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 profit to be credited to A's Capital account?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs. 5,38,000
A’s share of the divisible profit is credited to his capital account, and his part of T’s deficiency is then deducted from it. His own fee deficiency is a separate debit to his capital (it was added to the profit first), so it does not reduce this figure.
Divisible profit = Rs. 8,60,000 + Rs. 2,80,000 − Rs. 40,000 = Rs. 11,00,000
A’s share = Rs. 11,00,000 × 5/10 = Rs. 5,50,000
Less: A’s share of T’s deficiency = Rs. 30,000 × 2/5 = Rs. 12,000
Profit credited to A’s capital = Rs. 5,50,000 − Rs. 12,000 = Rs. 5,38,000
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):
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