Question

Vishu, Rahul and Kirti are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their capitals on 1st April, 2025, were:

Vishu	₹ 3,00,000
Rahul	₹ 40,000 (Dr.)
Kirti	₹ 5,00,000

The terms of the partnership deed are as follows:

Interest on Drawings (except on commission withdrawn) @ 6% p.a.

Interest on Capital @ 10% p.a.

Rahul and Kirti are allowed a commission of 5% (each) on Net Profit, after charging such commission.

The drawings of the partners were:

• Vishu withdrew ₹ 3,000 p.m. at the end of each month starting from 31st August, 2025.
• Kirti withdrew @ 48,000 during the year (including her commission).
• Rahul had withdrawn at the beginning of every month a certain fixed amount on which he was charged interest of ₹ 1,365.

Net profit for the year ended 31st March, 2026, amounted to ₹ 1,65,000 before taking into account the above adjustments.

1. Find out about the drawings made by Rahul every month.
2. Pass the journal entries for commission.
3. Prepare the Profit and Loss Appropriation A/c.

Hints:

i. Interest on Vishu’s drawings will be charged for 3.5 months.

ii. Entries for commission:

(i)	Commission A/c   ...Dr.		15,000
	To Rahul’s Capital A/с			7,500
	To Kirti’s Capital A/c			7,500
(ii)	Profit and Loss Appropriation A/c   ...Dr.		15,000
	To Commission A/c			15,000

Answer 1

i. Given: Interest on Rahul’s drawings = ₹ 1,365 @ 6% p.a.

Rahul withdraws a fixed amount at the beginning of every month (12 months).

Let monthly drawings = ₹ x

Total drawings = 12 x

Average period (beginning of each month) = `(12 + 1)/2`

= 6.5 months

Interest on drawings = `"Total drawings" × "Rate of interest"/100 × "Average period"/12`

`1,365 = 12x  xx 6/100 xx 6.5/12`

`1,365 = x xx 6/100 xx 6.5`

1,365 = x × 0.39

x = `1365/0.39`

x = 3500

ii.

Journal Entries In the books of Vishu, Rahul and Kirti
Date	Particulars	L.F	Debit (₹)	Credit (₹)
2025
March 31	Commission A/c   ...Dr.		15,000
	To Rahul’s Capital A/с			7,500
	To Kirti’s Capital A/c			7,500
	(Being commissioned allowed to the partners as per the partnership deed)
March 31	Profit and Loss Appropriation A/c   ...Dr.		15,000
	To Commission A/c			15,000
	(Being partners’ commission transferred to Profit and Loss Appropriation Account)

iii.

Dr.	Profit and Loss Appropriation Account for the year ended 31st March, 2025						Cr.
Date	Particulars	Amount (₹)	Amount (₹)	Date	Particulars	Amount (₹)	Amount (₹)
2025				2025
March 31	To Partners’ Commission:		15,000	March 31	By Profit and Loss A/c		1,65,000
	Rahul Capital A/c	7,500		March 31	By Interest on Drawings:		3,000
	Kirti Capital A/c	7,500			Vishu	420
March 31	To Interest on Capital:		80,000		Rahul	1,365
	Vishu	30,000			Kirti	1,215
	Kirti	50,000
March 31	To Profit transferred to:
	Vishu’s Capital A/c	29,200	73,000
	Rahul’s Capital A/c	29,200
	Kirti’s Capital A/c	14,600
			1,68,000				1,68,000

Working Notes:

WN 1: Average Period for Rahul’s Drawings

Since Rahul withdrew a fixed amount at the beginning of every month for 12 months:

\[\text{Average Period} = \frac{\text{Months left after first drawing (12)} + \text{Months left after last drawing (1)}}{{2}} = {6.5 \text{ months}}\]

WN 2: Calculation of Partners’ Commission

$$\text{Total Commission Rate} = 5\% \text{ (Rahul)} + 5\% \text{ (Kirti)} = 10\%$$

$$\text{Total Commission} = \text{Net Profit} \times \frac{\text{Rate}}{100 + \text{Rate}} = 1,65,000 \times \frac{10}{110} = {₹\text{ }15,000}$$

$$\text{Commission to each partner} = \frac{15,000}{2} = {₹\text{ }7,500 \text{ each}}$$

WN 3: Interest on Vishu’s Drawings

Vishu withdrew ₹ 3,000 p.m. at the end of each month starting from 31st August, 2025 (Total 8 months).

$\text{Total Drawings} = 3,000 \times 8 = {₹\text{ }24,000}$

$\text{Average Period} = \frac{\text{Months left after first drawing (7)} + \text{Months left after last drawing (0)}}{2} = {3.5 \text{ months}}$

$$\text{Interest on Vishu’s Drawings} = 24,000 \times \frac{6}{100} \times \frac{3.5}{12} = {₹\text{ }420}$$ 

WN 4: Interest on Kirti's Drawings

Interest is explicitly excluded on the commission portion as per deed terms ($\text{₹ } 48,000 - \text{₹ } 7,500 = {₹\text{ }40,500}$).

Since the specific dates of drawings are missing, interest is computed for a default average of 6 months.

$$\text{Interest on Kirti’s Drawings} = 40,500 \times \frac{6}{100} \times \frac{6}{12} = {₹\text{ }1,215}$$