FUNDAMENTALS OF PARTNERSHIP

1. Sita and Geeta are partners in a firm sharing profits in the ratio of 3:2. They had advanced to the firm a
sum of Rs. 30,000 as a loan in their profit-sharing ratio on 1st October, 2017. The Partnership Deed is silent on
interest on loans from partners. Compute interest payable by the firm to the partners, assuming the firm closes
its books every year on 31st March.

2. Harshad and Dhiman are in partnership since 1st April, 2019. No partnership agreement was made.
They contributed Rs. 4,00,000 and Rs. 1,00,000 respectively as capital. In addition, Harshad advanced an
amount of Rs. 1,00,000 to the firm on 1st October, 2019. Due to long illness, Harshad could not participate in
business activities from 1st August, 2019 to 30th September, 2019.  Profit for the year ended 31st March, 2020
was Rs. 1,80,000. Dispute has arisen between Harshad and Dhiman. Harshad Claims:
(i) He should be given interest @ 10% per annum on capital and loan;
(ii) Profit should be distributed in the ratio of capital;
Dhiman Claims:
(i) Profit should be distributed equally;
(ii) He should be allowed Rs. 2,000 p.m. as remuneration for the period he managed the business in the absence
of Harshad;
(iii) Interest on Capital and loan should be allowed @ 6% p.a.
You are required to settle the dispute between Harshad and Dhiman. Also prepare Profit and Loss
Appropriation Account.

3. X and Y are partners sharing profits and losses in the ratio of 2 : 3 with capitals Rs. 2,00,000 and Rs.
3,00,000 respectively. On 1st October, 2019, X and Y gave loans of Rs. 80,000 and Rs. 40,000 respectively to
the firm. Show distribution of profits/losses for the year ended 31st March, 2020 in each of the following
alternative cases:
Case 1: If the profits before interest for the year amounted to Rs. 21,000.
Case 2: If the profits before interest for the year amounted to Rs. 3,000.
Case 3: If the profits before interest for the year amounted to Rs. 5,000.
Case 4: If the loss before interest for the year amounted to Rs. 1,400.

4. Bat and Ball are partners sharing the profits in the ratio of 2:3 with capitals of Rs. 1,20,000 and Rs. 60,000
respectively. On 1st October, 2019, Bat and Ball gave loans of Rs. 2,40,000 and Rs. 1,20,000 respectively to the
firm. Bat had allowed the firm to use his property for business for a monthly rent of Rs. 5,000. The loss for the
year ended 31st March, 2020 before rent and interest amounted to Rs. 9,000. Show distribution of profit/loss.

5. Akhil and Bimal are partners sharing profits in the ratio of 3 :2. Akhil gave loan to the firm of Rs.
1,00,000 on 1st October, 2020. On the same date, the firm gave loan to Bimal of Rs. 1,00 000. They do not have
an agreement as to interest. Akhil had also given his personal property for firm’s godown at a monthly rent of
Rs. 5,000. Firm earns profit of Rs. 1,03,000 (before above adjustments) for the year ended 31st March, 2020.
Show the distribution of profit for the year.

6. Nirmal and Pawan are partners sharing profits in the ratio of 3 :2. The firm had given loan to Pawan of Rs.
5,00,000 on 1st April, 2020. Interest was to be charged @ 10% p.a. The firm took loan of Rs. 2,00,000 from
Nirmal on 1st October, 2020. Before giving effect to the above, the firm incurred a loss of Rs. 10,000 for the
year ended 31st March, 2021. Determine the amount to be transferred to Profit and Loss Appropriation
Account.
 FUNDAMENTALS OF PARTNERSHIP
7. Vinod and Mohan are partners. Vinod 's Capital is Rs. 1,00,000 and Mohan 's Capital is Rs. 60,000. Interest
on capital is payable @ 6% p.a. Mohan is entitled to a salary of Rs. 3,000 per month. Profit for the current year
before interest and salary to Mohan is Rs. 80,000. Prepare Profit and Loss Appropriation Account.

