Partner Accounts

Commission is income for the partner so it is credited to capital. Record the full agreed amount in exams.

Realisation profit or loss is calculated after all realisation entries. Do not distribute profit or loss before completing realisation.

If debit side is more there is realisation loss. Debit it to partners' capital accounts in profit sharing ratio.

If credit side is more there is realisation profit. It is credited to partners' capital accounts.

A realisation profit is distributed among partners in their profit-sharing ratio. B’s share is 5 out of 12, so B’s share = ₹72,000 × 5/12 = ₹30,000. Therefore, ₹30,000 will be credited to B’s capital account. ₹42,000 is A’s share, while ₹36,000 represents half of the profit. Exam tip: Distribute realisation profit or loss in the partners’ old profit-sharing ratio.

A realisation loss is debited to the partners’ capital accounts in their profit-sharing ratio. C’s share is \(\frac{1}{3+2+1}=\frac{1}{6}\). Therefore, the amount debited to C’s capital account is \(₹66,000 \times \frac{1}{6}=₹11,000\). The closest distractor, ₹22,000, represents B’s \(\frac{2}{6}\) share. Exam tip: Distribute every realisation profit or loss in the partners’ profit-sharing ratio unless the agreement states otherwise.

The total ratio is 2 + 3 = 5, and the partner with the larger share is entitled to 3 parts. Therefore, the amount credited is ₹25,000 × 3/5 = ₹15,000. Accumulated profit is generally distributed through the partners’ capital accounts in their profit-sharing ratio; ₹12,500 would represent an equal division, which is not applicable here. Exam tip: Always use the specified profit-sharing ratio when distributing accumulated profits.

Accumulated loss is debited to the partners’ Capital Accounts in their profit-sharing ratio. Since the ratio is equal, each partner’s share is ₹42,000 ÷ 3 = ₹14,000. Therefore, option C is correct. ₹42,000 represents the total loss, not the amount debited to each partner. Exam tip: Divide the loss according to the profit-sharing ratio before recording the debit in individual partners’ accounts.

Taking asset gives debit and taking liability gives credit. Net effect is ₹12000 minus ₹7000 which is debit ₹5000.

Asset taken reduces capital and liability taken increases it. ₹55000 minus ₹20000 plus ₹8000 equals credit ₹43000.

B’s share of the realisation loss is ₹10,000 × 1/2 = ₹5,000. This loss is debited to B’s Capital Account, so the remaining balance is ₹28,000 − ₹5,000 = ₹23,000. Exam tip: A realisation loss reduces the partners’ capital balances in their profit-sharing ratio.

The deficiency of an insolvent partner is borne by solvent partners as per applicable rule. Choose the ratio according to the rule in exams.

Normal capital adjustments are made first then final capital ratio of solvent partners is found. Distribute deficiency at the end.

A and B’s final-capital ratio is ₹30,000:₹70,000, or 3:7. B’s share is therefore 7/10 of the deficiency: ₹15,000 × 7/10 = ₹10,500. So, option B is correct.

If final capital is zero his share in that ratio is zero. Final capital ratio is the base in exams.

The governing rule is to adjust all items affecting A’s capital account before finding its final balance. A begins with a credit balance of ₹25,000. The realisation commission payable to A is an additional credit of ₹4,000, so the balance becomes ₹29,000 credit. A then takes over an asset valued at ₹6,000; this is debited to A’s capital account because the asset reduces the cash amount ultimately payable to him. Thus, final credit balance = ₹25,000 + ₹4,000 − ₹6,000 = ₹23,000. Option A is correct. Options B and C fail to deduct the asset, while D reverses the direction and gives an unsupported debit balance.

Deduct debit current account and add realisation profit. ₹18000 minus ₹3000 plus ₹5000 equals credit ₹20000.

The credit balance in the current account reduces the debit balance in the capital account. Therefore, the final debit balance is ₹7,000 − ₹2,000 = ₹5,000. ₹9,000 would result only if both balances had the same nature. Exam tip: Subtract balances of opposite nature and retain the nature of the larger balance.

In payment order outside liabilities and partner loans come before return of capital. Do not forget the priority order.

Loan to partner is receivable by the firm. Show the separate loan clearly or adjust it as instructed.

Credit items increase the partner's claim. In exams keep profit and reserves on the credit side.

Asset taken over is debited to the partner's capital account and reduces amount payable. Deduct debit items from final payment in exams.

Paying a private liability benefits the partner personally so his capital account is debited. Treat private payment like a withdrawal in exams.

The firm paid A's private liability so A's capital account is debited. Do not treat a private item as firm's liability in exams.

Bringing private asset benefits the firm so the partner's capital account is credited. Treat it as partner's contribution in exams.