Partnership

Accounting

Easy

Comprehension:

Read the following passage and answer the questions

A Solid Partnership

A, V and T were partners of a law firm sharing profits in the ratio of 5:3:2. Their partnership deed provided the following:

(i) Interest on partners’ capital @ 5% p.a.

(ii) A guaranteed that he would earn a minimum annual fee of Rs. 6,00,000 for the firm.

(iii) T was guaranteed a profit of Rs. 2,50,000 (excluding interest on capital) and any deficiency on account of this was to be borne by A and V in the ratio of 2:3.

During the year ending March 31, 2019, A earned a fee of Rs. 3,20,000 and net profits earned by the firm were Rs. 8,60,000. Partner’s capital on April 01, 2018 were A - Rs. 3,00,000; V - Rs. 3,00,000 and T - Rs. 2,00,000.

In which ratio the deficiency of T will be borne by A & V.

5:3

2:3

2:4

2:1

✅ Correct Option: 2

The passage clearly states in provision (iii):

"T was guaranteed a profit of Rs. 2,50,000 (excluding interest on capital) and any deficiency on account of this was to be borne by A and V in the ratio of 2:3."

This means when T's actual share of profit falls short of the guaranteed amount of Rs. 2,50,000, the shortfall will be compensated by partners A and V. The contribution towards this deficiency will be in the ratio 2:3 between A and V respectively.

Therefore, the deficiency of T will be borne by A and V in the ratio 2:3.

2025: 13 May Shift 2

A and B are partners in a firm with their fixed capital Rs 4,00,000 and 5,00,000 respectively. After preparation of accounts, it was found that interest on capital @ 10% p.a as provided by the partnership deed is omitted. In order to rectify the mistake, A's Current account will be _____?

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: 22 May Shift 1

M and N are partners in a firm and agree that an interest @12% per annum should be charged on drawings. M draws Rs. 20,000 per month at the beginning of each month. The amount of interest to be charged from M is:

2026: 31 May Shift 1

Ram and Shyam are equal partners. Their capitals as on April 01, 2025 were Rs. 50,000 and Rs. 1,00,000 respectively. After the accounts for the financial year ending March 31, 2026 have been prepared, it is discovered that interest at the rate of 6 per cent per annum, as provided in the partnership deed has not been credited to the partners' capital accounts.

Choose the correct adjusting entry from the options given below:

2025: 2 June Shift 2

Rent payable to partner is .

2026: 19 May Shift 1

Krishna, Sandeep and Karim are partners sharing profits in the ratio of 3:2:1. Their fixed capitals are: Krishna Rs. 1,20,000, Sandeep 90,000 and Karim 60,000. For the year 2024-25, interest was credited to them at @ 8% p.a. instead of 5% p.a. Find the amount transferred from Karim to Krishna's current account as an adjustment.

In which ratio the deficiency of T will be borne by A & V.

Solution

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