8. X, Y and Z are partners in a firm sharing profits in 2:2:1 ratio. The fixed capitals of the partners were: X - Rs
5,00,000; Y - Rs 5,00,000 and Z – Rs 2,50,000 respectively. The Partnership Deed provides that interest on
capital is to be allowed @ 10% p.a. Z is to be allowed a salary of Rs. 2,000 per month. The profit of the firm for
the year ended 31st March, 2021 after debiting Z's salary was Rs. 4,00,000. Prepare Profit and Loss
Appropriation Account

9. X and Y are partners sharing profits in the ratio of 3: 2 with capitals of Rs. 8,00,000 and Rs. 6,00,000
respectively. Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of Rs. 60,000 which
has not been withdrawn. Profit for the year ended 31st March, 2021 before interest on capital but after charging
Y's salary amounted to Rs. 2,40,000. A provision of 5% of the profit is to be made in respect commission to the
manager. Prepare an account showing the allocation profits.

10. Reema and Seema are partners sharing profits equally. The Partnership Deed provides that
both Reema and Seema will get monthly salary of Rs. 15,000 each, Interest on Capital will be allowed @ 5%
p.a. and Interest on Drawings will be charged @ 10% p.a. Their capitals were Rs. 5,00,000 each and drawings
during the year were Rs. 60,000 each. The firm incurred a loss of Rs. 1,00,000 during the year ended 31st
March, 2019.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2019.

11. Naresh and Sukesh are partners with capitals of  Rs. 3,00,000 each as on 31st March, 2021. Naresh had
withdrawn  Rs. 50,000 against capital on 1st October, 2020 and also Rs. 1,00,000 besides the drawings against
profit. Sukesh also had drawings of  Rs. 1,00,000. Interest on capital is to be allowed @ 10% p.a.
Net profit for the year was Rs. 2,00,000, which is yet to be distributed. Pass the Journal entries for interest on
capital and distribution of profit.

12. A and B are partners in the ratio of 3:2. The firm maintains Fluctuating Capital Accounts and the balance of
the same as on 31st March, 2020 amounted to R 1,60,000 and 1,40,000 for A and B respectively. Their
drawings during the year were 30,000 each. As per Partnership Deed, interest on capital@ 10% p.a. on opening
capitals had been provided to them. Calculate opening capitals of partners given that their profit was 90,000.
Show your workings clearly.

13. Shiv, Mohan and Gopal are partners sharing profits and losses in the ratio of 2 : 2 : 1 respectively. Shiv is
entitled to a commission of 10% on the net profit. Net profit for the year is  Rs. 1,10,000. Determine the amount
of commission payable to Shiv.

14. Abha, Bobby and Vineet are partners sharing profits and losses equally. As per Partnership Deed, Vineet is
entitled to a commission of 10% on the net profit after charging such commission. The net profit before
charging commission is Rs. 2,20,000. Determine the amount of commission payable to Vineet.

15. X and Y are partners in a firm. X is entitled to a salary of  Rs. 10,000 per month and commission of 10% of
the net profit after partners' salaries but before charging commission. Y is entitled to a salary of  Rs. 25,000 p.a.
 FUNDAMENTALS OF PARTNERSHIP
and commission of 10% of the net profit after charging all commission and partners' salaries. Net profit before
providing for partners' salaries and commission for the year ended 31st March, 2020 was Rs. 4,20,000. Show
distribution of profit.

16. Brij and Mohan are partners in a firm. They withdrew Rs. 48,000 and Rs. 36,000 respectively during the
year evenly in the middle of every month. According to the partnership agreement, interest on drawings is to be
charged @ 10% p.a. Calculate interest on drawings of the partners using the appropriate formula.
17. Dev withdrew Rs.10 000 on 15th day of every month Interest on drawings was to be charged @ 12% per
annum. Calculate interest oh Dev's Drawings.
 
