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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Kabir, Zoravar and Parul are partners sharing profits in the ratio of 5 : 3 : 2. Their capitals as on 1st April, 2024 were: Kabir ₹5,20,000, Zoravar ₹3,20,000 and Parul ₹2,00,000. The Partnership Deed provided as follows: (i) Kabir and Zoravar each will get a salary of ₹24,000 p.a.; (ii) Parul will get a commission of 2% of sales; (iii) Interest on capital is to be allowed @ 5% p.a.; (iv) Interest on drawings is to be charged @ 5% p.a.; (v) 10% of the divisible profit is to be transferred to General Reserve. Sales for the year ended 31st March, 2025 were ₹50,00,000. Drawings by each partner during the year were ₹60,000. Net profit for the year was ₹1,55,500. Prepare the Profit & Loss Appropriation Account.
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Profit transferred (in ratio of appropriations 5 : 4 : 11): | By Profit & Loss A/c (Net Profit) | 1,55,500 | |
| Kabir (1,60,000 × 5/20) | 40,000 | By Interest on Drawings (1,500 each) | 4,500 |
| Zoravar (1,60,000 × 4/20) | 32,000 | ||
| Parul (1,60,000 × 11/20) | 88,000 | ||
| Total | 1,60,000 | Total | 1,60,000 |
Working Notes:
Total appropriations claimed = Salaries ₹48,000 + Commission ₹1,00,000 + Interest on capital ₹52,000 = ₹2,00,000.
Profit available = Net profit ₹1,55,500 + Interest on drawings ₹4,500 = ₹1,60,000.
As available profit (₹1,60,000) is less than appropriations (₹2,00,000), no Reserve is created and the ₹1,60,000 is distributed in the ratio of appropriations:
Kabir (24,000 + 26,000) : Zoravar (24,000 + 16,000) : Parul (1,00,000 + 10,000) = 50,000 : 40,000 : 1,10,000 = 5 : 4 : 11.
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.55 - 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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