agree to allow interest on capital at 6% per annum. In case 1, there is no agreement on how to distribute the profits except for interest on capitals. Thus, X and Y will receive interest on their capital contributions and then share the remaining profit in the ratio of 2:3 (X:Y).

In case 2, there is an agreement to charge interest on capital as a charge against profits. This means that X and Y will receive interest on their capital contributions, but it will be deducted from the net profit before sharing the profit. Thus, X and Y will receive a smaller share of the profit, but they will also not have to pay taxes on the interest earned on their capital contributions.

Overall, the distribution of profits will depend on the agreement between the partners and the terms of their partnership agreement. It is important to have a clear understanding of how profits will be distributed to avoid any misunderstandings or conflicts in the future.
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Question X and Y contribute 20000 and 10000 respectively towards capital. They decided to allow interest on capital @ 6% per annum. Their respective share of profit is 2:3 and the net profit for the year is Rupees 1500 only. Show distribution of profits case 1 where there is no agreement except for interest on capitals and 2 where there is an agreement that the interest on capital as a charge?
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Question X and Y contribute 20000 and 10000 respectively towards capital. They decided to allow interest on capital @ 6% per annum. Their respective share of profit is 2:3 and the net profit for the year is Rupees 1500 only. Show distribution of profits case 1 where there is no agreement except for interest on capitals and 2 where there is an agreement that the interest on capital as a charge? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Question X and Y contribute 20000 and 10000 respectively towards capital. They decided to allow interest on capital @ 6% per annum. Their respective share of profit is 2:3 and the net profit for the year is Rupees 1500 only. Show distribution of profits case 1 where there is no agreement except for interest on capitals and 2 where there is an agreement that the interest on capital as a charge? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Question X and Y contribute 20000 and 10000 respectively towards capital. They decided to allow interest on capital @ 6% per annum. Their respective share of profit is 2:3 and the net profit for the year is Rupees 1500 only. Show distribution of profits case 1 where there is no agreement except for interest on capitals and 2 where there is an agreement that the interest on capital as a charge?.
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