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T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 1 - Accounting for Partnership FIRMS – Fundamentals

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T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 1 - Accounting for Partnership FIRMS – Fundamentals Page/Excercise 1.79

Solution Ex. 1

In the absence of Partnership Deed, the provisions of Indian Partnership Act, 1932 are applicable. Accordingly,

 

a. No Salary is to be allowed to a partner

b. No Interest on Partner's Capital is to be allowed

c. Interest on Partner's Loan to be allowed at 6% p.a.

d. Distribution of Profit to be done in equal ratio

e. No Interest on Partner's Drawings to be charged

Solution Ex. 2

a. P is bound to pay Rs.20,000 along with profit of Rs.5,000 to the firm. This is because this because this amount belongs to the firm and according to the principal and agent relationship, P is principal as well as agent to the firm, to Q and to R. And as per the rule, any profit earned by an agent (P) by using the firm's property is attributable to the firm.

b. Q is liable to pay Rs.5,000 to the firm. This is because, as per the Partnership Act, every partner of a partnership firm is liable to the firm for any loss caused by his/her wilful negligence which is clearly evident from the fact that he used the property of the firm and also mis-represented himself as a principal rather than an agent to the other partners and to the firm.

 

c. As per the Partnership Act, 1932, a partner has a right to buy and sell goods without consulting the other partners unless a Public Notice has been given by the partnership firm to restrict the partners to buy and sell. Accordingly, P and Q may buy goods from A Ltd.

 

d. No, C will not be admitted as one of the partners, P, has not agreed to admit C. And as per the Partnership Act, 1932 a new partner cannot be admitted into a firm unless all the existing partners agree on the same decision.

Solution Ex. 3

 

 

 

Disputes

Possible Judgements

a.

A wants that interest on capital should be allowed to the partners, but B and C do not agree.

According to the Partnership Act, no interest on capital will be allowed as there is no partnership agreement among A, B and C mentioning payment of interest on capital.

b.

B wants that the partners should be allowed to draw salary, but A and C do not agree.

No salary will be allowed to any partner until and unless there is an

agreement to the contrary.

c.

C wants that the loan given by him to the firm should bear interest @ 10% p.a., but A and B do not agree.

Interest on C's loan will be allowed at 6% p.a. in the absence of a partnership agreement mentioning the said amount of interest.

d.

A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution, but C does not agree.

Profit will be shared equally if there is no agreement between the partners mentioning such distribution.

 

 

T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 1 - Accounting for Partnership FIRMS – Fundamentals Page/Excercise 1.80

Solution Ex. 4

In case there is no partnership deed entered between partners or if deed is silent on few of the aspects, then the provisions of Indian Partnership Act, 1932 are applicable. According to the Act, if there is no agreement regarding the ratio in which profits are to be shared, then profits (or losses) are to be shared equally among all the partners. Accordingly, Jaspal's view over distribution of profits in the capital ratio is not acceptable, and Rosy should convince Jaspal stating the provisions contained in the Partnership Act, 1932.

Solution Ex. 5

Harshad Claims:

(i) It cannot Claim interest on capital to Indian Partnership Act 1932, he is entitled only for 6% interest on loan.

(ii) In absence to any agreement profit are distributed equally, according to Indian Partnership Act 1932.

 

Dhiman Claims:

(i) It will be accepted, according to Indian Partnership Act 1932.

(ii) He is not entitled for any remuneration because there is no agreement on matter of remuneration.

(iii) It is no interest on capital is allowed whereas 6% interest for loan should be given.

 

Distribution Profits:

Profit and Loss Adjustment Account

Dr

 

Cr

Particulars

Rs.

Particulars

Rs. 

To Interest on Partner's Loan A/c

 

By Profit and Loss A/c

1,80,000

Harshad [1,00,000 ×(6/100)× (6/12)]

3,000

 

 

To Profit and Loss Appropriation A/c 

1,77,000

 

 

 

1,80,000

 

1,80,000

 

Profit and Loss Appropriation Account

Dr

 

Cr

Particulars

Rs.

Particulars

Rs. 

To Profit transferred to :

 

By Profit and Loss Adjustment A/c

1,77,000

 

Harshad's Capital A/c

88,500

 

 

 

Dhiman's Capital A/c

88,500

 

 

 

1,77,000

 

1,77,000

 

 

 

Solution Ex. 6

 

Profit and Loss Appropriation Account

for the year ended March 31,2018

Dr

 

Cr

Particulars

 

Rs.

Particulars

Rs. 

