NAME : Mihir Agarwal

CLASS : XII
SEC :C
ROLL:2
 ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my
teacher Mr P.K SAHU as well as our principal Mrs Rajani
Shekhar who gave me the golden opportunity to do this
wonderful project on the topic –FUNDAMENTAL OF
PARTNERSHIP
which also helped me in doing a lot of Research and I came to
know about so many new things I am really thankful to them.
Secondly I would also like to thank my parents and sister who
helped me a lot in finalizing this project within the limited time
frame.
THANKS TO EVERYONE WHO HELPED ME

contents
SL NO Particulars Page No

1 Cover Page 1

2 Acknowledgement 2

3 Contents 3

4 Introduction 4-5

5 Case Study 6-19

6 Transaction 6-7

7 Journal 8-9

8 Ledger 10-14

9 Trial Balance 15
10 Adjustments 16

11 Trading and P&L A/c 17

12 P&L Appr A/c 17

13 Partners Capital A/c 18

14 Partners Loan A/c 18

15 Balance Sheet 18

16 Pie Chart 19

17 Conclusions 20

18 Bibliography 21
 introduction
A partnership firm is a business jointly owned by two or more persons. Partnership is
defined by Indian Partnership Act of 1932 as “the relation between persons who have agreed
to share profits of a business carried on by all or any one of them acting for all”. This
definition highlights the following features of a partnership business.

i) A partnership involves two or more persons. ii) It is formed on the

basis of an agreement. iii) It is formed for conducting a business. iv)
Profit or loss arising from the business will be shared by the partners.
v) It may be run by all the partners or any one of the partners representing all of them.

Accounting for partnership involves several special adjustments due to the presence of more
than one owner. It should safeguard the rights of partners and it should establish liabilities of
partners in an impartial manner. Any error in accounting decision will result in undue
advantage to some partners at the expense of others. This problem does not arise in a sole
trading business since there is only one owner, whose decisions, whether they are right or
wrong would affect only his own interest.

Partnership Deed – Meaning, Impact

Partnership deed is the written agreement between partners. This agreement contains all the
terms and conditions agreed between partners. Rights, duties and liabilities of all partners are
stated in the partnership deed.

The effect or impact of partnership deed is that it guides partners’ decisions at all stages of
the business. In the absence of a Partnership Deed or when the Deed is silent on an issue, the
partners are expected to follow the relevant provisions of the Indian Partnership Act, 1932.
The Act gives guidelines on the general principles of partnership business. If the partners
agree on any specific condition such as interest on capital, salary etc. such agreements are to
be clearly stated in the partnership deed.

Contents of the Partnership Deed

A Partnership Deed contains elaborate provisions on almost all aspects of a partnership

business. If the partnership deed does not contain any specific condition on any issue, it will
be decided according to the provisions of the Partnership Act. Following is the list of major
items mentioned in a partnership deed.

i) Name address of the partnership business

ii) ii) Names and addresses of partners
iii) iii) Nature of partnership business
iv) iv) Profit or loss sharing arrangement
v)Duties and responsibilities of each partner in conducting the business

vi) Method of accounting, auditing etc.

vii) Conditions regarding maintenance of bank account.
viii) Conditions regarding drawings
ix) Conditions regarding interest on capital, interest on drawings etc.
x) Whether, or not salary is allowed to partners, conditions regarding salary.
xi) Conditions regarding loans from partners, loans to partners
xii) Valuation and presentation of goodwill
xiv) Arbitration clause, to settle disagreement if any.
P.T.O
P.T.O
p.t.o
 CASE STUDY
Sohan and Mohan were commerce students.They decided to open a furniture showroom
after completing their MBA.They prepared a partnership deed containing the following
clause.

Sohan and Mohan formed a partnership firm on 1st April, 2019 and a deed was made
on the following terms and condition:
1. Name of the firm :S&M Furnitures
2. Capital Contribution : Sohan will contribute Rs. 10,00,000 &
Mohan will contribute Rs. 10,00,000.
3. Profit Sharing ratio : 1:1
4. Interest on Capital : 6% p.a.
5. Interest on Drawings : 12%p.a.
6. Salary to Mohan : Rs. 15,000 p.a.
7. Commission to Sohan : @ 8% on Net Profit.
8. Interest on partner’s loan : @ 12% p.a. (loan taken and loan given).
Their transactions during the year 2019-2020 were given below:
DATE TRANSACTIONS AMOUNT
st
2019, 1 Started business with Rs. 20,00,000/-
April (Opened a Bank a/c in which Sohan gave a cheque of 20,00,000
9,00,000/- and cash 1,00,000/- and Mohan Gave the
cheque of 10,00,000/- in the firms name)
nd
2 April Took a shop on rent and paid 9 month Rent advance 1,80,000
@20,000/- per month by cheque

