CHAPTER – 1 FUNDAMENTAL TO PARTENRSHIP

Extra Question for Practice

Q.1. Given below are two statements, one labelled as Assertion (A) and the other
labelled as Reason (R)
Assertion (A): Rent paid to partner is shown in P & L Appropriation A/c.
Reason (R): Rent paid to partner is a charge against the profits. In the
context of the above statements, which one of the following is correct?
(a) (A) is correct, but (R) is wrong.
(b) Both (A) and (R) are correct.
(c) (A) is wrong, but (R) is correct.
(d) Both (A) and (R) are wrong.
Q.2. If there exist insufficient profits for appropriations, the available profit is
distributed in:
(a) Profit-sharing ratio (b) Appropriation ratio
(c) Capital ratio (d) Equally
Q.3. The interest on drawings to be charged from a partner on an amount of
30,000 @ 5% p.a. will be:
(a) ₹15,000 (b) ₹1,500
(c) ₹750 (d) ₹150
Q.4. Seeta and Geeta are partners sharing profits and losses in the ratio 4:1.
Meeta was manager who received the salary of ₹ 4,000 p.m. in addition to a
commission of 5% on net profits after charging such commission. Profit for the
year is ₹ 6,30,000 before charging partner’s salary. Find the total
remuneration of Meeta
(a) ₹78,000 (b) ₹88,000
(c) ₹87,000 (d) ₹76,000
Q.5. Anupam and Abhishek are partners sharing profits and losses in the ratio
of 3 : 2. Their capital accounts showed balances of ₹1,50,000 and ₹2,00,000
respectively on April 01, 2023. Show the calculation of interest on
capital for the year ending March 31, 2024 when partnership deed provides
for interest on capital @ 8% p.a. and the firm earned a profit of ₹14,000
during the year.
Q.6. Ajay, Binod and Chandra entered into partnership on 1st April 2019 with a
capital of ₹3,00,000, ₹2,00,000 and ₹1,00,000 respectively. In addition to
capital Chandra has advanced a loan of ₹1,00,000. Since they had no
agreement to guide them, they faced following issues during and at the end of
the year.
1. Ajay wanted interest on capital to be provided @8% pa but Binod and
Chandra did not agree.
2. Chandra wanted that interest on loan be paid to him @ 10% pa but Ajay
and Binod wanted to pay @ 5% pa.
3. Ajay and Binod demanded to share profits in the ratio of their capital
contribution, Chandra is not in agreement with this proposal.
Binod, being working partner, demands a lump sum payment of
 ₹40,000 as remuneration for which the other two partners are not in
agreement. You are required to suggest and help them resolve these issues.
Q.7. Ram and Mohan are partners in a business. Their capitals at the end of the
year were ₹ 24,000 and ₹ 18,000 respectively. During the year, Ram’s
drawings and Mohan’s drawings were ₹ 4,000 and ₹ 6,000 respectively.
Divisible Profit during the year was ₹ 16,000. Calculate interest on capital @
5% p.a. for the year ended 31st March, 2018.
Q.8. P and Q were partners in a firm sharing profits in 3:1 ratio. Their respective
fixed capitals were ₹10,00,000 and ₹6,00,000. The partnership deed provided
interest on capital @ 12 % p.a. even if it will result into a loss to the firm. The
net profit of the firm for the year ended 31st March, 2023 was ₹1,50,000.
Pass necessary journal entries in the books of the firm allowing interest on
capital and division of profit/loss amongst the partners.
Q.9. B and M are partners in a firm. They withdrew ₹ 48,000 and ₹ 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.
Q.10. A and B started business on 1st April, 2017 with capitals of ₹ 15,00,000 and ₹
9,00,000 respectively. On 1st October, 2017, they decided that their capitals
should be ₹ 12,50,000 each. The necessary adjustments in capitals were
made by introducing or withdrawing by cheque. Interest on capital is allowed
@ 8% p.a. Compute interest on capital for the year ended 31st March, 2018.
Q.11 Calculate interest on drawings of Mr. Ashok @ 10% p.a. for the year ended
31st March, 2018, in each of the following alternative cases:
Case 1. If he withdrew ₹ 7,500 in the beginning of each month.
Case 2. If he withdrew ₹ 7,500 at the end of each quarter.
Case 3. If he withdrew ₹ 7,500 during the middle of each half yearly.
Q.12. A and B are partners sharing Profit and Loss in the ratio 3 : 2 having Capital
Account balances of ₹ 50,000 and ₹ 40,000 on 1st April, 2017. On 1st July,
2017, A introduced ₹ 10,000 as his additional capital whereas B introduced
only ₹ 1,000. Interest on capital is allowed to partners @ 10% p.a. Calculate
interest on capital for the financial year ended 31st March, 2018.
Q.13. Saloni and Srishti are partners in a firm. Their capital accounts as on
April 01. 2024 showed a balance of ₹2,00,000 and ₹3,00,000
respectively. On July 01, 2024, Saloni introduced additional capital of
₹50,000 and Srishti, ₹60,000. On October 01, 2024 Saloni withdrew ₹30,000,
and on January 01, 2025 Srishti withdraw, ₹15,000 from their
capitals. Interest is allowed @ 8% p.a. Calculate interest payable on capital
to both the partners during the financial year 2024–2025.
Q.14. Kanika and Gautam are partners doing a dry cleaning business in Lucknow,
sharing profits in the ratio 2 : 1 with capitals ₹ 5,00,000 and ₹ 4,00,000
respectively. Kanika withdrew the following amounts during the year to pay
the hostel expenses of her son:
1st April ₹ 10,000
 1st June ₹ 9,000
1st November ₹ 14,000
1st December ₹ 5,000
Gautam withdrew ₹ 15,000 on the first day of April, July, October and January
to pay rent for the accommodation of his family. He also paid ₹ 20,000 per
month as rent for the office of partnership which was in a nearby shopping
complex. Calculate interest on drawings @ 6% p.a.
Q.15. On 01.04.2018 Raheem and Kareem started partnership business. Raheem
contributed for ₹72,00,000 first and increased by ₹3,00,000 after seven
months. Kareem contributed₹ 3,00,000 first and increased it to ₹4,00,000
after five months and he withdrew out of capital₹ 2,00,000 after nine months.
Calculate interest on capital on 31.03.2019 if rate of interest on capital is 12%
p.a.
Q.16. Calculate Interest on Drawings @10% p.a. in each of the following cases:
Case (A): When ₹10,000 is withdrawn at the beginning of each month.
Case (B): When ₹8,500 is withdrawn at the end of each month.
Case (C): When ₹20,000 is withdrawn in the middle of each month.
Case (D): When ₹30,000 is withdrawn at the beginning of each quarter.
Case (E): When ₹45,000 is withdrawn at the end of each quarter.
Case (F): When ₹25,000 is withdrawn during the middle of each quarter.