Read the following passage and answer the questions.
A Solid Partnership
A, V and T were partners of a law firm sharing profits in the ratio of 5:3:2. Their partnership deed provided the following:
(i) Interest on partners' capital @ 5% p.a.
(ii) A guaranteed that he would earn a minimum annual fee of ₹6,00,000 for the firm.
(iii) T was guaranteed a profit of ₹2,50,000 (excluding interest on capital) and any deficiency on account of this was to be borne by A and V in the ratio of 2:3.
During the year ending March 31, 2019, A earned a fee of ₹3,20,000 and net profits earned by the firm were ₹8,60,000.
Partner's capital on April 01, 2018 were A - ₹3,00,000; V - ₹3,00,000 and T- ₹2,00,000.
What is the amount of T's deficiency in profits?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 30,000
A guaranteed partner’s deficiency is the guaranteed amount minus his actual share of the divisible profit. T’s guarantee excludes interest on capital, so it is compared with his share of profit only.
Divisible profit = Rs. 8,60,000 + Rs. 2,80,000 (A’s fee deficiency) − Rs. 40,000 (interest on capital) = Rs. 11,00,000
T’s share = Rs. 11,00,000 × 2/10 = Rs. 2,20,000
Guaranteed amount = Rs. 2,50,000
Deficiency = Rs. 2,50,000 − Rs. 2,20,000 = Rs. 30,000
Leaving out A’s Rs. 2,80,000 makes the divisible profit only Rs. 8,20,000 and T’s share Rs. 1,64,000, which overstates the deficiency. A’s shortfall in fees is his own obligation to the firm, so it is added to the profit before sharing.
Note: The book’s own question prints Arun’s capital as Rs. 30,00,000; its solution charges him interest of Rs. 15,000, which is 5% of Rs. 3,00,000, so the book’s Rs. 30,00,000 is a misprint. The NTA passage has the correct Rs. 3,00,000.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
|
