Partnership Deed

Salary is allowed as per deed and the deficiency may become loss after appropriation. Such loss is shared in the profit sharing ratio.

Average capital reflects capital movements during the year. Drawings reduce capital and may reduce the base for interest.

Goods taken for personal use are drawings. If the deed charges interest it may apply to that value also.

The deficiency is fifty thousand minus forty thousand which is ten thousand. Since B alone guarantees it the amount is debited to B.

Profit ratio is a key basis in the deed. Applying a new ratio without documented amendment may create disputes among partners.

The additional capital remained for six months. Six percent on forty thousand for half year is one thousand two hundred rupees.

From first July to thirty first March is nine months. Twelve percent on thirty thousand for nine by twelve gives two thousand seven hundred rupees.

Direct answer: Option A is correct. A partnership deed may contain a special agreement that one partner will not bear losses. Such a valid agreed clause is followed instead of applying an automatic general rule. First exclude the protected partner from the loss. Then distribute the loss among the remaining partners in the ratio stated in the deed. Option A works because it follows the deed’s specified ratio. Option B is wrong because equal sharing is used only when the applicable agreement requires it or when no different ratio is available; it cannot override this special clause. Option C is wrong because losses are not automatically divided according to capital contributions. Option D is wrong because drawings measure withdrawals, not the agreed loss-sharing basis. The important reasoning is: read the special clause, remove the exempted partner, and use the remaining stated ratio. The exact figures are not supplied, so no numerical allocation should be invented. Exam cue: a clear partnership agreement normally controls the distribution.

Such a clause gives a basis for amount due on death. It reduces disputes between heirs and continuing partners.

If cash is not brought goodwill may be adjusted through the new partners account. Old partners are credited in sacrificing ratio.

An unauthorized loan may create dispute about whether the firm is liable. Written consent gives control and evidence.

Capital profit is not normal trading profit. As per deed it may be adjusted to capital reserve or capital accounts.

When profit is low priority of salary interest and commission may cause disputes. A stated order makes calculation easier.

If the deed gives an order it must be followed. A later appropriation may not be allowed when profit is insufficient.

A special clause may exempt the new partner from losses. Loss will be shared by partners who are liable under the deed.

At dissolution the order of liabilities and capital payments is important. A method in the deed reduces confusion.

When payment is made in instalments the unpaid amount remains a liability. It is properly shown as retiring partners loan account.

On A capital of sixty thousand B required capital is forty thousand. B has fifty thousand so excess is ten thousand.

For equal drawings at month end average period is five and a half months. Ten percent on seventy two thousand for five point five by twelve gives three thousand three hundred rupees.

For equal drawings at month beginning average period is six and a half months. Ten percent on seventy two thousand for six point five by twelve gives three thousand nine hundred rupees.

Direct answer: Option A is correct. Partner salary is an appropriation of profit and is recorded according to the partnership deed. If different partners have different salary rates, calculate each salary using that partner’s own rate and the relevant period. For example, if one partner receives Rs 10,000 per month for 12 months, the amount is Rs 1,20,000; another partner’s amount may differ because the rate or period differs. Option A works because the deed is the controlling basis. Option B is wrong because different stated rates do not become equal merely for convenience. Option C is wrong because capital ratio is not the basis unless the deed expressly says so. Option D is wrong because drawings show withdrawals and do not determine salary. The accounting idea is that salary is not an automatic business expense here; it is a distribution or appropriation made under agreed terms. First read the rate, then the period, and calculate partner by partner. Memory cue: salary follows the deed, not equality, capital, or drawings.

The direct answer is option A: the interest is a gain for the firm. If a partner brings capital late and the deed requires interest for the delay, that partner must pay the stated interest to compensate the firm for the period during which the promised capital was unavailable. The accounting direction is therefore from the concerned partner to the firm. Option A is correct because the firm receives the amount and benefits from the compensation. Option B is wrong because the delayed partner is the person who pays the interest, not the person who gains it. Option C is wrong because a bank is not involved merely because the firm has a capital contribution arrangement. Option D is wrong because customers neither pay nor receive this contractual interest and have no role in the partners’ capital obligations. This interest is distinct from interest allowed on capital: here the partner is charged because of delay. The exact rate and calculation depend on the deed. First identify the delayed amount, rate and delay period, then calculate the stipulated interest. Memory cue: delayed capital means partner pays, firm receives.

Normally loan interest is a charge but the deed may impose a special condition. In such a case the deed restriction must be followed.

Arbitration helps settle account related disputes before court action. It reduces disruption in firm operations.

Actual profit up to death date may be difficult to calculate immediately. The deed gives an accepted basis for estimation.