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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Ankur, Bhavna and Disha are partners in a firm. On 1st April, 2024, the balances in their Capital Accounts stood at ₹14,00,000, ₹6,00,000 and ₹4,00,000 respectively. They shared profits in the proportion of 7 : 3 : 2. Partners are entitled to interest on capital @ 6% per annum, a salary to Bhavna of ₹50,000 p.a. and a commission of ₹3,000 per month to Disha. Bhavna’s share of profit (excluding interest on capital) is guaranteed at not less than ₹1,70,000 p.a. Disha’s share of profit (including interest on capital but excluding commission) is guaranteed at not less than ₹1,50,000 p.a. Any deficiency shall be met by Ankur. The profit for the year ended 31st March, 2025 amounted to ₹9,50,000. 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 (84,000 + 36,000 + 24,000) | 1,44,000 | By Profit & Loss A/c (Net Profit) | 9,50,000 |
| To Salary to Bhavna | 50,000 | ||
| To Commission to Disha (₹3,000 × 12) | 36,000 | ||
| To Profit transferred to Capital A/cs: | |||
| Ankur | 4,14,000 | ||
| Bhavna | 1,80,000 | ||
| Disha | 1,26,000 | ||
| Total | 9,50,000 | Total | 9,50,000 |
Working Notes: Profit available = ₹9,50,000 – ₹1,44,000 – ₹50,000 – ₹36,000 = ₹7,20,000 (7 : 3 : 2 → Ankur ₹4,20,000, Bhavna ₹1,80,000, Disha ₹1,20,000). Bhavna’s ₹1,80,000 exceeds her guarantee of ₹1,70,000 (no deficiency). Disha’s guaranteed profit (excluding interest) = ₹1,50,000 – ₹24,000 = ₹1,26,000; deficiency ₹6,000 is borne by Ankur, whose share becomes ₹4,14,000.
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.89 - 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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