Partnership

Accounting

Medium

Amitabh and Babul are partners sharing profits in the ratio of 3:2, with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. Babul is to be allowed an annual salary of Rs. 2,500. Manager is to be allowed commission Rs. 5,000. Amitabh has also given a loan on April 01, 2019 of Rs. 50,000 to the firm without any agreement. During the year 2019-20, the profits earned is Rs. 22,250. What amount of profit will be transferred to Profit and Loss Appropriation account :

Rs. 14,500

Rs. 14,250

Rs. 14,750

Rs. 14,350

✅ Correct Option: 2

The profit earned is Rs. 22,250, but certain items must be charged to Profit and Loss Account before the balance is transferred to Profit and Loss Appropriation Account.

Items charged to P&L Account (not appropriation):

Manager's commission = Rs. 5,000

Interest on loan from Amitabh:

Loan amount = Rs. 50,000
Period = April 1, 2019 to March 31, 2020 = 12 months
Since no interest rate is agreed, as per Partnership Act, interest @ 6% p.a. applies
Interest = $50,000 \times \frac{6}{100} \times \frac{12}{12}$ = Rs. 3,000

Calculation of profit transferred to P&L Appropriation Account:

Net Profit as per P&L Account = Rs. 22,250

Less: Manager's commission = Rs. 5,000

Less: Interest on loan to Amitabh = Rs. 3,000

Profit transferred to P&L Appropriation A/c = Rs. 14,250

The remaining items (interest on partners' capital @ 6% and Babul's salary of Rs. 2,500) are appropriation items and will be dealt with in the P&L Appropriation Account itself after this Rs. 14,250 is transferred.

Correct Option: 2 (Rs. 14,250)

2026: 20 May Shift 1

The capital of the firm of M and N is Rs. 1,00,000 and the market rate of interest is 15%. The annual salary to partners is Rs. 6,000 each. The profits for the last 3 years were Rs. 30,000 (for 2022); Rs. 36,000 (for 2023) and Rs. 42,000 (for 2024). Goodwill is to be valued at 2 years' purchase of the last 3 years' average super profits or 3 years' purchase of the last 2 years' average super profits, whichever is less. Calculate the goodwill of the firm.

2025: 27 May Shift 1

Under which Section & Act, the Central Government is empowered to prescribe a maximum number of partners in a firm, but the number of partners can not be more than 100?

2025: 15 May Shift 2

Match List-I with List-II

Match the accounts with their purpose

List-I	List-II
(A) Profit and Loss adjustment A/c	(I) Changes in amount of capital
(B) Profit and loss appropriation A/c	(II) Generally no change in amount of capital
(C) Fixed capital A/c	(III) Errors and omissions found after preparation of final A/c
(D) Fluctuating capital method	(IV) Extention of Profit & loss A/c

Choose the correct answer from the options given below:

2025: 13 May Shift 1

Calculate Interest on drawings for the amount Rs. 12000 on June 1, 2019.

2022: 23 Aug Shift 2

Calculate net profit as per P & L A/c for the year ending 31 March, 2022 from the following information :

share of profit transferred to Capital A/c's of partners :

Ram Rs. 7,000

Shyam Rs. 3,500

Interest on capital :

Ram Rs. 1,500

Shyam Rs. 500

Interest on Drawings :

Ram Rs. 300

Shyam Rs. 200

Ram's salary Rs. 1,000

2025: 3 June Shift 2

The clauses of a partnership deed can be altered with the consent of ________.

Solution

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