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 Rs. 5,00,000, Madhu Rs. 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 Rs. 2000 per month. The net loss of the firm as per profit and loss account for the year ending March 31, 2019, amounted to Rs. 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 salary to a partner are appropriations of profit. When the firm has made a net loss, there is no profit to appropriate, so neither is allowed; the whole loss is just shared in the profit sharing ratio 2:2:1.
Yadu: Rs. 75,000 × 2/5 = Rs. 30,000
Madhu: Rs. 75,000 × 2/5 = Rs. 30,000
Vidu: Rs. 75,000 × 1/5 = Rs. 15,000
NCERT (2026-27 edition):
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