Read the following passage and answer the questions
A Solid Partnership
A, V and T were partners of a law firm sharing profits in the ratio of 5:3:2. Their partnership deed provided the following:
(i) Interest on partners' capital @ 5% p.a.
(ii) A guaranteed that he would earn a minimum annual fee of Rs. 6,00,000 for the firm.
(iii) T was guaranteed a profit of Rs. 2,50,000 (excluding interest on capital) and any deficiency on account of this was to be borne by A and V in the ratio of 2:3.
During the year ending March 31, 2019, A earned a fee of Rs. 3,20,000 and net profits earned by the firm were Rs. 8,60,000. Partner's capital on April 01, 2018 were A - Rs. 3,00,000; V - Rs. 3,00,000 and T- Rs. 2,00,000.
Q.) In which ratio the deficiency of T will be borne by A & V.
Correct Answer :
2:3
Solution :
The correct option is 2:3.
To determine the ratio in which the deficiency of T's guaranteed profit will be borne by partners A and V, we look at the specific clauses laid down in the partnership deed provided in the passage.
According to clause (iii) of the partnership agreement:
"T was guaranteed a profit of Rs. 2,50,000 (excluding interest on capital) and any deficiency on account of this was to be borne by A and V in the ratio of 2:3."
Since the deed explicitly states the ratio for sharing any deficiency arising from T's guarantee, we do not need to perform any further mathematical computations. The deficiency will be borne by A and V in the agreed ratio of 2:3.
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