Questions for the fundamentals of partnership
6.Sita and Geeta are partners in a firm sharing profits in the ratio of 3 : 2. They had given loan to the firm of ₹30,000 in their profit-sharing ratio on 1st October, 2024. The Partnership Deed does not prescribe for interest on loans from partners. Compute interest payable by the firm to the partners, assuming the firm closes its books every year on 31st March.
[Ans : Interest payable to Sita — ₹30,000 × 3/5 × 6/100 × 6/12 = ₹540;
Interest payable to Geeta — ₹30,000 × 2/5 × 6/100 × 6/12 = ₹360.]
Hint: According to the Indian Partnership Act, 1932, interest @ 6% p.a. is payable on the amount of loan given by partners. In the present case, interest will be payable for 6 months, i.e., from 1st October, 2024 to 31st March, 2025.
7.Bat and Ball are partners sharing the profits in the ratio of 2 : 3 with capitals of ₹1,20,000 and ₹60,000 respectively. On 1st October, 2024, Bat and Ball gave loans of ₹2,40,000 and ₹1,20,000 respectively to the firm. Bat had allowed the firm to use his property for business for a monthly rent of ₹5,000. Loss for the year ended 31st March, 2025 before rent and interest amounted to ₹9,000. Show distribution of profit/loss.
[Ans : Share of Loss: Bat — ₹31,920; Ball — ₹47,880.]
Hint: Interest on Loan by partner and Rent are charges against profit.
Important points:
1. Minimum no. = 2 and Maximum is 50.
2. Minor can be partner for benefit.
3. Every partner should be competent to do business.
4. Partnership agreement is to do business.
5. Agreement should be to share profit/losses.
6. Business may be carried on by all or any of the partners acting for all.
In absence of partnership deal
1. Profit sharing ratio = Equal
2. Interest on Capital = Not allowed
3. Interest on Drawings = Not charged
4. Remuneration to partners = Not allowed
5. Admission = Every partner should agree for admission
Charge vs Appropriation
Exercise Problems
Given : Sita, Geeta
Ratio 3:2
Sita & Geeta gave loan of 30,000 (in 3:2)
Date of loan 1st Oct (6 months)
Important point
When partners give loan to the firm, interest on loan is to be calculated @ 6% p.a. (if nothing is mentioned).
Given:
Bat and Ball (partners)
Ratio 2:3
Bat’s loan to firm = ₹ 2,40,000
Ball’s loan to firm = ₹ 1,20,000
Date of loan = 1st Oct (6 months)
Loss = ₹ 9,000
Calculation of Interest:
Important Points
Interest on Capital is not calculated at a loss and moreover appropriations are subject to profit.
IOL (Interest on Loan) is a charge (irrespective of profit or loss).
Exercise Problem 8
Given:
Anil, Sunil, Praveen (partners)
Profit sharing ratio = 3:2:1
Sunil’s loan to the firm (existing) = ₹ 3,00,000
Rate of Interest = 10% p.a.
Journal Entries
