In the absence of partnership deed:

Partners are entitled for any remuneration

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Interest is to be charged on drawing

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Partners share profit or losses equally

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Partners are entitled to any interest on their capital balances

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Solution

The correct option is C Partners share profit or losses equally
1. # All partners will divide profit and loss equally.
2. # If any partner gave loan to firm, partnership firm will give 6% interest on that loan.
3. # No salary is given to any partner for participation in the work of partnership firm.
4. # No interest will be given on the capital of partners.
5. # Partnership firm will not take interest on his given amount in the form of drawing to any partner.

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Similar questions

A, B and C were partners. Their capital were Rs 30,000, Rs 20,000 and Rs 10,000 respectively. According to the partnership deed, they were entitled to an interest on capital at 5%. p.a. In addition, B was also entitled to draw a salary of Rs 500 per month. C was entitled to a commission of 5% on the profit after charging the interest on capital but before charging the salary payable to B. The net profit for the year was Rs 30,000 distributed in the ratio of their capitals without providing for any of the above adjustment. The profits were to be shared in the ratio of 2 : 2 : 1. Pass the required adjustment entry and show the working.

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Q. A, B and C were partners. Their capitals were A–₹ 30,000; B–₹ 20,000 and C–₹ 10,000 respectively. According to the Partnership Deed, they were entitled to an interest on capital @ 5% p.a. In addition, B was also entitled to draw a salary of ₹ 500 per month. C was entitled to a commission of 5% on the profits after charging the interest on capital, but before charging the salary payable to B. The net profit for the year were ₹ 30,000 distributed in the ratio of capitals without providing for any of the above adjustments. The profits were to be shared in the ratio of 5 : 3 : 2.
Pass necessary adjustment entry showing the workings clearly.