18. One of the partners in a partnership firm has withdrawn  Rs. 9,000 at the end of each quarter, throughout the
year. Calculate interest on drawings at the rate of 6% per annum.

19. A and B are partners sharing profits equally. A drew regularly Rs. 4,000 in the beginning of every month for
six months ended 30th September, 2020. Calculate interest on drawings @ 5% p.a. for a period of six months.

20. A and B are partners sharing profits equally. A drew regularly  Rs. 4,000 at the end of every month for six
months ended 30th September, 2020. Calculate interest on drawings @ 5% p.a. for a period of six months.

21. Calculate interest on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2021, in each of the
following alternative cases:
Case 1.  If he withdrew Rs. 7,500 in the beginning of each quarter.
Case 2.  If he withdrew Rs. 7,500 at the end of each quarter.
Case 3.  If he withdrew Rs. 7,500 during the middle of each quarter

22. The capital accounts of Tisha and Divya showed credit balances of Rs. 10,00,000 and Rs. 7,50,000
respectively after taking into account drawings and net profit of Rs. 5,00,000. The drawings of the partners
during the year 2020-21 were:
(i) Tisha withdrew Rs. 25,000 at the end of each quarter.
(ii) Divya's drawings were:
31st May, 2020 20,000
1st November, 2020 17,500
1st February, 2021 12,500
Calculate interest on partners' capitals@ 10% p.a. and interest on partners' drawings@ 6% p.a. for the year
ended 31st March, 2021.

23. A and B are partners sharing profits and losses in the ratio of 3 : 1. On 1st April, 2020, their capitals
were: A Rs. 50,000 and B Rs. 30,000. During the year ended 31st March, 2021 they earned a net profit of Rs.
50,000. The terms of partnership are:
(a) Interest on capital is to allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of Rs. 500 per month.
(d) B will get commission of 5% on profits after deduction of all expenses including such commission.
Partners' drawings for the year were: A Rs. 8,000 and B Rs. 6,000. Turnover for the year was Rs. 3,00,000.
After considering the above facts, you are required to prepare Profit and Loss Appropriation Account and
Partners' Capital Accounts.
 FUNDAMENTALS OF PARTNERSHIP
24. Ram and Shyam are partners in a firm sharing profits in the ratio of 3:2. On 1st April, 2020, their fixed
capitals were Rs. 3,00,000 and Rs. 2,50,000 respectively. On 1st October, they decided that their total capital
(Fixed) should be Rs. 6,00,000 in their profit-sharing ratio. Accordingly, they introduced extra capital or
withdrew excess capital. The Partnership Deed provided for the following:
(i) Interest on capital @ 12% p.a.
(ii) Interest on Drawings @ 18% p.a.
(iii) A monthly salary of `2,000 to Ram and a quarterly salary of Rs. 4,500 to Shyam.

The drawings of Ram and Shyam were as follows:

25. P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were Rs. 2,00,000
and  Rs. 3,00,000 respectively. The Partnership Deed provided for interest on capital @ 12% per annum. For
the year ended 31st March, 2016, the profits of the firm were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error.

26. Azad and Benny are equal partners. Their capitals are 40,000 and 80,000 respectively. After the accounts
for the year had been prepared, it was noticed that interest @ 5% p.a. as provided in the Partnership Deed was
not credited to their Capital Accounts before distribution of profits. It is decided to pass an adjustment entry in
the beginning of the next year. Record the necessary Journal entry.

27. Ram, Mohan and Sohan sharing profits and losses equally have capitals of  1,20,000,  90,000 and  60,000
respectively. For the year ended 31st March, 2021, interest was credited to them @ 6% instead of 5%. Give
adjustment Journal entry.

