Question 1:
In the absence of Partnership
Deed, what are the rules relation to :
(a) Salaries of partners,
(b) Interest on partners’ capitals,
(c) Interest on loan by partner,
(d) Division of profit,
(e) Interest on partners’ drawings
(f) Interest on loan to
partners?
Answer:
|
|
Items (Points) |
Provision in the
Absence of Partnership Deed |
|
(a) |
Salaries of Partners |
No
Salary will be allowed to Partners. |
|
(b) |
Interest on Partners’
Capitals |
No
interest will be allowed to
Partners on Capital |
|
(c) |
Interest on Loan by
Partners’ |
6%
p.a. Interest will be allowed on the amount given by |
|
(d) |
Division of Profit |
Profits will be
shared equally, it is
irrespective the |
|
(e) |
Interest on Partners’
Drawings |
No
Interest will be charged on the
Drawings of Partners |
|
(F) |
Interest on loan to partner |
Not charged from partner |
Question 2:
Mahesh, Ramesh
and Suresh are partners in a firm. They do not have a Partnership Deed. At the
end of the first year of the commencement of the firm, they have faced the
following problems :
(a) Mahesh wants that interest on capital should be allowed to the partners but
Ramesh and Suresh do not agree.
(b) Ramesh wants that the partners should be allowed
to draw salary but Mahesh and Suresh do not agree.
(c) Suresh wants that the loan given by him to the firm should bear interest @
10% p.a. but Mahesh and Ramesh do not agree.
(d) Mahesh and Ramesh having contributed larger
amounts of capital, desire that the profits should be divided in the ratio of
their capital contribution but Suresh does not agree.
State how you will settle these disputes if the
partners approach you for purpose.
Answer:
|
|
Disputes |
Possible Judgements |
|
(a) |
Mahesh wants that interest
on capital should be allowed to the partners but Ramesh
and Suresh do not agree. |
As per Partnership Act, no interest on Capital will be
allowed. Reason: There is no partnership agreement among Mahesh, Ramesh and Suresh regarding interest on capital. |
|
(b) |
Ramesh wants that the partners should be allowed to draw
salary but Mahesh and Suresh do not agree. |
No
salary will be allowed to any partner. Reason: There is no partnership agreement. |
|
(c) |
Suresh wants that the loan
given by him to the firm should bear interest @ 10% p.a. but Mahesh and Ramesh do not agree. |
Interest on partner’s loan
(Suresh’s loan) will be allowed at
6% p.a. Reason: As per Partnership Act, in the absence of
partnership agreement, interest on partners loan is allowed at 6% p.a. |
|
(d) |
Mahesh and Ramesh having contributed larger amounts of capital,
desire that the profits should be divided in the ratio of their capital
contribution but Suresh does not agree. |
Profit will be shared equally and not in the
capital ratio. Reason: There is no partnership agreement. |
Question 3:
Following differences have
arisen among P, Q and R. State who is correct in each case:
(a) P used ` 20,000 belonging to the firm and made a profit
of ` 5,000. Q and R want the amount to be given to the
firm?
(b) Q used `5,000
belonging to the firm and suffered a loss of ` 1000. He wants the firm to bear the loss?
(c) P and Q want to purchase goods from A Ltd., R does not agree?
(d) Q and R want to admit C as partner, P does not agree?
(e) R had given loan of `1,00,000 to firm and demands
interest @ 10% p.a. P and Q do not want
to pay the interest.
Answer:
(a) P is bound to pay ` 20,000 together with profit of ` 5,000 to the firm because this amount belongs to the
firm.
Explanation: As per Principal and Agent relationship, P is
principal as well as agent to the firm and to Q and R. As per this rule, any
profit earned by an agent (P) by using the firm’s property is attributable to
the firm.
(b) Q is liable to pay ` 5,000 to the firm. As per the Partnership Act, 1932,
every partner of a partnership firm is liable to the firm for any loss caused
by his/her willful negligence.
Explanation: Here Q is solely responsible for the loss of ` 1,000 because he used the property of the firm and
also represented himself as a principal rather than an agent to the other
partners and to the firm.
(c) P and Q may buy goods
from A Ltd.
Explanation: As per Partnership Act, 1932, a partner has a right
to buy and sell goods without consulting the other partners unless a Public
Notice has been given by the partnership firm to restrict the partners to buy
and sell.
(d) C will not be admitted
because one of the partners P has not agreed to admit C.
