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Accountancy · 2025 · 3 marks
CBSE 2025 · Region 5 · Set 3 · Q17
Prathma, Madhyama and Tritiya were partners in a firm sharing profits and losses in the ratio of $\displaystyle 2$ : $\displaystyle 2$ : 1. On 1st April, $\displaystyle 2023$, their capital accounts showed balances of ₹ $\displaystyle 10,00,000$, ₹ $\displaystyle 8,00,000$ and ₹ $\displaystyle 6,00,000$, *s respectively. The partnership deed provided for interest on capital @ $\displaystyle 10$% p.a. Show the treatment of interest on capital in the following cases if : (i) During the year ended 31st March, $\displaystyle 2024$, the firm earned a profit of ₹ $\displaystyle 3,00$,000. (ii) During the year ended 31st March, $\displaystyle 2024$, the firm earned a profit of ₹ $\displaystyle 1,20$,000.
Marking-scheme solution
(i)
Dr. Profit & Loss Appropriation A/c Cr.
for the year ended 31st March, $\displaystyle 2024$
Particulars Amount Particulars Amount
₹ ₹
Interest on Capital: P & L A/c (Net Profit) $\displaystyle 3,00,000$
Prathma $\displaystyle 1,00,000$
Madhyama $\displaystyle 80,000$ $\displaystyle 2,40,000$
Tritiya $\displaystyle 60,000$ ($\displaystyle 1$½)
Profit transferred to capital accounts:
Prathma $\displaystyle 24,000$
Madhyama $\displaystyle 24,000$
Tritiya $\displaystyle 12,000$ $\displaystyle 60,000$
$\displaystyle 3,00,000$ $\displaystyle 3,00,000$
(ii)
Dr. Profit & Loss Appropriation A/c Cr.
for the year ended 31st March, $\displaystyle 2024$
Particulars Amount Particulars Amount
₹ ₹
Interest on Capital: P & L A/c (Net Profit) $\displaystyle 1,20,000$
Prathma $\displaystyle 50,000$
Madhyama $\displaystyle 40,000$
Tritiya $\displaystyle 30,000$ ($\displaystyle 1$½) $\displaystyle 1,20,000$
$\displaystyle 1,20,000$ $\displaystyle 1,20,000$
Alternatively,
(i)
As the profit for the year is ₹$\displaystyle 3,00,000$, which is sufficient to pay the amount of interest on
capital due to partners, therefore, Full interest will be paid.
Prathma’s interest on capital= ₹$\displaystyle 1,00,000$
Madhyama’s interest on capital= ₹$\displaystyle 80,000$
Tritiya’s interest on capital = ₹$\displaystyle 60,000$
(ii)
As the profit for the year is ₹$\displaystyle 1,20,000$, which is less than the amount of interest on capital due
to partners, i.e. ₹$\displaystyle 2,40,000$ (₹$\displaystyle 1,00,000$+₹$\displaystyle 80,000$+₹$\displaystyle 60,000$), therefore, interest will be paid to
the extent of available profits i.e. ₹$\displaystyle 1,20,000$ in the ratio of interest on capital ($\displaystyle 5$:$\displaystyle 4$:$\displaystyle 3$).
Prathma’s interest on capital = $\displaystyle 1,20$,000x $\displaystyle 5$/$\displaystyle 12$= ₹$\displaystyle 50,000$
Madhyama’s interest on capital = $\displaystyle 1,20$,000x $\displaystyle 4$/$\displaystyle 12$= ₹$\displaystyle 40,000$
Tritiya’s interest on capital = $\displaystyle 1,20$,000x $\displaystyle 3$/$\displaystyle 12$=₹$\displaystyle 30,000$
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CBSE Class 12 Accountancy past-paper question from the 2025board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.