The solution to Question number 5 of the Accounting for Share Capital chapter of TS Grewal Book 2025-26 Edition.
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 capitals. In addition, Harshad had given a loan of ₹ 1,00,000 to the firm on 1st October 2022. Due to a long illness, Harshad could not participate in business activities from 1st August 2021 to 30th September 2022. Profit for the year ended 31st March 2023 was ₹ 1,80,000. A 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 the ratio of capital.
Dhiman Claims:-
i) Profits 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 a Profit and Loss Appropriation Account.