10th April Purchased Furniture from Shyam Furnitures 2,80,000

Paid 10,000 cash as advance and paid rest amount by
cheque
16th April Purchased Electricity Fittings for the firm from SAI 1,25,500
Electrics by cheque

Purchased 15 Sofa from Ankit Furnitures by Cheque

18th April Costing Rs 61,000 per sofa availed trade discount of
15,000/-
Carriage 1,500/- is buyers expense and buyers pay it.
26rd April Purchased 10 Beds, 6 Cupboardsand 20 – flower vas 8,10,000
and 20 wooden stool from Ankit Furnitures on credit
and accepted a bill of 3 month.
Costing Rs 40,000/- , 60,000/-, 1,500/-, 1,000/- per
laptop, I-Pad, Keyboard, Stool each respectively
27th April Paid Internet and WiFi charges for the year. 24,000
Rs 2,000 Per Month by cash

2nd May Purchased Stationery on Credit from Varun store 76,000

15th May Sold 10 Sofa to Mukesh enterprises on credit 7,50,000

Rs 75,000 per sofa

10th June Bought goods from Laxman traders for cash. 30,000

29th July Partnership firm took a loan from Sohan in Cheque 5,00,000

30th July Cleared Bill Payable of Ankit Furnitures in full

settlement

20th Paid to Varun store in full settlement of Rs. 3,000 73,000

August paid 23000 Cash & Rest by Chq
18th Sold 5 Beds@Rs 80,000 each for Cash 4,00,000
September
2020,
1st Partnership firm gave a loan to Mohan 2,50,000
January
2nd Feb Sold 3 Cupboards@ 90,000/- to Mukesh
enterprisesmpany and Party settled cheque with old
dues
1st March Cash Withdrawn by Sohan for personal use 30,000 45,000
and Mohan 15,000
31th Cash deposited into bank 1,10,000
March
SOLUTION: JOURNAL
In The Books of M/S TECHTONICS
JOURNAL ENTRIES
DATE PARTICULARS J/ AMOUNT(Dr) AMOUNT(Cr)
F
1/4/2019 Cash a/c Dr 01,00,000
Bank a/c Dr 19,00,000
To Sohan’s Capital a/c 10,00,000
To Mohan’s Capital a/c 10,00,000
[Being capital introduced by Sohan&Mohan]
2/4/2019 Rent a/c 1,80,000
To Bank a/c 1,80,000
[Being rent paid for 9 months]
10/4/2019 Furnitures a/c 2,80,000
To Cash a/c 10,000
To Bank a/c 2,70,000
[Being furniture purchased from Shyam Furnitures]
16/4/2019 Electric Fittings a/c 1,25,500
To Bank a/c 1,25,500
[Being Electric Fittings by cheque]
18/4/2019 Purchases a/c 9,00,000
Carraige Inward a/c 1500
To Bank a/c 9,00,000
To Cash a/c 1,500
[Being sofa purchased for cash and discount recievd
and carriage paid]
26/4/2019 Purchases a/c 8,10,000
To Ankit Furnitures a/c 8,10,000
[Being beds,cupboards,wooden stool and
flower vas purchased on credit]
26/4/2019 Ankit Furnituresa/c 8,10,000
To B/P a/c 8,10,000
[Being Bills Payable accepting]
27/4/2019 Internet Charges a/c 24,000 24,000
To Cash a/c
[Being paid internet charges for the year]
2/5/2019 Stationery a/c 76,000
To Varun storea/c 76,000
[Being stationery purchased]
15/5/2019 Mukesh enterprises a/c 7,50,000
To Sales 7,50,000
[Being sofa sold on credit]
10/6/2019 Purchases a/c 30,000 30,000
To Cash a/c
[Bought goods for cash]
29/7/2019 Bank a/c 5,00,000
To Sohan’s loan a/c 5,00,000
[Being Loan given to firm]
 30/7/2019 B/P a/c 8,10,000
To Bank a/c 8,10,000
[Cleared the bill]
20/8/2019 Varun storea/c 76,000
To Cash a/c 23,000
To Bank a/c 50,000
To Discount Received a/c 3,000
[Being paid to varun Stores in full settlement of 3000]

