Accounting for Partnership: Basic ConceptsClass 12 Accountancy Part 1 Case Study Questions

Aakriti and Bindu entered into a partnership on April 1, 2019, to manufacture garments, without any partnership agreement. They introduced capitals of Rs. 5,00,000 and Rs. 3,00,000 respectively. On October 1, 2019, Aakriti advanced Rs. 20,000 by way of a loan to the firm but there was no agreement as to the interest rate. The Profit and Loss account for the year ended March 31, 2020, showed a profit of Rs. 43,000, but the partners could not agree upon the question of interest and the basis of division of profit. Aakriti claimed interest on her loan at 12% p.a. and suggested that profits be shared in the capital ratio. Bindu disagreed and argued that profits should be shared equally and no interest on loan should be given as it was not agreed upon.

Sameer and Yasmin are partners. The partnership deed specifies that the firm will follow the Fixed Capital Method. On April 1, 2019, their capital account balances were Sameer: Rs. 15,00,000 and Yasmin: Rs. 10,00,000. During the year 2019-20, Sameer introduced additional capital of Rs. 3,00,000 on October 1, 2019. The following transactions also occurred during the year:

Mohit and Rohan share profits and losses in the ratio of 2:1. They admit Rahul as a partner with a 1/4 share in profits, with a guarantee that his share of profit shall be at least Rs. 50,000. The new profit sharing ratio among Mohit, Rohan, and Rahul is 2:1:1. Any deficiency on account of the guarantee is to be borne by Mohit and Rohan in their original profit-sharing ratio of 2:1. The net profit of the firm for the year ending March 31, 2020, was Rs. 1,60,000.