Harshad and Dhiman are in Partnership Since April 01, 2016. No Partnership Agreement Was Made-Harshad and Dhiman

Harshad and Dhiman are in partnership since April 01, 2016. No Partnership agreement was made. They contributed Rs 4,00,000 and 1,00,000 respectively as capital. In addition, Harshad advanced an amount of Rs 1,00,000 to the firm, on October 01, 2016. Due to long illness, Harshad could not participate in business activities from August 1, to September 30, 2017. The profits for the year ended March 31, 2017 amounted to Rs 1,80,000.

Dispute has arisen between Harshad and Dhiman.

Harshad Claims:
(i) He should be given interest @ 10% per annum on capital and loan;
(ii) Profit should be distributed in proportion of capital;

Dhiman Claims:
(i) Profits should be distributed equally;
(ii) He should be allowed Rs 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.

Decisions according to partnership Act,1932, if there is no agreement .

(ii) Profits shall be distributed equally among all the partners ,if their is no agreement for profit sharing ratio.

(ii) No salary shall be allowed to any partner if there is no agreement.

(iii) Interest shall be allowed on partner’s Loan @ 6% pa whereas no interest is allowed on capital.

Profit and loss Appropriation Account

Particulars		Amount	Particulars	Amount
To Interest on Partners Loan Account		3,000	By profit and loss	1,80,000
To profit transfered to:
Harshad Capital A/c	88,500
Dhiman Capital A/c	88,500	1,77,000
		1,80,000		1,80,000

Chapter-2 Partnership Basic: Accounts

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