To Interest on A's Loan A/c

 

240

By Profit b/d (before Interest)

15,000

To Profit transferred to :

 

 

 

 

 

A's Capital A/c

7,380

 

 

 

 

B's Capital A/c

7,380

14,760

 

 

 

 

15,000

 

15,000

Working notes :

1

Calculation of interest on Loan

Interest on loan to be provided at 6% p.a.

Amount of Loan = Rs.8,000

Period (from October 01 to March 31) = 6 Months

2

Calculation of Profit Share of each partner

Equal distribution of profits

Profit after Interest on A's loan = Rs.15,000 - Rs.240 = Rs.14,760

Solution Ex. 7

Total amount advanced by the partners = Rs.30,000

Profit sharing ratio = 3 :2

Interest Period (from Oct. 01, 2017 to Mar. 31, 2018) = 6 months

Interest rate = 6% p.a.

Calculation of Interest on Advances

Note: In the absence of a partnership deed, interest on loans and advances is provided at 6% p.a.

 

T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 1 - Accounting for Partnership FIRMS – Fundamentals Page/Excercise 1.81

Solution Ex. 8

Total amount advanced: 30,000

 

Period (from Oct. 01, 2017 to Mar. 31, 2018) = 6 months

Interest rate = 6% p.a.

 

Solution Ex. 9

HTML Source EditorWord Wrap

Calculation of Interest on Loan for 6 months

 

Case 1 – When Profits before Interest amounted to Rs.21,000

 

Profit and Loss Appropriation Account

for the year ended March 31,2018

Dr

 

Cr

 

Particulars

 

Rs.

Particulars

Rs.

To Interest on X’s Loan A/c

 

2,400

By Profit b/d (before interest)

21,000

To Interest on Y’s Loan A/c

 

1,200

 

 

To Profit transferred to

 

 

 

 

 

X’s Capital A/c (17,400 ´ 2/5)

6,960

 

 

 

 

Y’s Capital A/c (17,400 ´ 3/5)

10,440

17,400

 

 

 

 

21,000

 

21,000

               



Case 2 – When Profits before Interest amounted to Rs.3,000

 

Profit and Loss Appropriation Account

for the year ended March 31,2018

Dr

 

Cr

Particulars

Rs.

Particulars

 

Rs.

To Interest on X’s Loan A/c

2,400

By Profit b/d (before interest)

 

3,000

To Interest on Y’s Loan A/c

1,200

By Loss transferred to-

 

 

 

 

 

X’s Capital A/c (600 ´2/5)

240

 

 

 

 

Y’s Capital A/s (600 ´ 3/5)

360

600

 

 

 

 

 

 

3,600

 

 

3,600

 

Case 3 – When Profits before Interest amounted to Rs.5,000

 

Profit and Loss Appropriation Account

for the year ended March 31,2018

Dr

 

Cr

Particulars

 

Rs.

Particulars

Rs.

To Interest on X’s Loan A/c

 

2,400

By Profit b/d (before interest)

5,000

To Interest on Y’s Loan A/c

 

1,200

 

 

To Profit transferred to

 

 

 

 

 

X’s Capital A/c (1400 ´ 2/5)

560

 

 

 

 

Y’ Capital A/c (1400 ´ 3/5)

840

1,400

 

 

 

 

5,000

 

5,000

 

 

Case 4 – When Losses before Interest were Rs.1,400

 

Profit and Loss Appropriation Account

for the year ended March 31,2018

Dr

 

Cr

Particulars

 

Rs.

Particulars

Rs.

To Loss b/d (before interest)

 

2,400

By Loss transferred to:

 

 

To Interest on X’s Loan A/c

 

1,200

X’s Capital A/c (1400 ´ 2/5)

2,000

 

To Interest on Y’s Loan A/c

 

1,400

Y’ Capital A/c (1400 ´ 3/5)

3,000

5,000

 

 

5,000

 

 

5,000

 

Solution Ex. 10

 

Profit and Loss Appropriation Account

for the year ended March 31,2018

Dr

 

Cr

Particulars

Rs.

Particulars

 

Rs. 

To Loss b/d (before interest)

9,000

By Loan transferred to :

 

 

To Interest on Bat's Loan A/c

7,200

 

Bat's Capital A/c

31,920

 

To Interest on Ball's loan A/c

3,600

 

Ball's Capital A/c

47,880

79,800

To Rent A/c (Bat's)

60,000

 

 

 

 

79,800

 

 

79,800

Working notes :

1. 

Interest on Partner's Loan

  

3.

Distribution of Loss to the Partners

Solution Ex. 11

 

Profit and Loss Appropriation Account

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

Rs. 