18/9/2019 Cash a/c 4,00,000 4,00,000

To Sales a/c
[Sold beds for cash]
1/1/2020 Mohan loan a/c 2,50,000
To Cash a/c 2,50,000
[Being loan given to Mohan]
2/2/2020 Mukesh enterprises a/c 2,70,000
To Sales 2,70,000
[Being Sofa sold to Mukesh enterprises]
2/2/2020 Bank a/c 10,20,000
To Mukesh enterprisesa/c 10,20,000
[Being dues cleared by Mukesh enterprises]
1/3/20 Sohan’s Drawings a/c 30,000
Mohan’s Drawings a/c 15,000
To Cash a/c 45,000
[Being Cash withdrawn by Sohan and Mohan for
personal use]
31/03/2020 Bank a/c 1,10,000 1,10,000
To Cash a/c
[Being cash deposited to bank]

LEDGER
In The Books of M/S TECHTONICS LEDGER ACCOUNTS
Cash A/C

DATE PARTICULARS J/ AMOUNT DATE PARTICULARS J/ AMOUNT

F F
1/4/19 To Sohan’s Capital a/c 1,00,000 10/4/19 By Funiture a/c By 10,000
18/9/19 To Sales a/c 4,00,000 18/04/1 Carraige Inward 1,500
9 a/c
By Internet Expenses 24,000
27/4/19 a/c
By Purchases a/c 30,000
10/6/19 By Varun storea/c By 23,000
20/8/19 Mohans Loan a/c
By Sohan’s Drawings 2,50,000
1/1/20 a/c
By Mohan’s Drawings 30,000
1/3/20 a/c
By Bank a/c 15,000
1/3/20 By bal c/d
1,10,000
31/3/20 6,500
31/3/20
TOTAL 5,00,000 TOTAL 5,00,000
1/4/2020 To bal b/d 6,500

Bank A/C
DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/ AMOUNT
F
1/4/19 To Sohan’s Capital a/c 9,00,0000 2/4/19 By Rent a/c 1,80,000
To Mohans Captial 10,00,000 10/4/19 By Furniture a/c By 2,70,000
1/4/19 a/c 16/4/19 Electric Fittings a/c 1,25,500
29/7/19 To Sohan’s Loan a/c 5,00,000 By Purchases a/c
2/2/20 To Mukesh 10,20,000 18/4/20 By B/P a/c 9,00,000
31/3/20 enterprisesa/c 1,10,000 30/7/20 By Varun store 8,10,000
To Cash 20/8/20 By Bal c/d 50,000
31/3/20 11,94,500
TOTAL 35,30,000 TOTAL 35,30,000
1/4/20 To Bal b/d 11,94,500

B/P A/C

DATE PARTICULARS J/ AMOUNT DATE PARTICULARS J/ AMOUNT

F F
30/7/19 To Bank a/c 8,10,000 26/4/19 By Ankit Furnitures 8,10,000
a/c

TOTAL 8,10,000 TOTAL 8,10,000

 Carraige Inward A/C
DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
18/4/19 To Cash a/c 1,500 31/3/20 By Bal c/d 1,500
TOTAL 1,500 TOTAL 1,500
1/4/20 To Bal b/d 1,500

Discount Received A/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT

31/3/20 To Bal c/d 3,000 20/08/19 By Varun stores a/c 3,000

TOTAL 3,000 TOTAL 3,000

1/4/2020 By Bal b/d 3,000

Electric Fittings A/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
16/4/19 To Bank a/c 1,25,500 31/3/20 By Bal c/d 1,25,500
TOTAL 1,25,500 TOTAL 1,25,500
1/4/20 To Bal b/d 1,25,500

Furniture A/C
DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
10/4/19 To Cash a/c To 10,000 31/3/2020 By Bal c/d 2,80,000
10/4/19 Bank a/c 2,70,000
TOTAL 2,80,000 TOTAL 2,80,000
1/4/2020 To Bal b/d 2,80,000

Ankit FurnituresA/C
DATE PARTICULARS J/ AMOUNT DATE PARTICULARS J/F AMOUNT
F
26/4/19 To B/P A/C 8,10,000 26/4/19 By Purchase A/C 8,10,000
TOTAL 8,10,000 TOTAL 8,10,000

Internet Charges A/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
27/4/19 To Cash a/c 24,000 31/3/20 By Bal c/d 24,000
 TOTAL 24,000 TOTAL 24,000
1/4/20 To Bal b/d 24,000

Varun storeA/C
DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
20/8/2019 To Cash a/c 23,000 2/07/19 By Stationery a/c 76,000
20/8/2019 To Discount 3,000
Received a/c
20/8/19 To Bank 50,000
TOTAL 76,000 TOTAL 76,000

