Question

Pratap and Shiva were partners in a firm sharing profits equally. As per agreement, Pratap to get a salary of ₹ 10,000 p.m. and Shiva is entitled to commission at the rate of 2% on sales. On 1st Oct., 2025, Pratap had given his premises to the firm for business purposes for which he is entitled to a rent of ₹ 15,000 p.m. The firm earned a net profit of ₹ 2,52,000 for the year 2025-26 before providing for rent to Pratap. Sales for the year ended on 31st March, 2026 was ₹ 30,00,000.

Show the distribution of profit.

Answer 1

1. Profit Available for Appropriation

Rent to Pratap (1st Oct to 31st Mar = 6 months):

15,000 × 6 = 90,000

Net Profit After Rent:

2,52,000 − 90,000 = 1,62,000

2. Amount of Appropriations Required

Pratap's Salary:

10,000 × 12 = 1,20,000

Shiva's Commission:

30,00,000 × 2% = 60,000

Total Appropriations Required:

1,20,000 + 60,000 = 1,80,000

3. Since available profit (₹ 1,62,000) is less than required appropriations (₹ 1,80,000):

Ratio of Appropriations (Pratap : Shiva):

1,20,000 : 60,000 = 2 : 1

Pratap's Share:

1,62,000 × `2/3 = 1,08,000`

Shiva's Share:

1,62,000 × `1/3 = 54,000`