Adjustments

Total interest is (₹27000). Wrong excess profit was (₹15000) and (₹12000) while correct interest is A (₹18000) and B (₹9000). A gains (₹3000).

Interest on capital has priority and the available profit is already insufficient for it. So no profit remains for salary.

The deficiency is the difference between the guaranteed minimum profit and A’s normal share: ₹60,000 − ₹52,000 = ₹8,000. Since B and C bear it in the ratio 3:1, B bears 3 out of the total 4 parts: ₹8,000 × 3/4 = ₹6,000. Therefore, the correct answer is ₹6,000. Exam tip: Divide the deficiency according to the stated ratio, not according to the partners’ normal profit shares.

C's normal share is (₹20000), so deficiency is (₹10000). A's normal share (₹40000) becomes (₹30000).

When the deed is silent loan interest is (6%) per annum and the period is (8) months. Interest is (75000\times6%\times\frac{8}{12}=₹3000).

Interest on partner's loan is a charge against profit. It should be debited to profit and loss account, not appropriation account.

A debit balance in current account shows amount recoverable from partner. Fixed capital account has a different meaning.

Opening capital (=160000+20000-12000-30000=₹138000). In reverse calculation subtract credit items.

Interest is (200000\times8%+50000\times8%\times\frac{9}{12}-30000\times8%\times\frac{3}{12}=₹18800). Dates of capital changes are important.

B pays (₹8000) and the increased profit is shared (3:1). A gets (₹6000) and B gets (₹2000), so A gains (₹6000).

The omitted expense will reduce the firm's profit by ₹10,000. A's share is 2 out of the total 5 parts, so the decrease in A's profit share is \(₹10,000 \times \frac{2}{5}=₹4,000\). ₹10,000 is the reduction in the firm's total profit, not A's individual share. Exam tip: Allocate the effect of an omitted expense according to the partners' profit-sharing ratio.

Personal insurance premium is the partner's personal expense. If paid by firm it is treated as drawings.

Goods taken for personal use are treated as drawings and purchases are reduced. Partner's account is debited.

Partner salary is generally an appropriation of profit. If there is no profit and no special instruction it is not allowed by increasing loss.

A's claim is (₹18000) and B's claim (₹12000) but profit is (₹20000). A gets (20000\times\frac{3}{5}=₹12000) in (3:2).

Profit was wrongly overdistributed (3:2), that is A (₹15000) and B (₹10000). Correct interest gives B (₹15000), so A transfers (₹5000) to B.

If commission is on profit before commission the base is total profit. The phrase after profit distribution can confuse but commission is calculated first.

A's bonus of ₹25,000 is deducted from the total profit before the remaining profit is shared. Profit available for distribution = ₹90,000 − ₹25,000 = ₹65,000. Since 5:5 means equal sharing, B's share is ₹65,000 ÷ 2 = ₹32,500. ₹45,000 is incorrect because it ignores the deduction of the bonus. Exam tip: When a bonus is paid before profit sharing, subtract it from total profit first and distribute the balance among the partners.

In the Profit and Loss Appropriation Account, interest on capital of ₹22,000 and partner’s salary of ₹18,000 are debited. Interest on drawings of ₹5,000 is credited. Therefore, net debit effect = ₹22,000 + ₹18,000 − ₹5,000 = ₹35,000. ₹40,000 represents only the total debit items and ignores the credit for interest on drawings. Exam tip: Add the appropriation items debited and subtract the items credited to find the net effect.

Capital interest is on (₹120000) for (6) months and (₹60000) for next (6) months, and loan interest is (₹1800). Total is (₹10500).

A joined on \(1\) July and the year ends on \(31\) March, so A is entitled for \(9\) months (July to March). Salary for the year \(=\frac{9}{12}\times ₹24,000=₹18,000\).

Drawings are not limited to cash physically taken out by a partner. When the firm pays a partner’s personal expense, the firm has paid on the partner’s behalf, so the amount is treated as a drawing. Here the personal rent of ₹11,000 is therefore recorded as the partner’s drawing, even though the partner did not receive cash directly.

For interest on drawings, the relevant date is the date on which the partner receives the benefit or the firm makes the personal payment. From that date, the amount is treated as withdrawn for calculating interest, according to the partnership agreement or usual accounting rule. Hence option A, “from the date of payment,” is correct. It is not automatically counted from the beginning or end of the year, and it is certainly not ignored.

Direct answer: Option A, ₹68,000. Interest on A's capital is 12% of ₹50,000 = ₹6,000. Interest on B's capital is 12% of ₹1,50,000 = ₹18,000. Thus total interest on capital is ₹24,000. The residual profit after charging this interest is ₹44,000, so total profit before the interest charge was ₹24,000+₹44,000=₹68,000. Equal sharing of the residual profit does not change the total; each partner would receive ₹22,000 from the residual, but the question asks total profit. Option A is correct. Option B, ₹62,000, subtracts instead of adding the interest. Option C, ₹74,000, uses an incorrect interest amount. Option D, ₹56,000, also does not restore the ₹24,000 interest to the residual profit. Memory cue: total profit = interest on capital + residual profit, after calculating each interest carefully.

Deficiency of a guarantee is not recovered from the guaranteed partner. Usually other or specified partners bear it.

Interest on capital is allowed on positive capital. Interest on negative balance is not allowed unless specifically instructed.