(e) P,Q
and R are not correct
Explanation: As per Partnership Act, a new partner cannot be admitted
into a firm unless all the existing partners agree on the same decision. In
other words, a new partner can be admitted in a partnership firm with the
consent of all the existing partners.
Question 4: Barun, Tarun and Shivam are partners in
a firm and do not have a Partnership Deed. Barun
introduced further capital of `5,00,000 on 1st October, 2022. Whereas Shivam took a loan of `
50,000 from the firm on 1st October, 2022. Disputes have arisen among
them on the following issues:
(a) Barun
demands interest 10% p.a. on ` 5,00,000 being his extra capital.
(b) Tarun
desires that his son Deep should be admitted as partner and he will give him
half of his share Barun and Shivam
do not agree.
(c) Barun
and Tarun are of the view that Shivam
should be charged interest on loan from the firm at
the lending rate of the banks, which is 12% p.a.
(d) Tarun
has withdrawn `50,000 from the firm for his personal use. Barun and Shivam are of the view thatTarun should be charged interest @ 10% p.a.
Give solution to each issue
of dispute.
Answer:
In the absence of Partnership
Deed, the provisions of Indian Partnership Act, 1932 will apply as follows;
(a) Interest will not be
allowed on extra capital introduced by Barun,
(b) Deep cannot be admitted
as Barun and Shivam don't
agree, no partner has right to admit any one as a partner,
(c) Interest will not be
charged from Shivam as rate of interest was not
agreed.
(d) Interest on drawings will
not be charged on Tarun’s drawings.
Question 5:
Harshad and Dhiman are in partnership
since 1st April, 2022. No partnership agreement was made. They contributed ` 4,00,000
and `
1,00,000 respectively as capital. In addition, Harshad
advanced an amount of `
1,00,000 to the firm on 1st October, 2022. Due to long illness, Harshad could not participate in business activities from
1st August, 2022 to 30th September, 2022. Profit for the year ended 31st
March, 2023 was `
1,80,000. Dispute has arisen between Harshad and Dhiman.
HarshadClaims :
(i) He should be given interest @ 10% per annum on
capital and loan;
(ii) Profit should be distributed in the ratio of capital;
Dhiman Claims :
(i) Profit should be distributed equally;
(ii) He should be allowed ` 2,000 p.m. as remuneration for the period he managed
the business in the absence of Harshad;
(iii) Interest on Capital and loan should be allowed @ 6% p.a.
You are required to settle the dispute between Harshad
and Dhiman. Also prepare Profit and Loss
Appropriation Account.
Answer:
DISTRIBUTION OF PROFITS
Harshad Claims:
Decisions
(i) If there is no agreement on interest on partner’s
capital, according to Indian partnership act 1932, no interest will be allowed
to partners.
(ii) If there is no agreement on the matter of profit sharing, according to
partnership act 1932, profit shall be distributed equally.
Dhiman Claims:
Decisions
(i) Dhiman claim is
justified, according partnership act 1932 if there is no agreement on the
matter of profit distribution, profit shall be distributed equally.
(ii) No salary will be allowed to any partner because there is no agreement on
matter of remuneration.
(iii) Dhiman’s claim is not justified on the matter
of interest on capital but justified on the matter of interest on loan. If
there is no agreement on interest on partner’s loan, Interest shall be provided
at 6% p.a.
|
Profit and Loss Account |
|||||
|
Dr. |
for
the year ended 31st March, 2023 |
Cr. |
|||
|
Particulars |
(`) |
Particulars |
(`) |
||
|
Interest on Partner’s Loan |
|
Profit and Loss A/c |
1,80,000 |
||
|
Harshad 1,00,000 × (6/100) × (6/12) |
3,000 |
|
|
||
|
Profit and Loss Appropriation
A/c |
1,77,000 |
|
|
||
|
|
1,80,000 |
|
1,80,000 |
||
|
|
|
|
|
||
|
Profit and Loss
Appropriation Account |
|||||
|
Dr. |
for
the year ended 31st March, 2023 |
Cr. |
|||
|
Particulars |
(`) |
Particulars |
(`) |
||
|
Profit transferred to |
|
Profit and Loss A/c |
1,77,000 |
||
|
Harshad’s Capital |
88,500 |
|
|
||
|
Dhiman’s Capital |
88,500 |
|
|
||
|
|
|
|
|
||
|
|
1,77,000 |
|
1,77,000 |
||
|
|
|
|
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Ts Grewal Solution 2023-2024
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Class 12 / Volume – I