Bank invest in project as Sharik (sleeping partner) and the project manager will act as managing partner. The managing partner borrows Rs. 10,000 capital from the bank which he invests into the project. This loan must be repaid at the maturity of the project whether profits or losses are made. The bank contributes capital of Rs. 50,000. No other capital sources are used. Profit sharing ratio is agreed at a ratio of 70% to bank and 30 % to managing partner. The balance of any profit is paid to the other partner(s) in the scheme. Required: Provide the solutions/ distribution of profit/loss of following potential outcomes: 1) Profits of Rs. 2,500 are made. 2) Losses of Rs. 2,000 are made . 3) Identify the type of Musharkah .
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Bank invest in project as Sharik (sleeping partner) and the project manager will act as managing partner. The
managing partner borrows Rs. 10,000 capital from the bank which he invests into the project. This loan must be
repaid at the maturity of the project whether profits or losses are made. The bank contributes capital of Rs. 50,000.
No other capital sources are used. Profit sharing ratio is agreed at a ratio of 70% to bank and 30 % to managing
partner. The balance of any profit is paid to the other partner(s) in the scheme.
Required:
Provide the solutions/ distribution of
1) Profits of Rs. 2,500 are made.
2) Losses of Rs. 2,000 are made .
3) Identify the type of Musharkah .
Step by step
Solved in 2 steps
