Yadu, Madhu and Vidu are partners, sharing profit and losses in the ratio of 2:2:1. Their fixed capitals on April 01,2018 were:
Yadu ₹5,00,000, Madhu ₹4,00,000 and Vidu is ₹3,50,000.
As per a partnership deed, partners are entitled to interest on capital of @5% p.a. and Yadu has to be paid a salary of ₹2000 per month. The net loss of the firm as per profit and loss account for the year ending March 31, 2019, amounted to ₹75,000. On the basis of the profit and loss appropriation account, Partners' distribution of loss would be:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Yadu Rs. 30,000, Madhu Rs. 30,000, Vidu Rs. 15,000
Interest on capital and a partner’s salary are appropriations of profit: they are allowed only out of profits. The firm has a net loss, so there is nothing to appropriate. No interest and no salary are allowed, and the whole loss is shared in the profit sharing ratio 2:2:1.
Yadu’s share = Rs. 75,000 × 2/5 = Rs. 30,000
Madhu’s share = Rs. 75,000 × 2/5 = Rs. 30,000
Vidu’s share = Rs. 75,000 × 1/5 = Rs. 15,000
Adding interest and salary to the loss (the Rs. 39,600 option) treats them as charges against profit, which they are not. A loss year has no extras to hand out; it only splits the bill.
NCERT (2026-27 edition):
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