To Interest on Capital:

 

 

By Profit and Loss (Net Profit)

80,000

-----A's A/c (6% of 1,00,000)

6,000

 

 

 

-----B's A/c(6% of 60,000)

3,600

9,600

 

 

To Salary to B's A/c (3,000 × 12)

 

36,000

 

 

To Profit transferred to :

 

 

 

 

----A's Capital A/c

17,200

 

 

 

----B's Capital A/c

17,200

34,400

 

 

 

 

80,000

 

80,000

 

Working Notes :

WN 1 Calculation of Profit Share of each Partner

 Divisible Profit = 80,000 - 9,600 - 36,000 = 34,400

   

Solution Ex. 12

 

Profit and Loss Appropriation Account

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

Rs. 

To Interest on Capital A/c

 

 

By Profit and Loss A/c

4,00,000

----X (10% of 5,00,000)

50,000

 

---- (Net Profit after Z's salary )

 

----Y (10% of 5,00,000)

50,000

 

 

 

----Z (10% of 2,50,000)

25,000

1,25000

 

 

To Profit transferred to :

 

 

 

 

----X's Capital A/c

1,10,000

 

 

 

----Y's Capital A/c

1,10,000

 

 

 

----Z's Capital A/c

55,000

2,75,000

 

 

 

 

4,00,000

 

4,00,000

Working Notes :

 

1.  

Salary to Z will not be debited to Profit and Loss Appropriation Account as Profit of Rs.4,00,000 is already given after adjusting the Z's salary.

 

2.   

Calculation of Profit Share of each Partner

Divisible of Profit after Interest on Capital = Rs.4,00,000 - Rs.1,25,000 = Rs. 2,75,000

 

Profit sharing ratio = 2 : 2: 1

  

Solution Ex. 13

 

Profit and Loss Adjustment Account

Dr.

 

Cr.

Particulars

Rs. 

Particulars

Rs. 

To Manager's Commission A/c

(30,000 × 5%)

1,500

By Profit and Loss A/c

(Net Profit after Y's salary)

24,000

To Profit transferred to Profit and Loss Appropriation A/c:

28,500

By Y's salary A/c

6,000

 

30,000

 

30,000

 

 

Profit and Loss Appropriation Account

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

Rs. 

To Salary to Y's A/c

 

6,000

By Profit and Loss Adjustment A/c (After manager's commission)

28,500

To Interest on Capital A/c

 

 

 

 

----X

4,000

 

 

 

----Y

3,000

7,000

 

 

To Salary to A/c

 

12,000

 

 

To Profit transferred to :

 

 

 

 

----X's Capital A/c

9,300

 

 

 

----Y's Capital A/c

6,200

15,500

 

 

 

 

28,500

 

28,500

 

Working Notes :

 

1.

Calculation of Manager's Commission

Profit to calculate Managers' Commission = 24,000 + 6,000 (Y's Salary) = Rs.30,000

  

 

2.

Calculation of Interest on Capital

 

3.

Calculation of Profit Share of each Partner

Profit available for distribution = 28,500 - 6,000 - 7,000 = Rs.15,500

 

Solution Ex. 14

 

Profit and Loss Appropriation Account

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

 

Rs. 

To Salary to Prem

(2,500 × 12)

 

30,000

By Profit and Loss A/c

(Net Profit)

 

90,575

To Commission to Manoj

 

10,000

By Interest on Drawings A/c:

 

 

To Interest on Capital A/c:

 

 

----Prem

1,250

 

----Prem (5% of 2 Lacs)

10,000

 

----Manoj

425

1,675

----Manoj (5% of 1.50 Lacs)

7,500

17,500

 

 

 

To Profit transferred to:

 

 

 

 

 

----Prem's Capital A/c

20,850

 

 

 

 

----Manoj's Capital A/c

13,900

34,750

 

 

 

 

 

92,250

 

 

92,250

 

Working Notes :

1. 

Calculation of Profit Share of each Partner

Profit available for distribution = 90,575 + 1,675 - 30,000 -10,000 - 17,500 = Rs.34,750

Profit Sharing Ratio = 3 : 2

T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 1 - Accounting for Partnership FIRMS – Fundamentals Page/Excercise 1.82

Solution Ex. 15

 

Profit and Loss Appropriation Account

for the year ended 31st March 2018

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

 

Rs. 

To Profit and Loss A/c (Loss)

1,00,000

By Interest on Drawings A/c:

 

 

 

 

---- Reema

3,000

 

 

 

---- Seema

3,000

6,000

 

 

 

 

 

 

 

By Net Loss transferred to:

 

 

 

 

---- Reema Capital A/c

47,000

 

 

 

---- Seema Capital A/c

47,000

94,000

 

1,00,000

 

 

1,00,000

Working Notes :

1. Calculation of Interest on drawings of each Partner

In the no given of dates of drawings, interest thereon has been calculated for the average period. 

