Question

Pushpa and Rashmi are partners in a firm. Their capitals were ₹ 3,00,000 and ₹ 2,00,000, respectively. Pushpa was to get a commission of 10% on the net profits before charging any commission. However, Rashmi was to get a commission of 10% on the net profits after charging all commissions. The following profit loss appropriation account for the year ended 31st March is given to you: Dr. Profit and Loss Appropriation Account for the year ended 31st March 2024 Cr. Particulars ₹ ₹ Particulars ₹ ₹ To Pushpa’s Commission `(₹ "....." xx 10/100)`   44,000 By Profit and Loss A/c   ______ To Rashmi’s Commission   ______       To Profit transferred to:   ______       Pushpa’s Capital A/c ______       Rashmi’s Capital A/c ______           ______     ______

1. Rashmi’s commission will be:
   1. ₹ 40,000
   2. ₹ 44,000
   3. ₹ 36,000
   4. ₹ 36,364
2. Rashmi’s share of profit will be:
   1. ₹ 1,80,000
   2. ₹ 1,44,000
   3. ₹ 2,16,000
   4. ₹ 1,60,000
3. In case there is no partnership agreement, which of the following is incorrect:
   1. Interest on the partner’s loan will be allowed at 6% p.a.
   2. No interest is to be charged on drawings made by the partners.
   3. Interest on the partner’s loan to the firm will not be allowed in case of loss in the firm.
   4. Even if the capitals of partners are unequal, profits and losses are to be shared equally.

Answer 1

1. ₹ 36,000
2. ₹ 1,80,000
3. Interest on the partner’s loan to the firm will not be allowed in case of loss in the firm.

Dr.	Profit and Loss Appropriation Account for the year ended 31st March 2024			Cr.
Particulars	₹	₹	Particulars	₹
To Pushpa’s Commission \[\left(₹\underline{4,40,000} × \frac{10}{100}\right)\]		44,000	By Profit and Loss A/c	4,40,000
To Rashmi’s Commission `(₹ 3,96,000 xx 10/110)`		36,000
To Profit transferred to:		3,60,000
Pushpa’s Capital A/c	1,80,000
Rashmi’s Capital A/c	1,80,000
		4,40,000		4,40,000

Explanation:

Total Profit of the firm before charging any commission = `44,000 xx 100/10`

= 4,40,000

Profit after allowing Pushpa’s Commission = 4,40,000 − 44,000

= 3,96,000

Rashmi’s Commission = `3,96,000 xx 10/110`

= 36,000