28. Ram, Shyam and Mohan were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their
capitals were fixed at Rs. 3,00,000,  Rs. 1,00,000 and Rs. 2,00,000. For the year ended 31st March, 2021,
interest on capital was credited to them @ 9% instead of 10% p.a. The profit for the year before charging
interest was Rs. 2,50,000. Show your working notes clearly and pass necessary adjustment entry.

29. Profit earned by a partnership firm for the year ended 31st March, 2021 were distributed equally between
the partners – Pankaj and Anu – without allowing interest on capital. Interest due on capital was Pankaj –  Rs.
3,000 and Anu –  Rs. 1,000. Pass necessary adjustment entry.

30. Ram, Mohan and Sohan were partners sharing profits in the ratio of 2:1:1. Ram withdrew Rs. 3,000 every
month and Mohan withdrew Rs. 4,000 every month. Interest on drawings @ 6% p.a. was charged, whereas the
partnership deed was silent about interest on drawings.

31. Mita and Usha are partners in a firm sharing profits in the ratio of 2 : 3. Their Capital Accounts as on 1st
April, 2015 showed balances of  Rs. 1,40,000 and Rs. 1,20,000 respectively. The drawings
of Mita and Usha during the year 2015-16 were Rs. 32,000 and Rs 24,000 respectively. Both the amounts were
 FUNDAMENTALS OF PARTNERSHIP
withdrawn on 1st January 2016. It was subsequently found that the following items had been omitted while
preparing the final accounts for the year ended 31st March, 2016:
(a) Interest on Capital @ 6% p.a.
(b) Interest on Drawings @ 6% p.a.
(c) Mita was entitled to a commission of Rs. 8,000 for the whole year. Showing your working clearly, pass a
rectifying entry in the books of the firm

32. On 31st March, 2021, after the closing of the accounts, the Capital Accounts of P, Q and R stood in the
books of the firm at Rs. 40,000; Rs. 30,000 and Rs. 20,000 respectively. Subsequently, it was noticed that
interest on capital @ 5% had been omitted. Profit for the year ended 31st March, 2021 was  Rs. 60,000 and the
partners' drawings had been P  –  Rs. 10,000, Q –  Rs. 7,500 and R –  Rs. 4,500. Profit-sharing ratio of P,
Q and R is 3 : 2 : 1. Pass necessary adjustment entry.

33. Mohan, Vijay and Anil are partners, the balances of their Capital Accounts being Rs. 30,000, Rs. 25,000
and Rs. 20,000 respectively. In arriving at these amounts profit for the year ended 31st March, 2021, Rs. 24,000
had already been credited to partners in the proportion in which they shared profits. Their drawings
were Rs. 5,000 (Mohan), Rs. 4,000 (Vijay) and Rs. 3,000 (Anil) during the year. Subsequently, the following
omissions were noticed and it was decided to rectify the errors: (a) Interest on capital @ 10% p.a.
(b) Interest on drawings: Mohan  Rs. 250, Vijay Rs. 200 and Anil Rs. 150. Make necessary corrections through
a Journal entry and show your workings clearly.

34. Mudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their fixed capital
balances are Rs. 4,00,000,  Rs. 1,60,000 and  Rs. 1,20,000 respectively. Net profit for the year ended 31st
March, 2018 distributed amongst the partners was Rs. 1,00,000, without taking into account the following
adjustments:
(a) Interest on capitals @ 2.5% p.a.;
(b) Salary to Mudit Rs. 18,000 p.a. and commission to Uday Rs. 12,000.
(c) Mudit was allowed a commission of 6% of divisible profit after charging such commission. Pass a rectifying
Journal entry in the books of the firm. Show workings clearly.