 

2. Loss share of each partner Ratio 1:1.

 

3. Interest on capital is charge against profit.

 

 

Solution Ex. 16

Profit and Loss Appropriation Account

for the year ended 31st March 2018

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

 

Rs. 

To Profit and Loss A/c (Loss)

60,000

By Interest on Drawings A/c:

 

 

(1,20,000 - 1,80,000)

 

---- Bhanu Current A/c

3,750

 

 

 

---- Partap Current A/c

7,500

11,250

 

 

 

 

 

 

 

By Net Loss transferred to:

 

 

 

 

---- Bhanu Current A/c

24,375

 

 

 

---- Partap Current A/c

24,375

48,750

 

60,000

 

 

60,000

 

Working Notes:

1. Calculation of Interest on Drawing of each partner

In the no given of dates of drawings, interest thereon has been calculated for the average period. 

 

2. Calculation of Interest on Capital of each partner

Interest on Capital is a charge against Profit. Thus, will be debited to Profit and Loss Account

  

Total interest = Rs.1,80,000

 

 

 

Solution Ex. 17

 

 

 

Journal Entries

Date

Particulars

 

L.F.

Debit

Rs. 

Credit

Rs. 

 

Profit and Loss Appropriation A/c 

Dr.

 

40,000

 

 

----To Amar's Current A/c

 

 

 

15,000

 

----To Bimal's Current A/c

 

 

 

25,000

 

(Being interest on capital transferred to Profit and Loss Appropriation Account)

 

 

 

 

 

Working Notes :

Calculation of Interest on Capital :

Solution Ex. 18

 

Journal Entries

Date

Particulars

 

L.F.

Debit

Rs. 

Credit

Rs. 

 

Profit and Loss Appropriation A/c 

Dr.

 

1,00,000

 

 

----To Kamal's Current A/c

 

 

 

55,000

 

----To Kapil's Current A/c

 

 

 

45,000

 

(Being interest on capital transferred to Profit and Loss Appropriation Account)

 

 

 

 

 

 

Profit and Loss Appropriation Account

year ended 31st March 2018

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

Rs. 

To Interest on Capital

 

 

By Profit and Loss A/c

6,00,000

----Kamal A/c

55,000

 

 

 

----Kapil A/c

45,000

1,00,000

 

 

To Profit transferred to:

 

 

 

 

----Kamal's Capital A/c

2,50,000

 

 

 

----Kapil's Capital A/c

2,50,000

5,00,000

 

 

 

 

6,00,000 

 

6,00,000

 

Working Notes :

Calculation of Interest on Capital: 

 

 

Solution Ex. 19

 

Journal Entries

Date

Particulars

 

L.F.

Debit

Rs. 

Credit

Rs. 

 

Profit and Loss Appropriation A/c 

Dr.

 

20,000

 

 

----To Simran's Current A/c

 

 

 

10,000

 

----To Reema's Current A/c

 

 

 

10,000

 

(Being interest on capital transferred to Profit and Loss Appropriation Account)

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Appropriation A/c 

Dr.

 

2,80,000

 

 

----To Simran's Current A/c

 

 

 

1,68,000

 

----To Reema's Current A/c

 

 

 

1,12,000

 

(Being profit transferred to Partners Current Account)

 

 

 

 

 

 

 

Profit and Loss Appropriation Account

year ended 31st march 2018

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

Rs. 

To Interest on Capitals:

 

 

By Profit and Loss A/c

3,00,000

----Simran's A/c

10,000

 

 

 

----Reema's A/c

10,000

20,000

 

 

To Profit transferred to :

 

 

 

 

----Simran's Current A/c

1,68,000

 

 

 

----Reema's Current A/c

1,12,000

2,80,000

 

 

 

 

3,00,000

 

3,00,000

 

 

Working Notes :

 

1

Calculation of Interest on Capital 

  

 

 

Solution Ex. 20

 

Journal Entries

Date

Particulars

 

L.F.

Debit

Rs. 

Credit

Rs. 

 

Profit and Loss Appropriation A/c 

Dr.

 

90,000

 

 

----To Anita's Current A/c

 

 

 

50,000

 

----To Ankita's Current A/c

 

 

 

40,000

 

(Being interest on capital transferred to Profit and Loss Appropriation Account)

 

 

 

 

 

Working Notes :

 

Calculation of Interest on Capital

  

 

T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 1 - Accounting for Partnership FIRMS – Fundamentals Page/Excercise 1.83

Solution Ex. 21

 

Journal Entries

Date

Particulars

 

L.F.

