Q.59 Solution Fundamentals of Partnership Firm TS Grewal Book Class 12 CBSE

X and Y entered into partnership on 1st April, 2018. Their capitals as on 1st April, 2023 were ₹2,00,000 and ₹1,50,000 respectively. On 1st October, 2023, X gave ₹50,000 as loan to the firm. As per the provisions of the Partnership Deed:

1. (i) 20% of Profits before charging Interest on Drawings but after making appropriations was to be transferred to General Reserve.
2. (ii) Interest on capital is to be allowed @ 12% p.a. and Interest on Drawings is to be charged @ 10% p.a.
3. (iii) X to get monthly salary of ₹5,000 and Y to get salary of ₹22,500 per quarter.
4. (iv) X is entitled to a commission of 5% on sales. Sales for the year were ₹3,50,000.
5. (v) Profit to be shared in the ratio of their capitals up to ₹1,75,000 and balance equally.

Profit for the year ended 31st March, 2024, before allowing or charging interest was ₹4,61,000. The drawings of X and Y were ₹1,00,000 and ₹1,25,000 respectively.

Pass the necessary Journal entries relating to appropriation of profit. Prepare Profit & Loss Appropriation Account and the Partners’ Capital Accounts.