Sonia and Shruti were partners in a firm sharing profits and losses in the ratio of 5:3. On 1st April, 2023, the balance in their Fixed Capital Accounts were ₹25,00,000 and ₹15,00,000 respectively. The profit of the firm for the year ended 31st March, 2024 was ₹24,00,000. Calculate their share of profit if:

(i) The Partnership Deed is silent as to the payment of interest on capital.

(ii) The Partnership Deed provides for interest on capital @ 10% per annum. (CBSE 2025)

 

Answer:

(i) No interest on capital will be allowed because the Partnership Deed is silent as to the payment of interest on capital.

 

Share Of Profit:

Sonia = 24,00,000×5/8=15,00,000

Shruti =24,00,000×3/8=9,00,000

 

(ii) The Partnership Deed provides for interest on capital @ 10% per annum.

 

Interest on capital = Sonia ₹2,50,000; Shruti ₹1,50,000

Total interest =2,50,000+1,50,000=4,00,000

Distributable Profit = 24,00,000-4,00,000=20,00,000

Share Of Profit:

Sonia = 20,00,000×5/8= 12,50,000

Shruti =20,00,000×3/8=7,50,000

 

Salary or commission to Partners

Shiv, Mohan and Gopal are partners sharing profits and losses in the ratio of 2 : 2 : 1 respectively. Shiv is entitled to a commission of 10% on the net profit. Net profit for the year is  ₹ 1,10,000.
Determine the amount of commission payable to Shiv.

Answer:

Net Profit before charging commission = ₹ 1,10,000

Commission to Shiv = 10% of on Net Profit before charging such commission    

Partner' s Commission =(Netprofit×rate of commission)/100

Shiv ' s Commission =(1,10,000×10)/100=11,000

 

Abha, Bobby and Vineet are partners sharing profits and losses equally. As per Partnership Deed, Vineet is entitled to a commission of 10% on the net profit after charging such commission. The net profit before charging commission is ₹2,20,000.
Determine the amount of commission payable to Vineet.

Answer:

Net Profit before charging Commission = ₹ 2,20,000

Commission to Vineet = 10% of on Net Profit after charging such commission

Partner' s Commission =(Net profit×Rate of commission)/(100+Rate of commission)

Vineet's Commission=(2,20,000×10)/(100+10)=20,000

 

A, B, C, and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹1,80,000 for the year ended 31st March, 2026. As per the Partnership Deed, they are to charge a commission @ 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3.

You are required to show appropriation of profits among the partners.

Answer:

Profit and Loss Appropriation Account for the year ended March 31, 2026
Dr.				Cr.
Particulars		₹		Particulars		₹
Partners’ Commission:				Profit and Loss A/c		1,80,000
A’s Capital A/c	6,000		(Net Profit)
B’s Capital A/c	9,000
C’s Capital A/c	6,000
D’s Capital A/c	9,000	30,000
Profit transferred to:
A’s Capital A/c	60,000
B’s Capital A/c	45,000
C’s Capital A/c	30,000
D’s Capital A/c	15,000	1,50,000
		1,80,000				1,80,000

Working Notes:

WN 1Calculation of Partners’ Commission

Partners’ Commission = 20% on Net Profit after charging such commission

Partners' Commission = (Net profit×Rate of commission)/(100+Rate of commission)

Partners' Commission = (1,80,000×20)/(100+20)=30,000

This commission is to be shared by the partners in the ratio of 2 : 3 : 2 : 3

A' s Commission =(30,000×2)/10=6,000

B' s Commission =(30,000×3)/10=9,000

C' s Commission =(30,000×2)/10=6,000

D's Commission =(30,000×3)/10=9,000

 

WN 2Calculation of Profit Share of each Partner

Profit available for Distribution = 1,80,000- ₹ 30,000 = ₹ 1,50,000

Profit sharing ratio = 4 : 3 : 2 : 1

A' s Profit share=(1,50,000×4)/10=60,000

B' s Profit share=(1,50,000×3)/10=45,000

C' s Profit share=(1,50,000×2)/10=30,000

D's Profit share=(1,50,000×1)/10=15,000

 

X and Y are partners in a firm. X is entitled to a salary of  ₹ 10,000 per month and commission of 10% of the net profit after partners' salaries but before charging commission. Y is entitled to a salary of  ₹ 25,000 p.a. and commission of 10% of the net profit after charging all commission and partners' salaries. Net profit before providing for partners' salaries and commission for the year ended 31st March, 2026 was ₹ 4,20,000. Show distribution of profit.

Answer:

Profit and Loss Appropriation Account for the year ended March 31, 2026
Dr.				Cr.
Particulars			( ₹)	Particulars	( ₹)
Partners’ Salary:				Profit and Loss A/c	4,20,000
X (10,000 × 12)	1,20,000			(Net Profit)
Y	25,000		1,45,000
Partners’ Commission:
X’s Capital A/c		27,500
Y’s Capital A/c		22,500	50,000
Profit transferred to:
X’s Capital A/c	1,12,500
Y’s Capital A/c	1,12,500		2,25,000
			4,20,000		4,20,000

Working Notes:

WN 1- Calculation of Commission

Commission to X = 10% of Net Profit after partners’ salaries but before charging such commission

Profit after Partners’ Salaries = 4,20,000 - ₹ 1,45,000 =  ₹ 2,75,000

Commission to X	= Profit after Partners’ Salaries × Rate of commission / 100
	= 2,75,000 ×  10 /100= 27,500

Commission to Y = 10% of Net Profit after charging Commission and Partners’ Salaries

Profit after commission and partners’ salaries = 4,20,000-₹ 1,45,000-₹ 27,500 =  ₹ 2,47,500

Commission to Y	= Profit after commission and partners’ salaries × Rate of commission / 100+Rate
	= 2,45,500 ×  10 /100+10= 22,500

WN 2- Calculation of Profit Share of each Partner

Profit available for distribution = 4,20,000-₹ 1,45,000 -₹ 50,000 =  ₹2,25,000

Profit sharing ratio = 1 : 1

 Profit share of each X and Y = 2,25,000×1/2