Profit Distribution

Personal income tax is not firm expense. If paid by firm it is treated as drawings of the concerned partner.

The governing concept is that a specific agreement in the partnership deed can override the ordinary profit-and-loss ratio. Although A and B normally share profits in the ratio 1:4, the question expressly states that B will not share losses. Consequently, the entire loss of Rs 60,000 must be borne by A. A’s loss share is therefore Rs 60,000, making option A correct. Option B would be A’s share if the ordinary 1:4 ratio were applied to the loss, while option C would be B’s ordinary share under that ratio. Option D incorrectly assumes that A is also exempt. The special clause concerning losses has priority over the general profit-sharing ratio.

A loss in the appropriation account is borne by partners in their profit‑sharing ratio. Here A:B = 2:3, total parts = 5. A’s share = (2/5) × 10,000 = 4,000 rupees, so 4,000 is debited to A. The common distractor 6,000 rupees is actually B’s share (3/5 × 10,000), not A’s. Exam tip: Always add the ratio parts first and then multiply the partner’s fraction by the total; check whether salary/interest has already been accounted for before sharing.

Explanation: A's salary ₹50,000 exceeds the net profit ₹30,000. Excess salary = ₹50,000 − ₹30,000 = ₹20,000, which becomes a loss shared by partners. With A:B = 2:3, total parts = 5. B's share = (3/5) × ₹20,000 = ₹12,000. Thus ₹12,000 is correct. Closest distractor ₹8,000 is A's share (2/5 of ₹20,000), and ₹20,000 is the total loss, not B's portion. Exam tip: If salary specified in the deed is payable but profit is insufficient, treat the excess as a loss to be divided in the profit‑sharing ratio—compute excess first, then apply the ratio.

C commission is fifteen thousand and remaining profit is one lakh thirty five thousand. B three tenths share is forty thousand five hundred.

A bonus is ten thousand eight hundred and remaining profit is sixty one thousand two hundred. B share is five twelfths which is twenty five thousand five hundred.

Bonus is fifteen percent of seventy two thousand which is ten thousand eight hundred. B gets five twelfths of sixty one thousand two hundred which is twenty five thousand five hundred.

Total sales are six lakh and first period share is four sixths or two thirds. Two thirds of ninety thousand is sixty thousand.

Wrong treatment deducted drawings from profit, reducing net profit by \(\text{Rs }20000\). Correct treatment removes this deduction (drawings are not expenses), so net profit is increased by \(\text{Rs }20000\) compared to the wrong treatment.

C actual share is forty thousand so deficiency is ten thousand. A bears it from eighty thousand so final profit is seventy thousand.

Guarantee deficiency does not change total profit. It is an adjustment between guaranteed and guaranteeing partners.

The governing concept is sequential appropriation: A’s bonus is deducted first, and only the remaining profit is distributed in the agreed 3:2 ratio. A’s bonus is 20% of Rs 50,000, so it equals Rs 10,000. The residual profit is therefore Rs 50,000 − Rs 10,000 = Rs 40,000. The ratio 3:2 contains five parts, and B is entitled to two parts. Thus B’s share is 2/5 × Rs 40,000 = Rs 16,000. Option A is correct. Option B is the entire residual profit before division, option C is A’s bonus rather than B’s share, and option D does not correspond to B’s two-fifths share. The total check is Rs 10,000 + Rs 24,000 + Rs 16,000 = Rs 50,000.

As per deed A does not share remaining profit. B and C share sixty thousand equally so C gets thirty thousand.

The governing concept is the effect of an express loss-exemption clause. A is entitled to share profits but is specifically not liable for losses. Consequently, the entire loss of Rs 30,000 must be borne by B, regardless of the 1:2 profit-sharing ratio. B’s account will therefore be debited by Rs 30,000, making option A correct. Option B would incorrectly apply the profit ratio to the loss; option C would apply A’s one-part ratio to the loss even though A is exempt; and option D would fail to record the loss against the partner who must bear it. Profit and loss rights need not be identical when the deed provides otherwise.

