Question 27 Chapter 2 of +2-Part-1
27. Money and Rupee are partners sharing profits in the ratio of 2:1. Their capitals were Rs.1,20,000 and Rs. 90,000 respectively.
Show the distribution of profits/losses in each of the following alternative cases:
Case A: Profits are Rs.45,000 and the deed is silent as regards interest on capital.
Case B: Profits are Rs.45,000 and the deed provides for interest on capital @10% p.a.
Case C: Profits are Rs.16,800 and the deed provides for interest on capital @10% p.a.
Case D: Profit is Rs.16,800 and the deed provides for interest on capital @10% p.a. even if there is a loss.
Case E: Loss is Rs.6,000 and the deed provides for interest on capital @10% p.a. even if there is a loss.
The solution of Question 27 Chapter 2 of +2 Part-1: –
Case – A :
Money’s Share in profit 2/3 i.e. Rs.30,000
Rupee’s Share in profit 1/3 i.e. Rs.15,000
Note: No interest on capital will be allowed.
Case – B :
Interest on Money’s Capital = 1,20,000 X 10%
= Rs.12,000
Interest on Rupee’s Capital = 90,000 X 10%
= Rs.9,000
Net profit after interest on Capital:
= Rs.(45,000-12,000-9,000)
= Rs.24,000
Money’s Share in profit = 24,000 X 2/3
= Rs.16,000
Rupee’s Share in profit = 24,000 X 1/3
= Rs. 8000
Case – C :
Calculation of Interest on Capital
Interest on Money’s Capital = 1,20,000 X 10/100
= Rs.12,000
Interest on Rupee’s Capital = 90,000 X 10/100
= Rs.9,000
Calculation of Net Profit/Loss after Interest on Capital
Net Profit/Loss after interest on Capital = 16,800 – (12,000 + 9,000)
Net Loss = Rs. – 4,200
Calculation of Net Interest on Capital will be due to the partners after adjustment of loss:
To calculate the net amount of interest on capital payable we have to adjust the loss in capital ratio, So the loss will be Adjusted in the capital ratio of the partners:
Capital ratio of the partners = 1,20,000 :90,000
= 4:3
Interest on Money’s Capital = 12,000 – 2,400 (4200 X 4/7)
= Rs.9,600
Interest on Rupee’s Capital = 9,000 – 1,800 (4200 X 3/7)
= Rs.7,200
Case – D :
Particulars |
Details | Amount | |
Interest on Capital: | |||
-Money | 12,000 | ||
-Rupee | 9,000 | 21,000 | |
Less: Net Profit | 16,800 | ||
Net Loss | 4,200 |
Money’s Share of loss =2/3*4,200 i.e. Rs.2,800
Rupee’s Share in loss= 1/3*4,200 i.e. Rs.1,400
Case – E :
Particulars |
Details | Amount | |
Interest on Capital: | |||
-Money | 12,000 | ||
-Rupee | 9,000 | 21,000 | |
Less: Net Profit | 6,000 | ||
Net Loss | 27,000 |
Money’s Share of loss =2/3*27,000 i.e. Rs.18,000
Rupee’s Share in loss= 1/3*27,000 i.e. Rs.9,000
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Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

Why we use 4/7 3/7 ratio
To calculate the net amount of interest on capital payable we have to adjust the loss in capital ratio