T.S. Grewal Class 12 Chapter 1 Q.34 - Accounting for Partnership Firm Fundamentals

Question 34

A, B, C and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹1,80,000 for the year ended 31st March, 2025. As per the Partnership Deed, they are to charge a commission @ 20% of the profit after charging such commission, which they will share as 2 : 3 : 2 : 3. Show the appropriation of profits among the partners.

Solution

Profit & Loss Appropriation Account (for the year ended 31st March, 2025)

Particulars (Dr.)	₹	Particulars (Cr.)	₹
To Partners’ Commission:		By Profit & Loss A/c (Net Profit)	1,80,000
A’s Capital A/c	6,000
B’s Capital A/c	9,000
C’s Capital A/c	6,000
D’s Capital A/c	9,000
To Profit transferred to Capital A/cs:
A (1,50,000 × 4/10)	60,000
B (1,50,000 × 3/10)	45,000
C (1,50,000 × 2/10)	30,000
D (1,50,000 × 1/10)	15,000
Total	1,80,000	Total	1,80,000

Working Notes:
Total commission = ₹1,80,000 × 20/120 = ₹30,000, shared 2 : 3 : 2 : 3 → A ₹6,000; B ₹9,000; C ₹6,000; D ₹9,000.
Divisible profit = ₹1,80,000 – ₹30,000 = ₹1,50,000, shared 4 : 3 : 2 : 1.