35. On 31st March, 2014, the balances in the Capital Accounts of Saroj, Mahinder and Umar after making
adjustments for profits and drawings, etc., were Rs. 80,000, Rs. 60,000, Rs. 40,000 respectively. Subsequently,
it was discovered that the interest on capital and drawings has been omitted. (a) The profit for the year ended
31st March, 2014 was Rs. 80,000. (b) During the year Saroj and Mahinder each withdrew a sum of Rs. 24,000
in equal instalments in the end of each month and Umar withdrew Rs. 36,000. (c) The interest on drawings was
to be charged @ 5% p.a. and interest on capital was to be allowed @ 10% p.a. (d) The profit-sharing ratio
among partners was 4:3:1. Showing your workings clearly, pass the necessary rectifying entry.

36. The partners of a firm, Alia, Bhanu and Chand distributed the profits for the year ended 31st March,
2017, Rs. 80,000 in the ratio of 3:3:2 without providing for the following adjustments:
(a) Alia and Chand were entitled to a salary of Rs. 1,500 each p.a.
(b) Bhanu was entitled for a commission of Rs. 4,000.
(c) Bhanu and Chand had guaranteed a minimum profit of Rs. 35,000 p.a. to Alia any deficiency to borne
equally by Bhanu and Chand. Pass the necessary Journal entry for the above adjustments in the books of the
firm. Show workings clearly.

37. Mohit and Sobhit are partners sharing profits in the ratio of 3:2. Rohit was admitted for 1/6th share of profit
with a minimum guaranteed amount of Rs. 10,000. At the close of the first financial year the firm earned a
profit of Rs. 54,000. Find out the share of profit which Mohit, Sobhit and Rohit will get.
 FUNDAMENTALS OF PARTNERSHIP
38. A, B and C were in partnership sharing profits and losses in the ratio of 4:2:1. It was provided that Cs share
in profit for a year would not be less than Rs. 75,000. Profit for the year ended 31st March, 2021 amounted
to Rs. 3,15,000. You are required to show the appropriation among the partners. The Profit and Loss
Appropriation Account is not required. Minimum Earnings Guaranteed by a Partner

39. X, Y and Z entered into partnership on 1st October, 2020 to share profits in the ratio of 4:3:3. X, personally
guaranteed that Z's share of profit after charging interest on capital @ 10% p.a. would not be less then Rs.
80,000 in any year. Capital contributions were: X- Rs. 3,00,000, Y- Rs. 2,00,000 and Z- Rs. 1,50,000. Profit for
the year ended 31st March, 2021 was Rs. 1,60,000. Prepare Profit and Loss Appropriation Account.

40. A, B and C are partners sharing profits in the ratio of 5:4:1. C is given a guarantee that his minimum share of
profit in any given year would be at least Rs. 5,000. Deficiency, if any, would be borne by A and B equally.
Profit for the year ended 31st March 2021 was Rs. 40,000. Pass necessary Journal entries in the books of the
firm.

41. Three Chartered Accountants A, B and C form a partnership, profits being shared in the ratio of 3 : 2 : 1
subject to the following:
(a) C's share of profit guaranteed to be not less than Rs. 15,000 p.a.
(b) B gives a guarantee to the effect that gross fee earned by him for the firm shall be equal to his average gross
fee of the preceding five years when he was carrying on profession alone, which on an average works out at Rs.
25,000. The profit for the first year of the partnership are Rs. 75,000. The gross fee earned by B for the firm is
Rs. 16,000. You are required to show Profit and Loss Appropriation Account after giving effect to the above.

42. Ankur, Bhavna and Disha are partners in a firm. On 1st April, 2021, the balance in their Capital Accounts
stood at Rs. 14,00,000, Rs. 6,00,000 and Rs. 4,00,000 respectively. They shared profits in the proportion of
7:3 :2 respectively. Partners are entitled to interest on capital @ 6% per annum and salary to Bhavna @ Rs.
50,000 p.a. and a commission of Rs. 3,000 per month to Disha as per the provisions of the partnership Deed.
Bhavna's share of profit (excluding interest on capital) is guaranteed at not less than Rs.1,70,000 p.a. Disha's
share of profit (including interest on capital but excluding commission) is guaranteed at not less than Rs.
1,50,000 p.a. Any deficiency arising on that account shall be met by Ankur. The profit of the firm for the year
ended 31st March, 2022 amounted to Rs. 9,50,000. Prepare Profit and Loss Appropriation Account for the year
ended 31st March, 2022.

