Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Bhanu and Partab are partners sharing profits equally. Their fixed capitals as on 1st April, 2024 are ₹8,00,000 and ₹10,00,000 respectively. Their drawings during the year were ₹50,000 and ₹1,00,000 respectively. Interest on capital is a charge and is to be allowed @ 10% p.a. and interest on drawings is to be charged @ 15% p.a. Net profit for the year ended 31st March, 2025 before giving effect to the above was ₹1,20,000. 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) | 1,20,000 | |
| Bhanu’s Current A/c | 80,000 | By Interest on Drawings: | |
| Partab’s Current A/c | 1,00,000 | Bhanu’s Current A/c | 3,750 |
| Partab’s Current A/c | 7,500 | ||
| By Loss transferred to Current A/cs: | |||
| Bhanu | 24,375 | ||
| Partab | 24,375 | ||
| Total | 1,80,000 | Total | 1,80,000 |
Working Notes:
Interest on capital (a charge): Bhanu = ₹8,00,000 × 10% = ₹80,000; Partab = ₹10,00,000 × 10% = ₹1,00,000.
Interest on drawings @ 15% p.a. for an average of 6 months: Bhanu = ₹50,000 × 15% × 6/12 = ₹3,750; Partab = ₹1,00,000 × 15% × 6/12 = ₹7,500.
As interest on capital is a charge, the resulting loss of ₹48,750 (₹1,80,000 – ₹1,20,000 – ₹11,250) is shared equally = ₹24,375 each.
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.19 - 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.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "T.S. Grewal Class 12 Chapter 1 Q.19 - Accounting for Partnership Firm Fundamentals" instantly.