Mohan’s Capital a/C

DATE PARTICULARS J/ AMOUNT DATE PARTICULARS J/F AMOUNT
F
31/3/20 To Bal c/d 10,00,000 1/4/19 By Bank a/c 10,00,000

TOTAL 10,00,000 TOTAL 10,00,000

1/4/20 By Bal b/d 10,00,000

Mohan’s Drawings a/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
1/03/20 To Cash a/c 15,000 31/3/20 By Bal c/d 15,000
TOTAL 15,000 TOTAL 15,000
1/4/20 To Bal b/d 15,000

Mohan’s loan a/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT

1/1/20 To Cash a/c 2,50,000 31/3/20 By Bal c/d 2,50,000

TOTAL 2,50,000 TOTAL 2,50,000

1/4/2020 To Bal b/d 2,50,000
 Purchases A/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT

18/4/19 To Bank 9,00,000 31/3/20 By Bal c/d 17,40,000
26/4/19 To Ankit FurnituresTo 8,10,000
10/6/19 Cash a/c 30,000
TOTAL 17,40,000 TOTAL 17,40,000
1/4/20 To Bal b/d 17,40,000

Mukesh enterprises A/C

DATE PARTICULARS J/ AMOUNT DATE PARTICULARS J/F AMOUNT
F
15/5/19 To Sales 7,50,000 2/2/20 By Bank a/c 10,20,000
2/2/20 To Sales 2,70,000

TOTAL 10,20,000 TOTAL 10,20,000

Rent A/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT

2/4/19 To Cash a/c 1,80,000 31/3/20 By Bal c/d 1,80,000
TOTAL 1,80,000 TOTAL 1,80,000
1/4/20 To Bal b/d 1,80,000

sohan’s Capital a/C

DATE PARTICULARS J/ AMOUNT DATE PARTICULARS J/ AMOUNT

F F
31/3/20 To Bal c/d 10,00,000 1/4/19 By Cash a/c By 9,00,000
1/4/19 Bank 1,00,000
TOTAL 10,00,000 TOTAL 10,00,000
1/4/20 By Bal b/d 10,00,000
 sohan’s Drawings a/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT

1/3/20 To Cash a/c 30,000 31/3/20 By Bal c/d 30,000
TOTAL 30,000 TOTAL 30,000
1/4/20 To Bal b/d 30,000

sohan’s loan a/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
31/3/20 To Bal c/d 5,00,000 29/7/19 By Bank a/c 5,00,000
TOTAL 5,00,000 TOTAL 5,00,000
1/4/20 By Bal b/d 5,00,000

Sales A/C
DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
31/3/20 To Bal c/d 14,20,000 15/5/19 By Mukesh 7,50,000
18/9/19 enterprises 4,00,000
2/2/20 By Cash 2,70,000
By Mukesh
enterprises
TOTAL 14,20,000 TOTAL 14,20,000
1/4/2020 By Bal b/d 14,20,000

Stationery A/C
DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
2/5/19 To Varun storea/c 76,000 31/3/20 By Bal c/d 76,000
TOTAL 76,000 TOTAL 76,000
1/4/20 To Bal b/d 76,000
 TRIAL BALANCE
In The Books of S&M FURNITURES

PARTICULARS DEBIT CREDIT

Mohan Capital A/c 10,00,000
Mohan Drawing A/c 15,000

Sohan Capital A/c 10,00,000

Sohan Drawing A/c 30,000

Sohan Loan A/c 5,00,000

Mohan Loan A/c 2,50,000

Cash A/c 6,500

Bank A/c 11,94,500

Electric Fittings A/c 1,25,500

Furniture A/c 2,80,000
 Sales A/c 14,20,000
Purchase A/c 17,40,000

Carriage Inward A/c 1,500

Internet Expenses A/c 24,000

Rent A/c 1,80,000

Stationary A/c 76,000

Discount Recd A/c 3,000

GRAND TOTAL 39,23,000 39,23,000

Adjustments on 31st March 2020

a. Closing Stock Rs 9,60,000

b. Depreciate Furniture @10% p.a
c. Outstanding Rent of 3 months Rs 20,000 per month
d. Profit Sharing Ratio 1:1 (as per deed)
e. Allowed Intrest on Capital @6% p.a (as per deed)
f. Intrest on Drawings to be charged @12% p.a (as per deed)
g. Salary to Mohan Rs15,000 (as per deed)
h. Comission to Sohan@8% p.a (as per deed)
i. Intrest on partners loan @12% p.a (loan taken and loan given) (as per deed)
 FINAL ACCOUNT
Trading and Profit and Loss A/c For the year ending 31st
March,2020

