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Profit is ₹70000. Interest on capital due is ₹50000 and partner salary due is ₹30000. The deed says both are payable only if there is profit. What is the correct treatment?

Answer and explanation

Correct answer: Reduce both proportionately to ₹70000

When no priority is given claims are reduced proportionately if profit is insufficient. Total appropriation cannot exceed profit.

Related tags

PartnershipInsufficient ProfitAppropriationAdjustmentsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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