Ram and Shyam started a partnership.Ram who was rich contributed ₹1,00,000 but Shyam, who had experience and ability, contributed only ₹10,000 as their capitals. Besides this, Ram advanced a loan of ₹50,000 to the firm in the middle of the year. In the first year they earned a profit of ₹61,500. Ram insisted that interest on capital and loan be provided @18% per annum before the distribution of profit, while Shyam demanded a salary of ₹2,000 per month.
You didn't actually ask a question.
I will assume you want to know how the profit of ₹61,500 must be distributed, and
I will assume that the rate is 18% per annum, compounded monthly and will be applied to all monies.
At end of year, value of Ram's investment = 1,000,000(1.015)^12 + 50,000(1.015)^6 = 1,250,290.34
at end of year, value of Shyam = 10,000(1.015)^12 = 11,956.18
value of their investment = 1,262,246.52
Ram's share of profits = (1,250,290.34/1,262,246.52)*61500 = 60,917.46
Shyam's share = 61500 - 60917.46 = 582.54
BUT, Shyam also has already received 2000 per month for the year
which has a value of 2000(1.015^6 - 1)/.015 = 133,333.33, which is more than their total profit
So, you decide which of those values are liabilities and which are credits.
To calculate the distribution of profit between Ram and Shyam, we need to follow a step-by-step process:
Step 1: Calculate interest on capital for both partners.
Interest on capital is calculated on the capital contributed by the partners. Ram contributed ₹1,00,000, and Shyam contributed ₹10,000.
For Ram: Interest on capital = (Capital × Rate of Interest)
= (₹1,00,000 × 18%)
= ₹18,000
For Shyam: Interest on capital = (Capital × Rate of Interest)
= (₹10,000 × 18%)
= ₹1,800
Step 2: Calculate interest on the loan given by Ram.
Ram provided a loan of ₹50,000 to the firm. The agreed interest rate was 18% per annum.
Interest on loan = (Loan × Rate of Interest)
= (₹50,000 × 18%)
= ₹9,000
Step 3: Calculate Shyam's salary for the year.
Shyam demanded a salary of ₹2,000 per month.
Salary for the year = (Monthly salary × 12)
= (₹2,000 × 12)
= ₹24,000
Step 4: Calculate total expenses (interest on capital + interest on loan + salary).
Total expenses = (Interest on capital + Interest on loan + Salary)
= (₹18,000 + ₹9,000 + ₹24,000)
= ₹51,000
Step 5: Calculate the remaining profit after deducting expenses from the total profit.
Remaining profit = (Total profit - Total expenses)
= (₹61,500 - ₹51,000)
= ₹10,500
Step 6: Share the remaining profit between Ram and Shyam based on their capital ratio.
The capital ratio is the ratio of their capital contributions.
Capital ratio = (Ram's capital : Shyam's capital)
= (₹1,00,000 : ₹10,000)
= (100 : 1)
Total capital ratio = (100 + 1)
= 101
Ram's share = (Remaining profit × Ram's capital) / Total capital ratio
= (₹10,500 × 100) / 101
≈ ₹10,396.04
Shyam's share = (Remaining profit × Shyam's capital) / Total capital ratio
= (₹10,500 × 1) / 101
≈ ₹103.96
Step 7: Add interest on capital, interest on the loan, and salary to Ram's share.
Ram's final share = (Ram's share + Interest on capital + Interest on loan)
= (₹10,396.04 + ₹18,000 + ₹9,000)
= ₹37,396.04
Step 8: Add Shyam's share to his salary.
Shyam's final share = (Shyam's share + Salary)
= (₹103.96 + ₹24,000)
= ₹24,103.96
Therefore, Ram's share of the profit is ₹37,396.04, and Shyam's share is ₹24,103.96.