Question

Dev, Gautam, and Kamal were three partners sharing profits and losses in the ratio of 2 : 1 : 2. On 1st April, 2020, their capital account balances stood at ₹ 90,000, ₹ 80,000 and ₹ 20,000 (Dr.) respectively. On this date they admitted Naveen into the partnership with a capital of ₹ 50,000. Naveen is to have a `1/4` share of the profits with a guaranteed minimum share of distributable profit of ₹ 40,000. The new profit-sharing ratio among the partners being Dev : Gautam : Kamal : Naveen = 6 : 2 : 7 : 5. The profit of the firm for the year 2020-21 was ₹ 1,60,000 before the following adjustments were made: Interest on Capital @ 10% per annum to be allowed to the partners. Interest on Drawings: Dev: ₹ 3,000; Kamal: ₹ 6,000. Salary to Partners: Gautam: ₹ 7,000; Naveen: ₹ 10,000.

Deficiency in Naveen’s profits will be:

Options

• ₹ 8,000

• ₹ 7,500

• ₹ 12,500

• ₹ 12,000

Answer 1

₹ 7,500

Explanation:

Interest on Capitals:

Dev = `90,000 xx 10/100`

= 9,000

Gautam = `80,000 xx 10/100`

= 8,000

Naveen = `50,000 xx 10/100`

= 5,000

Total Interest on Capitals = 9,000 + 8,000 + 5,000

= 22,000

Particulars	Amount (₹)
Net Profit	1,60,000
Less: Interest on Capitals	22,000
Less: Salary to Partners (₹ 7,000 + ₹ 10,000)	17,000
	1,21,000
Add: Interest on Drawings (₹ 3,000 + ₹ 6,000)	9,000
Divisible Profit	1,30,000
Naveen’s Share: `1,30,000 xx 1/4`	32,500
Minimum Guaranteed Amount	40,000
Deficiency	7,500