43. In the absence of Partnership Deed, what are the rules relation to
(a) Salaries of partners
(b) Interest on partners’ capitals,
(c) Interest on loan by partner,
(d) Division of profit,
(e) Interest on partners’ drawings
(f) Interest on loan to partners?

44. Mahesh, Ramesh and Suresh are partners in a firm. They do not have a Partnership Deed. At the end of the
first year of the commencement of the firm, they have faced the following problems : (a) Mahesh wants that
interest on capital should be allowed to the partners but Ramesh and Suresh do not agree.
(b) Ramesh wants that the partners should be allowed to draw salary but Mahesh and Suresh do not agree.
 FUNDAMENTALS OF PARTNERSHIP
(c) Suresh wants that the loan given by him to the firm should bear interest @ 10% p.a. but Mahesh and
Ramesh do not agree. (d) Mahesh and Ramesh having contributed larger amounts of capital, desire that the
profits should be divided in the ratio of their capital contribution but Suresh does not agree.
State how you will settle these disputes if the partners approach you for purpose
Following differences have arisen among P, Q and R. State who is correct in each case:
(a) P used Rs. 20,000 belonging to the firm and made a profit of Rs. 5,000. Q and R want the amount to be
given to the firm? (b) Q used Rs. 5,000 belonging to the firm and suffered a loss of Rs. 1000. He wants the firm
to bear the loss? (c) P and Q want to purchase goods from A Ltd., R does not agree? (d) Q and R want to admit
C as partner, P does not agree? (e) R had given loan of Rs. 1,00,000 to firm and demands interest @ 10% p.a. P
and Q do not want to pay the interest.

45. Bose, Sarkar and Chatterjee are partners in a firm and do not have a Partnership Deed. Bose introduced
further capital of Rs. 5,00,000 on 1st October, 2021. Whereas Chatterjee took a loan of Rs. 50,000 from the
firm on 1st October, 2021. Disputes have arisen among them on the following issues:
(a) Bose demands interest 10% p.a. on Rs. 5,00,000 being his extra capital.
(b) Sarkar desires that his son Deep should be admitted as partner and he will give him half of his share. Bose
and Chatterjee do not agree.
(c) Bose and Sarkar are of the view that Chatterjee should be charged interest on loan from the firm at
the lending rate of the banks, which is 12% p.a.
(d) Sarkar has withdrawn Rs. 50,000 from the firm for his personal use. Bose and Chatterjee are of the view
that Sarkar should be charged interest @ 10% p.a.
You are required to give solution to each issue of dispute.

46. A and B are partners from 1st April, 2021, without a Partnership Deed and they introduced capitals of Rs.
35,000 and Rs. 20,000 respectively. On 1st October, 2021, A advanced loan of Rs. 8,000 to the firm without
any agreement as to interest. The profit and Loss Account for the year ended 31st March, 2022 shows a
profit of Rs. 15,000 but the partners cannot agree on payment of interest and on the basis of division of profits.
You are required to divide the profits between them giving reasons for your method.

47. Ankit, Bhanu and Charu are partners in a firm sharing profits and losses equally with capital of Rs. 2,50,000
each. On 1st October, 2021, Ankit and Bhanu gave loans of Rs. 2,50,000 each to the firm whereas Charu took a
loan of Rs. 1,00,000 from the firm on the same date. It was agreed among the partners that Charu will be
charged Interest @ 6% pa. Interest on loan from partners was paid on 10th April, 2022.The firm closes its
books on 31st March each year. Pass the Journal entries in the books of the firm for the year ended 31st March,
2022.