CBSE 2025, Set 2

Question

Daya and Deena were partners in a firm sharing profits and losses in the ratio of 3: 1. On 1st April, 2023, their capital accounts showed balances of ₹5,00,000 and ₹6,00,000 respectively. The partnership deed provided for interest on capital @ 12% p.a. Show the treatment of interest on capital in the following cases if :
(i) During the year ended 31st March, 2024, the firm earned a profit of ₹ 2,00,000.
(ii) During the year ended 31st March, 2024, the firm earned a profit of ₹ 66,000.

Edvaya · Accepted Answer

The correct answer is Subjective. **Case (i): Profit = ₹ 2,00,000** Total Interest required: Daya = 12% of 5,00,000 = 60,000; Deena = 12% of 6,00,000 = 72,000. Total = ₹ 1,32,000. Since profit (2,00,000) is greater than total interest, full interest is allowed. | Dr. Profit & Loss Appropriation A/c (for the year ended 31st March, 2024) Cr. | |---|---| | **Particulars** | **Amount (₹)** | **Particulars** | **Amount (₹)** | | To Interest on Capital: | | By P & L A/c (Net Profit) | 2,00,000 | | Daya: 60,000 | | | | | Deena: 72,000 | 1,32,000 | | | | To Profit transferred to capital accounts: | | | | | Daya (68,000 × 3/4): 51,000 | | | | | Deena (68,000 × 1/4): 17,000 | 68,000 | | | | **Total** | **2,00,000** | **Total** | **2,00,000** | **Case (ii): Profit = ₹ 66,000** Total Interest required = ₹ 1,32,000. Since profit (66,000) is less than interest due, interest will be allowed only to the extent of available profits, distributed in the ratio of their interest claims (60,000 : 72,000 = 5:6). Daya's Interest = 66,000 × (5/11) = 30,000. Deena's Interest = 66,000 × (6/11) = 36,000. | Dr. Profit & Loss Appropriation A/c (for the year ended 31st March, 2024) Cr. | |---|---| | **Particulars** | **Amount (₹)** | **Particulars** | **Amount (₹)** | | To Interest on Capital: | | By P & L A/c (Net Profit) | 66,000 | | Daya: 30,000 | | | | | Deena: 36,000 | 66,000 | | | | **Total** | **66,000** | **Total** | **66,000** |

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Accountancy > Accounting For Partnership Firms > Fundamentals Of Partnership

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