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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
X, Y and Z are partners in a firm sharing profits in the 2 : 2 : 1 ratio. The fixed capitals of the partners were: X ₹5,00,000; Y ₹5,00,000 and Z ₹2,50,000 respectively. The Partnership Deed provides that interest on capital is to be allowed @ 10% p.a. Z is to be allowed a salary of ₹2,000 per month. The profit of the firm for the year ended 31st March, 2025 after debiting Z’s salary was ₹4,00,000. Prepare the Profit & Loss Appropriation Account.
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Interest on Capital: | By Profit & Loss A/c (Net Profit after Z’s salary) | 4,00,000 | |
| X’s Capital A/c | 50,000 | ||
| Y’s Capital A/c | 50,000 | ||
| Z’s Capital A/c | 25,000 | ||
| To Profit transferred to Capital A/cs: | |||
| X (2,75,000 × 2/5) | 1,10,000 | ||
| Y (2,75,000 × 2/5) | 1,10,000 | ||
| Z (2,75,000 × 1/5) | 55,000 | ||
| Total | 4,00,000 | Total | 4,00,000 |
Working Notes:
Z’s salary is not shown in the Appropriation Account because the profit of ₹4,00,000 is already after charging Z’s salary.
Interest on capital: X = ₹5,00,000 × 10% = ₹50,000; Y = ₹5,00,000 × 10% = ₹50,000; Z = ₹2,50,000 × 10% = ₹25,000.
Divisible profit = ₹4,00,000 – ₹1,25,000 = ₹2,75,000, shared in 2 : 2 : 1.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 1 Q.15 - Accounting for Partnership Firm Fundamentals", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Accounting for Partnership Firm – Fundamentals.
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