PARTICULARS AMOUNT PARTICULARS AMOUNT

To Purchases A/c 17,40,000 By Sales A/c 14,20,000
To Carraige Inward A/c 1,500 By Closing Stock 9,60,000
To Profit and Loss a/c (gross profit 6,38,500
c/d)
TOTAL 23,80,000

To Internet Expense A/c By Trading A/c (gross profit b/d) 6,38,500

To Rent A/c Rs. 1,80,000 2,40,000 By Discount Recived a/c 3,000
(+)O/S Rent Rs. 60,000
To Stationary A/c 76,000 By Int on Mohan’s Loan 30,000
To Depreciation a/c 28,000
a) Furniture Rs.28,000
To Int on Sohan’s Loan 60,000
To Profit and Loss appr A/c (Net 2,43,500
Profit c/d)
TOTAL 6,71,500 6,71,500

Profit&Loss Appropriation A/C

 PARTICULARS AMOUNT PARTICULARS AMOUNT
To Int on Capital a/c By Profit&Loss a/c 2,43,500
a)Sohan Rs.60,000
b)Mohan Rs.60,000 1,20,000
To Salary a/c By Int on Drawings a/c
a)Mohan Rs.15,000 15,000 a)Sohan Rs.300
b)Mohan Rs.150 450
To Commission a/c
a)Sohan Rs.19,480 19,480
To Capital a/c
a)Sohan Rs.44,735
b)Mohan Rs.44,735 89,470
TOTAL 2,43,950 2,43,950

PARTNERS CAPITAL A/C

DATE PARTICULARS SOHAN MUNTAS DATE PARTICULARS SOHAN MUNTAS

HIR HIR
1/3/20 To Drawings a/c 30,000 15,000 1/4/19 By Cash a/c 1,00,000

31/3/20 To Int on 300 150 1/4/19 By Bank a/c 9,00,000 10,00,000

Drawings a/c
31/3/20 To Int on 30,000 31/3/20 By Int on Capital 60,000 60,000
Mohan’s Loan a/c

31/3/20 To bal c/d 10,93,915 10,74,585 31/3/20 By Salary a/c 15000

31/3/20 By Commission 19,480

a/c
31/3/20 By P/L Appr a/c 44,735 44,735

TOTAL 11,24,215 11,19,735 TOTAL 11,24,215 11,19,735

1/4/20 By bal b/d 10,93,915 10,74,585

Sohan’s Loan A/C

DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
31/3/20 To Bal c/d 5,00,000 29/7/19 By Bank a/c 5,00,000

TOTAL 5,00,000 TOTAL 5,00,000

1/4/20 By Bal b/d 5,00,000
 Mohan’s Loan A/C
DATE PARTICULARS J/F AMOUNT DATE PARTICULARS J/F AMOUNT
1/1/20 To Cash a/c 2,50,000 31/3/20 By Bal c/d 2,50,000

TOTAL 2,50,000 TOTAL 2,50,000

1/4/2020 To Bal b/d 2,50,000

BALANCE SHEET
AS AT 31ST MARCH, 2020

LIABILITIES AMOUNT ASSETS AMOUNT

Mohan Capital A/c 10,74,585 Mohan Loan A/c 2,50,000
Sohan’s Capital A/c 10,93,915 Cash a/c 6,500
Sohan Loan A/c Rs5,00,000 5,60,000 Bank a/c 11,94,500
(+)Intrest on loan Rs60,000
O/S Rent 60,000 Electric Fittings a/c 1,25,500
Furniture a/c Rs2,80,000 2,52,000
(-) Depriciation Rs28,000
Stock a/c 9,60,000
TOTAL 27,88,500 27,88,500

PIE CHART
 EXPENSES

INTERNET EXPENSE
RENT EXPENSE
STATIONERY EXPENSE

CONCLUSION
Partnerships are a good form of business to start up for some
entrepreneurs, and not so great for others. If an entrepreneur wants
more control andwants to seek out a higher profit level, than a
partnership may be a great way to go. Themost important facet of
starting the partnership is making sure that the partners gettogether and
create a partnership agreement that covers as many potential problems
aspossible. Without an extensive partnership agreement, the partnership
itself may gohaywire down the line when problems small or large arise.
Going into the introductorystages of the company, “each person
contributes money, property, labor or skill, andexpects to share in the
profits and losses of the business” (Partnerships, 2008), theseelements
are what makes up the partnership and also are the elements that later
bring thepartners into the court of law...
 BIBLIOGRAPHY
Following sites were recommended:

• www.wikipedia.com
• www.accountsadda.com
• www.partnership.com
Following books were recommended:

• ISC class 12 Accounts

• DK Goyal 12 Vol 1
• DK Goyal 12 Vol 2