Question

Swaraj, Viraj, and Maharaj are equal partners; their balances in the fixed capital accounts for the year ended 31st March, 2025, were ₹ 1,80,000, ₹ 1,60,000, and ₹ 1,75,000, respectively.

The balances in their current accounts were as follows:

	₹
Swaraj	15,000 (Cr.)
Viraj	13,000 (Dr.)
Maharaj	10,000 (Dr.)

The details of each partner’s drawings during the year 2024-25 are as follows:

Swaraj	₹ 600 at the end of each month.
Viraj	₹ 800 at the beginning of each month.
Maharaj	₹ 400 per month during 2024-25.

The partnership deed further provides that:

1. Partners are to be allowed interest on capital A/c balances @ 6% p.a. and that on current A/c balances @ 5% p.a.
2. Partners are charged interest on drawings @ 5% p.a.
3. Maharaj is to be given a salary of ₹ 20,000 for the year.
4. Swaraj is entitled to a commission of 10% of the corrected net profit of the firm.
5. Viraj is entitled to a commission of 10% of the corrected net profit of the firm after charging such commission.

During the year ended 31st March, 2025, the net profit of the firm was ₹ 2,00,000 after deducting Maharaj’s salary, which had been debited to salaries A/c.

You are required to prepare the Profit and Loss Appropriation Account of the firm.

Answer 1

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 Interest on Capitals		30,900	March 31	By Profit and Loss A/c		2,20,000
	Swaraj	10,800		March 31	By Interest on Current A/c		1,150
	Viraj	9,600			Viraj	650
	Maharaj	10,500			Maharaj	500
March 31	To Interest on Current A/c		750	March 31	By Interest on Drawings:		545
	Swaraj				Swaraj	165
March 31	To Salary (Maharaj)		20,000		Viraj	260
March 31	To Commission		42,000		Maharaj	120
	Swaraj	22,000
	Viraj	20,000
March 31	To Profit transferred to:		1,28,045
	Swaraj	42,682
	Viraj	42,682
	Maharaj	42,681
			2,21,695				2,21,695

Working Notes:

1. Calculation of interest on drawings:

Interest on drawings = `"Total drawings" xx "Rate"/100 xx "Average period"/12`

(i) Interest on drawings of Swaraj = `7,200 xx 5/100 xx 5.5/12`

= ₹ 165

(ii) Interest on drawings of Viraj = `9600 xx 5/100 xx 6.5/12`

= ₹ 260

(iii) Interest on drawings of Maharaj = `4800 xx 5/100 xx 6/12`

= 120

2. Calculation of commission to partners:

(i) Swaraj = `10/100 xx 2,20,000`

= 22,000

(ii) Viraj = `10/110 xx 2,20,000`

= 20,000