Tripathi and chauhan are partner in a firm sharing profit and loss in ...
Partnership Agreement and Capital
- Tripathi and Chauhan are partners in a firm.
- They share the profit and loss in the ratio of 3:2.
- Their capital as of 1st January 2016 was Rs. 60,000 and Rs. 40,000 respectively.
Profit Distribution
- During the year, the firm earned a profit of Rs. 30,000.
- According to the partnership deed, both partners are entitled to a salary of Rs. 1,000 per month.
- They are also entitled to an interest of 5% on their capital.
Calculation of Salary and Interest
- Tripathi's and Chauhan's salary for the year: 12 months x Rs. 1,000 = Rs. 12,000 each.
- Tripathi's interest on capital: 5% of Rs. 60,000 = Rs. 3,000.
- Chauhan's interest on capital: 5% of Rs. 40,000 = Rs. 2,000.
Calculation of Drawing
- Tripathi's drawing during the year: Rs. 12,000 salary + Rs. 3,000 interest - Rs. 12,000 interest charged = Rs. 3,000.
- Chauhan's drawing during the year: Rs. 12,000 salary + Rs. 2,000 interest - Rs. 8,000 interest charged = Rs. 6,000.
Adjustment of Profit and Loss
- Total salary and interest: Rs. 12,000 + Rs. 12,000 + Rs. 3,000 + Rs. 2,000 = Rs. 29,000.
- Remaining profit after adjustment: Rs. 30,000 - Rs. 29,000 = Rs. 1,000.
- Profit distribution as per the profit sharing ratio of 3:2:
- Tripathi's share: (3/5) x Rs. 1,000 = Rs. 600.
- Chauhan's share: (2/5) x Rs. 1,000 = Rs. 400.
Final Profit Distribution
- Tripathi's total share: Rs. 600 (share of profit) + Rs. 3,000 (interest) + Rs. 3,000 (drawing) = Rs. 6,600.
- Chauhan's total share: Rs. 400 (share of profit) + Rs. 2,000 (interest) + Rs. 6,000 (drawing) = Rs. 8,400.
Summary
- Tripathi's final share: Rs. 6,600.
- Chauhan's final share: Rs. 8,400.
- The remaining profit of Rs. 1,000 is not distributed as it is not sufficient to cover the salary and interest entitlements of both partners.