Question

Zeema and Neemsa are partners from 1^st Jan, 2008 without partnership agreement and they introduced capitals of Rs. 70,000 and Rs. 40,000 respectively. On 1^st July, 2008 Zeema advances Rs. 15,000 by way of loan to the firm without any agreement as to interest. The profit and loss account for the year 2008 discloses a profit of Rs. 16,450, but the partners cannot agree upon question of interest or upon the basis of division of profits. You are required to divide the profit between them giving reasons for your method.

Hint: Prepare Profit and Loss Appropriation Account.

Answer 1

Profit as per P/L a/c – Rs. 16450

Less: interest on loan to the firm (15000 x 6/100 x 6/12) – Rs. 450 

Actual Profit – Rs. 16000 

Zeema’s share of profit = 16000 x 1/2 = 8000 

Neema’s share of profit = 16000 x 1/2 = 8000 

If any partner has given a loan to the firm is addition to his/her share capital, he/she shall be entitled to interest on such loan @ 6% p.a. Such interest shall be paid even if the firm making any profit. If there is no written agreement, profits and losses are to be shared equally among partners.