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Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both Reema and Seema will get a monthly salary of ₹15,000 each, interest on capital will be allowed @ 5% p.a. and interest on drawings will be charged @ 10% p.a. Their capitals were ₹5,00,000 each and drawings during the year were ₹60,000 each. The firm incurred a loss of ₹1,00,000 during the year ended 31st March, 2025. Prepare the Profit & Loss Appropriation Account for the year ended 31st March, 2025.
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Profit & Loss A/c (Loss) | 1,00,000 | By Interest on Drawings: | |
| Reema’s Capital A/c | 3,000 | ||
| Seema’s Capital A/c | 3,000 | ||
| By Loss transferred to Capital A/cs: | |||
| Reema | 47,000 | ||
| Seema | 47,000 | ||
| Total | 1,00,000 | Total | 1,00,000 |
Note: Since the firm has incurred a loss, no salary and no interest on capital are allowed to the partners. However, interest on drawings is charged from each partner @ 10% p.a. on ₹60,000 for an average period of 6 months = ₹3,000 each. The net loss of ₹94,000 (₹1,00,000 – ₹6,000) is shared equally.
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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.18 - 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.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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