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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Bat and Ball are partners sharing profits in the ratio of 2 : 3 with capitals of ₹1,20,000 and ₹60,000 respectively. On 1st October, 2024, Bat and Ball gave loans of ₹2,40,000 and ₹1,20,000 respectively to the firm. Bat had allowed the firm to use his property for business for a monthly rent of ₹5,000. The loss for the year ended 31st March, 2025 before rent and interest amounted to ₹9,000. Show the distribution of profit/loss.
There being no Partnership Deed, interest on each partner’s loan is allowed @ 6% p.a. and rent payable to Bat is a charge against profit. No interest on capital is allowed.
Profit & Loss Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Loss (before rent and interest) | 9,000 | By Loss transferred to P & L Appropriation A/c | 79,800 |
| To Rent (Bat) [₹5,000 × 12] | 60,000 | ||
| To Interest on Bat’s Loan | 7,200 | ||
| To Interest on Ball’s Loan | 3,600 | ||
| Total | 79,800 | Total | 79,800 |
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Loss transferred from Profit & Loss A/c | 79,800 | By Loss transferred to Capital A/cs: | |
| Bat (79,800 × 2/5) | 31,920 | ||
| Ball (79,800 × 3/5) | 47,880 | ||
| Total | 79,800 | Total | 79,800 |
Working Notes:
WN 1 – Interest on partners’ loans @ 6% p.a. for 6 months:
Bat = ₹2,40,000 × 6/100 × 6/12 = ₹7,200
Ball = ₹1,20,000 × 6/100 × 6/12 = ₹3,600
WN 2 – Distribution of loss:
Total loss = ₹9,000 + ₹60,000 + ₹7,200 + ₹3,600 = ₹79,800, shared in 2 : 3.
Bat’s share = ₹79,800 × 2/5 = ₹31,920; Ball’s share = ₹79,800 × 3/5 = ₹47,880.
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.
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