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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
A and B are partners sharing profits and losses in the ratio of 3 : 1. On 1st April, 2024, their capitals were: A ₹5,00,000 and B ₹3,00,000. During the year ended 31st March, 2025 they earned a net profit of ₹5,00,000. The terms of partnership are: (a) Interest on capital is to be allowed @ 6% p.a.; (b) A will get a commission @ 2% on turnover; (c) B will get a salary of ₹5,000 per month; (d) B will get a commission of 5% on profits after deduction of all expenses including such commission. Partners’ drawings for the year were: A ₹80,000 and B ₹60,000. Turnover for the year was ₹30,00,000. Prepare the Profit & Loss Appropriation Account and the Partners’ Capital Accounts.
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) | 5,00,000 | |
| A’s Capital A/c | 30,000 | ||
| B’s Capital A/c | 18,000 | ||
| To Salary – B (₹5,000 × 12) | 60,000 | ||
| To Commission: | |||
| A’s Capital A/c (2% on turnover) | 60,000 | ||
| B’s Capital A/c | 15,810 | ||
| To Profit transferred to Capital A/cs: | |||
| A (3,16,190 × 3/4) | 2,37,143 | ||
| B (3,16,190 × 1/4) | 79,047 | ||
| Total | 5,00,000 | Total | 5,00,000 |
Partners’ Capital Accounts
| Particulars (Dr.) | A (₹) | B (₹) | Particulars (Cr.) | A (₹) | B (₹) |
|---|---|---|---|---|---|
| To Drawings A/c | 80,000 | 60,000 | By Balance b/d | 5,00,000 | 3,00,000 |
| To Balance c/d | 7,47,143 | 4,12,857 | By Interest on Capital A/c | 30,000 | 18,000 |
| By Salary A/c | – | 60,000 | |||
| By Commission A/c | 60,000 | 15,810 | |||
| By P & L Appropriation A/c | 2,37,143 | 79,047 | |||
| Total | 8,27,143 | 4,72,857 | Total | 8,27,143 | 4,72,857 |
Working Notes:
Interest on capital: A = ₹30,000; B = ₹18,000. A’s commission = 2% × ₹30,00,000 = ₹60,000.
B’s commission = 5% on profit after all expenses including such commission = (₹5,00,000 – ₹48,000 – ₹60,000 – ₹60,000) × 5/105 = ₹3,32,000 × 5/105 = ₹15,810 (approx.).
Divisible profit = ₹5,00,000 – ₹48,000 – ₹60,000 – ₹75,810 = ₹3,16,190, shared in 3 : 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.48 - 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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