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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Parul, Prerna and Kaushal are partners sharing profits equally. Parul is guaranteed a minimum annual profit of ₹2,00,000. Kaushal is to get a commission @ 5% of net sales, determined at ₹50,000. Net profit for the year ended 31st March, 2025 is ₹2,50,000. Prepare the Profit & Loss Appropriation Account for the year.
Profit & Loss Appropriation Account (for the year ended 31st March, 2025)
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Commission to Kaushal | 50,000 | By Profit & Loss A/c (Net Profit) | 2,50,000 |
| To Profit transferred to Parul’s Capital A/c | 2,00,000 | ||
| Total | 2,50,000 | Total | 2,50,000 |
Working Note: Profit after commission = ₹2,50,000 – ₹50,000 = ₹2,00,000. Each partner’s equal share (₹66,667) is less than Parul’s guarantee, and the entire divisible profit equals the guaranteed amount, so the whole ₹2,00,000 is credited to Parul; Prerna and Kaushal get no profit share.
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.81 - 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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