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Accountancy · 2025 · 3 marks
CBSE 2025 · Region 5 · Set 1 · Q17
Suman and Lata were partners in a firm sharing profits and losses in the ratio of $\displaystyle 3$ : 2. On 1st April, $\displaystyle 2023$, their capital accounts showed balances of ₹ $\displaystyle 1,50,000$ and ₹ $\displaystyle 2,00,000$, respectively. The partnership deed provided for interest on capital @ $\displaystyle 8$% p.a. Show the treatment of interest on capital in the following cases if : (i) The firm earned a profit of ₹ $\displaystyle 14,000$ for the year ended 31st March , 2024. (ii) The firm earned a profit of ₹ $\displaystyle 60,000$ for the year ended 31st March , 2024.
Marking-scheme solution
(i)
Dr. Profit & Loss Appropriation A/c Cr.
31st
for the year ended March, $\displaystyle 2024$
Particulars Amount Particulars Amount
₹ ₹
Interest on Capital: P & L A/c (Net Profit) $\displaystyle 14,000$
Suman $\displaystyle 6,000$
Lata $\displaystyle 8,000$ ($\displaystyle 1$½) $\displaystyle 14,000$
$\displaystyle 14,000$ $\displaystyle 14,000$
(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) $\displaystyle 60,000$
Suman $\displaystyle 12,000$
Lata $\displaystyle 16,000$ ($\displaystyle 1$½) $\displaystyle 28,000$
Profit transferred to capital accounts:
Suman $\displaystyle 19,200$
Lata $\displaystyle 12,800$ $\displaystyle 32,000$
$\displaystyle 60,000$ $\displaystyle 60,000$
Alternatively,
(i)
As the profit for the year is ₹$\displaystyle 14,000$, which is less than the amount of interest on capital due
to partners, i.e. ₹$\displaystyle 28,000$ (₹$\displaystyle 12000$+₹$\displaystyle 16000$), therefore, interest will be paid to the extent of
available profits i.e. ₹$\displaystyle 14,000$ in the ratio of interest on capital ($\displaystyle 3$:$\displaystyle 4$).
Suman’s interest on capital= 14000x $\displaystyle 3$/$\displaystyle 7$= ₹ $\displaystyle 6,000$
Lata’s interest on capital= 14000x $\displaystyle 4$/$\displaystyle 7$= ₹$\displaystyle 8,000$
(ii)
As the profit for the year is ₹$\displaystyle 60,000$, which is sufficient to pay the amount of interest on
capital due to partners, therefore, Full interest will be paid.
Suman’s interest on capital= ₹ $\displaystyle 12,000$
Lata’s interest on capital= ₹$\displaystyle 16,000$
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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.