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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Amit, Binita and Charu are three partners. On 1st April, 2024, their capitals stood as: Amit ₹1,00,000, Binita ₹2,00,000 and Charu ₹3,00,000. It was decided that: (a) they would receive interest on capital @ 5% p.a.; (b) Amit would get a salary of ₹10,000 per month; (c) Binita would receive a commission @ 5% of the net profit after deduction of commission; and (d) 10% of the net profit would be transferred to the General Reserve. Before the above items were taken into account, the profit for the year ended 31st March, 2025 was ₹5,00,000. Prepare the Profit & Loss Appropriation Account and the Capital Accounts of the partners.
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Interest on Capital (5,000 + 10,000 + 15,000) | 30,000 | By Profit & Loss A/c (Net Profit) | 5,00,000 |
| To Salary to Amit (₹10,000 × 12) | 1,20,000 | ||
| To Commission to Binita | 23,810 | ||
| To General Reserve (10% of 5,00,000) | 50,000 | ||
| To Profit transferred (Amit 92,063; Binita 92,063; Charu 92,064) | 2,76,190 | ||
| Total | 5,00,000 | Total | 5,00,000 |
Partners’ Capital Accounts
| Particulars (Dr.) | Amit | Binita | Charu | Particulars (Cr.) | Amit/Binita/Charu |
|---|---|---|---|---|---|
| To Balance c/d | 3,17,063 | 3,25,873 | 4,07,064 | By Balance b/d | 1,00,000 / 2,00,000 / 3,00,000 |
| By Interest on Capital A/c | 5,000 / 10,000 / 15,000 | ||||
| By Salary A/c | 1,20,000 / – / – | ||||
| By Commission A/c | – / 23,810 / – | ||||
| By P & L Appropriation A/c | 92,063 / 92,063 / 92,064 | ||||
| Total | 3,17,063 | 3,25,873 | 4,07,064 | Total | 3,17,063 / 3,25,873 / 4,07,064 |
Working Notes:
Interest on capital: Amit ₹5,000; Binita ₹10,000; Charu ₹15,000.
Binita’s commission = ₹5,00,000 × 5/105 = ₹23,810 (approx.).
General Reserve = 10% of ₹5,00,000 = ₹50,000.
Divisible profit = ₹5,00,000 – ₹30,000 – ₹1,20,000 – ₹23,810 – ₹50,000 = ₹2,76,190, shared equally.
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.51 - 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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