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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Sumit and Namit are partners sharing profits in the ratio of 3 : 2. They contribute ₹1,00,000 and ₹50,000 respectively towards capital. Compute interest on capital and show the distribution of profit in the following cases:
Case (i): No interest on capital is allowed (no agreement). Profit ₹50,000 is shared 3 : 2 → Sumit ₹30,000; Namit ₹20,000.
Case (ii): Interest on capital fully allowed (₹1,00,000 × 10% = ₹10,000 to Sumit; ₹50,000 × 10% = ₹5,000 to Namit). Total ₹15,000 equals profit, so no profit is left for distribution.
Case (iii): Interest on capital @ 12% → Sumit ₹12,000; Namit ₹6,000 (total ₹18,000). Remaining profit ₹23,000 – ₹18,000 = ₹5,000 shared 3 : 2 → Sumit ₹3,000; Namit ₹2,000.
Case (iv): No interest on capital is allowed in case of loss. Loss ₹8,000 is shared 3 : 2 → Sumit ₹4,800; Namit ₹3,200.
Case (v): Full interest would be ₹5,000 + ₹2,500 = ₹7,500, but profit is only ₹3,000. As interest is an appropriation, it is allowed only to the extent of profit, in the ratio of interest (2 : 1) → Sumit ₹2,000; Namit ₹1,000. No profit is left for distribution.
Case (vi): The deed allows interest even if it causes a loss, so full interest is given → Sumit ₹5,000; Namit ₹2,500 (total ₹7,500). This creates a loss of ₹7,500 – ₹6,000 = ₹1,500, shared 3 : 2 → Sumit ₹900; Namit ₹600.
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Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 1 Q.31 - Accounting for Partnership Firm Fundamentals", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Accounting for Partnership Firm – Fundamentals.
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