3:2
7 Salary/Commission to Partner, Interest on Capital and Drawings
23B. Sonu and Rajat started a partnership firm on 1 April, 2019. They contributed 8,00.000 and
26,00,000 respectively as their capitals and decided to share profits and losses in the ratio of
The partnership deed provided that sonu was to be paid a salary of 20,000 per month and
Rajat a commission of 5% on turnover. It also provided that interest on capital be allowed 8%
each month. Interest on drawings was charged @ 6% p.a. The net profit as per profit and loss
p.a. Sonu withdrew 20,000 on 1st December, 2017 and Rajat withdrew 5,000 at the end of
account for the year ended 31st March, 2020 was 4,89,950. The turnover of the firm for the
year ended 31st March, 2020.
Amounted to 20,00,000. Prepare profit and loss appropriation account for the above
transactions in the books of Sonu and Rajat.
[Ans. Net profit after appropriation * 40,000, Sonu * 24,000, Rajat * 16,000)
Profit 1,20,000. Share of Profit: Gopal
Aint : Interest on Drawings : Sonu * 400, Rajat > 1658
Answers
ANSWER
Journal of Sonu and Rajat
Date
Particulars
L.F.
Dr. (Rs.)
Cr. (Rs.)
2018
March 31
Profit & Loss Appropriation A/c Dr.
2,40,000
To Sonu’s Capital A/c
2,40,000
(Being Salary for the year payable to Sonu)
March 31
Profit & Loss Appropriation A/c Dr.
1,00,000
To Rajat’s Capital A/c
1,00,000
(Being commission on turnover @ 5% payable to Rajat)
March 31
Profit & Loss Appropriation A/c Dr.
1,12,000
To Sonu’s Capital A/c
64,000
To Rajat’s Capital A/c
48,000
(Being interest on capital @ 8% p.a)
March 31
Sonu’s Capital A/c Dr.
400
Rajat’s Capital A/c Dr.
1,650
To :Profit & Loss Appropriation A/c
2,050
(Being interest on drawings of partners charged @ 6% p.a)
March 31
Profit & Loss Appropriation A/c Dr.
40,000
To Sonu’s Capital A/c
24,000
To Rajat’s Capital A/c
16,000
(Being divisible profit in 3:2 distributed)
Working notes:
1. Computation of interest on drawings of partners
Drawings of Sonu = 20,000
Drawings of Rajat = 12 * 5,000 = 60,000
Interest on Sonu’s drawings = 20,000 * 6/100 * 4/12 = 400
Interest on Rajat’s drawings = 60,000 * 6/100 * 5.5/12 = 1,650
2. Computation of divisible profit and its distribution between partners
Profit as per the Profit and Loss account = 4,89,950
Divisible profit = Net Profit + Interest on Drawings – Interest on Capital – Salary of Sonu – Commission to Rajat
Divisible profit = 4,89,950 + 2,050 -1,12,000 – 2,40,000 – 1,00,000 = 40,000
Sonu’s share in divisible profit = 40,000 * 3/5 = 24,000
Rajat’s share in divisible profit = 40,000 * 2/5 = 16,000