Question

Divyanshi and Bhawna entered into a partnership firm on 1st July, 2025, with capitals of ₹ 6,50,000 and ₹ 2,70,000 respectively sharing profits in the ratio of 2 : 1. The terms of Partnership Deed were as follows: Interest on capital to be allowed @ 6% p.a. 4% of the Net Profit to be provided as commission to Bhawna before charging such commission. Bhawna is entitled to a rent of ₹ 5,000 p.m. for allowing the firm to carry on the business in her premises. Interest on loan advanced by a partner to the firm @ 10% p.a. Divyanshi advanced a loan of ₹ 3,00,000 to the firm on 1st January, 2026. The firm earned a net profit of ₹ 2,40,000 after considering all charges against profits. Pass Journal Entries for the year ended 31st March, 2026.

Pass Journal Entries for the year ended 31st March, 2026.

Hint: Since net profit of ₹ 2,40,000 is given after considering all charges against profit, this amount will be transferred from Profit & Loss A/c to Profit & Loss Appropriation A/c.

Answer 1

Journal Entries For the year ended 31st March, 2026
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2026
Mar 31	Profit & Loss A/c   ...Dr.		2,40,000
	To Profit & Loss Appropriation A/c			2,40,000
	(Being net profit transferred to the Appropriation account)
Mar 31	Profit & Loss Appropriation A/c   ...Dr.		9,600
	To Bhawna's Capital A/c			9,600
	(Being 4% partner's commission allowed to Bhawna)
Mar 31	Profit & Loss Appropriation A/c   ...Dr.		41,400
	To Divyanshi's Capital A/c			29,250
	To Bhawna's Capital A/c			12,150
	(Being interest on capital allowed for 9 months @ 6% p.a.)
Mar 31	Profit & Loss Appropriation A/c   ...Dr.		1,89,000
	To Divyanshi's Capital A/c			1,26,000
	To Bhawna's Capital A/c			63,000
	(Being remaining divisible profit shared in 2 : 1 ratio)

Working Note:

Net Profit Given: ₹ 2,40,000

Bhawna's Commission (Before charging such commission)

`2,40,000 xx 4/100 = 9,60,000`

Interest on Capital (from 1st July 2025 to 31st March 2026 = 9 months)

Divyanshi: `6,50,000 xx 6/100 xx 9/12 = 29,250`

Bhawna: `2,70,000 xx 6/100 xx 9/12 = 12,150`

Total Interest on Capital = ₹ 41,400

Divisible Profit:

2,40,000 − 9,600 (Commission) − 41,000 (IOC) = 1,89,000

Distribution of Profits (2 : 1 Ratio)

Divyanshi's Share: `1,89,000 xx 2/3 = 1,26,000`

Bahwa's Share: `1,89,000 xx 1/3 = 63,000`