Distinguish between average profits and super profits. Post category:Accountancy Reading time:1 mins read SOLUTION Average profit is the average of the profits of past few years whereas superprofit is the excess of average profits over normal profits. Please Share This Share this content Opens in a new window X Opens in a new window Facebook Opens in a new window Pinterest Opens in a new window LinkedIn Opens in a new window Viber Opens in a new window VK Opens in a new window Reddit Opens in a new window Tumblr Opens in a new window Viadeo Opens in a new window WhatsApp Read more articles Previous PostHow does the market situation affect the value of goodwill of a firm? Next PostWhen there is change in the profit-sharing ratio amongst existing partners, does it require adjustment for goodwill? You Might Also Like Following is the summarised Balance Sheet of Philips India Ltd. as at 31st March 2018: August 18, 2022 Harshad and Dhiman are in partnership since 1st April, 2018. No partnership agreement was made. They contributed Rs. 4,00,000 and Rs. 1,00,000 respectively as capital. In addition, Harshad advanced an amount of Rs. 1,00,000 to the firm on 1st October, 2018. Due to long illness, Harshad could not participate in business activities from 1st August, 2018 to 30th September, 2018. Profit for the year ended 31st March, 2019 was 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 the ratio of capital; Dhiman Claims: (i) Profit 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. July 20, 2022 X and Y are partners sharing profits in the ratio of 3: 2 with capitals of Rs. 8,00,000 and Rs. 6,00,000 respectively. Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of Rs. 60,000 which has not been withdrawn. Profit for the year ended 31st March, 2019 before interest on capital but after charging Y’s salary amounted to Rs. 2,40,000. A provision of 5% of the profit is to be made in respect commission to the manager. Prepare an account showing the allocation profits. July 20, 2022 Leave a Reply Cancel replyYou must be logged in to post a comment.
Following is the summarised Balance Sheet of Philips India Ltd. as at 31st March 2018: August 18, 2022
Harshad and Dhiman are in partnership since 1st April, 2018. No partnership agreement was made. They contributed Rs. 4,00,000 and Rs. 1,00,000 respectively as capital. In addition, Harshad advanced an amount of Rs. 1,00,000 to the firm on 1st October, 2018. Due to long illness, Harshad could not participate in business activities from 1st August, 2018 to 30th September, 2018. Profit for the year ended 31st March, 2019 was 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 the ratio of capital; Dhiman Claims: (i) Profit 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. July 20, 2022
X and Y are partners sharing profits in the ratio of 3: 2 with capitals of Rs. 8,00,000 and Rs. 6,00,000 respectively. Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of Rs. 60,000 which has not been withdrawn. Profit for the year ended 31st March, 2019 before interest on capital but after charging Y’s salary amounted to Rs. 2,40,000. A provision of 5% of the profit is to be made in respect commission to the manager. Prepare an account showing the allocation profits. July 20, 2022