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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
X, Y and Z entered into partnership on 1st October, 2024 to share profits in the ratio of 4 : 3 : 3. X personally guaranteed that Z’s share of profit after charging interest on capital @ 10% p.a. would not be less than ₹80,000 in any year. Capital contributions were: X ₹3,00,000, Y ₹2,00,000 and Z ₹1,50,000. Profit for the year ended 31st March, 2025 was ₹1,60,000. Prepare the Profit & Loss Appropriation Account.
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Interest on Capital (6 months): | By Net Profit b/d | 1,60,000 | |
| X’s Capital A/c | 15,000 | ||
| Y’s Capital A/c | 10,000 | ||
| Z’s Capital A/c | 7,500 | ||
| To Profit transferred to Capital A/cs: | |||
| X (51,000 – 1,750) | 49,250 | ||
| Y | 38,250 | ||
| Z (38,250 + 1,750) | 40,000 | ||
| Total | 1,60,000 | Total | 1,60,000 |
Working Notes: The firm started on 1st October, 2024, so interest on capital is for 6 months (X ₹15,000; Y ₹10,000; Z ₹7,500) and the guarantee is ₹40,000 (half of ₹80,000). Profit after interest = ₹1,27,500, shared 4 : 3 : 3 → X ₹51,000, Y ₹38,250, Z ₹38,250. Z’s deficiency ₹1,750 is borne by X.
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.78 - 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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