Remaining profit is two lakh plus ten thousand minus thirty thousand minus twenty thousand minus twenty five thousand equal to one lakh thirty five thousand.

C share among guaranteeing partners is one third. One third of eighteen thousand is six thousand rupees debit.

Guarantee deficiency gives B additional profit. Therefore B account is credited with the full deficiency of eighteen thousand rupees.

Matching final totals catches mistakes in commission guarantee reserve and ratio. It is the safest check in hard questions.

Interest on drawings is income for the firm and is therefore credited to the Profit and Loss Appropriation Account. A correct credit of Rs 11,000 would increase distributable profit by Rs 11,000. Instead, the account was debited by Rs 11,000, which decreases profit by Rs 11,000. The total error compared with the correct treatment is therefore Rs 11,000 + Rs 11,000 = Rs 22,000. Consequently, distributable profit is understated by Rs 22,000. The figure Rs 11,000 captures only one side of the error and ignores the missed credit; Rs 33,000 overstates the difference; and no effect is incorrect because both the account balance and profit distribution are affected. Hence option A is correct.

The governing concept is the effect of reversing the correct debit and the incorrect credit. Partner salary is an appropriation of profit and, in the relevant adjustment, it should reduce the profit available for distribution by Rs 18,000. Instead, crediting it increases the reported remaining profit by Rs 18,000. Thus the difference between the correct and erroneous treatments is Rs 18,000 + Rs 18,000 = Rs 36,000. Therefore, the remaining profit is overstated by Rs 36,000, making option A correct. Option B considers only the erroneous credit and ignores the missing debit. Option C gives the wrong direction, while option D ignores the accounting effect.

The governing rule is that an item which should be debited reduces profit, whereas a credit increases the balance used for distribution. The correct treatment would therefore lower distributable profit by Rs 40,000. Because the item was actually credited, the reported distributable profit rises by Rs 40,000 instead. The total overstatement compared with the correct position is consequently Rs 40,000 + Rs 40,000 = Rs 80,000. Hence option A is correct. Option B measures only the effect of the wrong credit and misses the debit that should have been recorded. Options C and D do not follow the debit-credit difference.

Answer: A, Rs 55,000. First remove A’s salary from the stated profit: Rs 3,80,000 − Rs 50,000 = Rs 3,30,000. The phrase “after charging the commission” means B’s commission is calculated on the amount left after the commission itself has been deducted. Let the commission be C. Then C = 20% of (3,30,000 − C), so C = 0.20(3,30,000 − C). Expanding gives C = 66,000 − 0.20C, hence 1.20C = 66,000 and C = 55,000. A useful shortcut is commission = 20/(100 + 20) × 3,30,000 = 20/120 × 3,30,000 = Rs 55,000. B is simply 20% of Rs 3,30,000 and ignores the “after commission” wording. C is too large and does not satisfy the equation. D merely repeats the salary amount, which is unrelated to the required commission.

The governing concept is appropriation of profit: a commission specified on total profit is calculated first, and the remaining profit is then distributed in the agreed ratio. A’s commission is 15% of ₹1,20,000, which equals ₹18,000. The residual profit is ₹1,20,000 − ₹18,000 = ₹1,02,000. Since A and B share this balance in the ratio 3:1, A receives 3/4 of it, or ₹1,02,000 × 3/4 = ₹76,500. A’s total share is therefore commission plus residual share: ₹18,000 + ₹76,500 = ₹94,500. Thus option A is correct. Option C excludes the commission, while B and D do not apply both the commission and the stated ratio correctly.

The governing concept is appropriation before residual profit sharing. A partner’s salary and another partner’s commission are deducted from the stated profit before the balance is divided in the profit-sharing ratio. Total appropriations are ₹20,000 + ₹16,000 = ₹36,000. Therefore, the remaining profit is ₹1,60,000 − ₹36,000 = ₹1,24,000. The combined ratio is 3+3+2 = 8, and A has three parts. A’s share of the remaining profit is ₹1,24,000 × 3/8 = ₹46,500. Hence option A is correct. ₹60,000 would result from distributing the original profit without deductions; the other alternatives use an incorrect balance or ratio fraction.