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 V's Capital account?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 3,12,000
First work out the profit available for distribution, share it in 5:3:2, and then make good T’s guarantee. V bears 3/5 of T’s deficiency (the ratio 2:3 between A and V), so his share is reduced by that amount.
Net profit = Rs. 8,60,000
Add: A’s deficiency of fee brought in by A = Rs. 2,80,000 (Rs. 6,00,000 − Rs. 3,20,000)
Less: interest on capital = Rs. 15,000 + Rs. 15,000 + Rs. 10,000 = Rs. 40,000
Divisible profit = Rs. 8,60,000 + Rs. 2,80,000 − Rs. 40,000 = Rs. 11,00,000
V’s share = Rs. 11,00,000 × 3/10 = Rs. 3,30,000
T’s deficiency = Rs. 2,50,000 − Rs. 2,20,000 = Rs. 30,000
V bears Rs. 30,000 × 3/5 = Rs. 18,000
Profit credited to V = Rs. 3,30,000 − Rs. 18,000 = Rs. 3,12,000
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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