Debit

Rs. 

Credit

Rs. 

 

Profit and Loss Appropriation A/c 

Dr.

 

1,35,000

 

 

----To Ashish's Capital A/c

 

 

 

65,000

 

----To Aakash's Capital A/c

 

 

 

70,000

 

(Being interest on capital transferred to Profit and Loss Appropriation Account)

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Appropriation A/c 

Dr.

 

3,65,000

 

 

----To Ashish's Capital A/c

 

 

 

2,19,000

 

----To Aakash's Capital A/c

 

 

 

1,46,000

 

(Being profit transferred to Partners Capital Account)

 

 

 

 

 

 

 

Profit and Loss Appropriation Account

year ended 31st march 2018

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

Rs. 

To Interest on Capitals:

 

 

By Profit and Loss A/c

5,00,000

----Ashish's A/c

65,000

 

 

 

----Aakash's A/c

70,000

1,35,000

 

 

To Profit transferred to :

 

 

 

 

----Ashish's Capital A/c

2,19,000

 

 

 

----Aakash's Capital A/c

1,46,000

3,65,000

 

 

 

 

5,00,000

 

5,00,000

 

 

Working Notes :

1.

Calculation of Opening Capital:

Particulars

Ashish

Aakash

Capital at the end

5,00,000

6,00,000

Add: Drawings

1,50,000

1,00,000

Opening Capital

6,50,000

7,00,000

 

2.

Calculation of Interest on Capital

 

Solution Ex. 22

 

 

Journal Entries

Date

Particulars

 

L.F.

Debit

Rs. 

Credit

Rs. 

 

Profit and Loss Appropriation A/c 

Dr.

 

82,500

 

 

----To Naresh's Capital A/c

 

 

 

42,500

 

----To Sukesh's Capital A/c

 

 

 

40,000

 

(Being interest on capital transferred to Profit and Loss Appropriation Account)

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Appropriation A/c 

Dr.

 

1,17,500

 

 

----To Naresh's Capital A/c

 

 

 

58,750

 

----To Sukesh's Capital A/c

 

 

 

58,750

 

(Being profit transferred to Partners Capital Account)

 

 

 

 

 

Working Notes :

1.

Calculation of Opening Capital:

Particulars

Naresh

Sukesh

Capital at the end

3,00,000

3,00,000

Add: Out of Capital Drawings

50,000

-----

Add: Against Profit Drawings

1,00,000

1,00,000

Opening Capital

4,50,000

4,00,000

 

2.

Calculation of Interest on Capital: 

 

Solution Ex. 23

 

Profit and Loss Appropriation Account

year ended 31st march 2014

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

Rs. 

To Interest on Capitals:

 

 

By Profit and Loss A/c

7,800

----Jay A/c

4,800

 

 

 

----Vijay A/c

3,000

7,800

 

 

 

 

7,800

 

7,800

 

 

Working Notes :

1.

Calculation of Interest on Capital

  

 

2.

Calculation of Proportionate Interest on Capital

 

 

Solution Ex. 24

 

Profit and Loss Appropriation Account

Dr.

 

Cr.

Particulars

 

Rs. 

Particulars

Rs. 

To Salary A/c

 

 

By Profit and Loss A/c

4,80,000

----A

1,20,000

 

 

 

----B

1,20,000

2,40,000

 

 

To Profit transferred to :

 

 

 

 

----A's Capital A/c

80,000

 

 

 

----B's Capital A/c

80,000

 

 

 

----C's Capital A/c

80,000

2,40,000

 

 

 

 

4,80,000

 

4,80,000

 

Solution Ex.25

Net Profit for the year= Rs.1,10,000

Commission to A = 10% of on Net Profit

Solution Ex. 26

Net Profit before charging Commission = 2,20,000

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

Solution Ex. 27

 

Profit and Loss Appropriation Account

for the year ended March 31,2018

Dr

 

Cr.

Particulars

 

Amount

Rs.

Particulars

Amount

Rs. 

To Partner's Commission

 

 

By Profit and Loss A/c

1,80,000

 

A's A/c

6,000

 

(Net Profit)

 

 

B's A/c

9,000

 

 

 

 

C's A/c

6,000

 

 

 

 

D's A/c

9,000

30,000

 

 

To 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 :

1.

Calculation of Partner's Commission

Partners Commission = 20 % On Net Profit after charging such commission

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

  

 

2. 

Calculation of Profit Share of each Partner

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

Profit sharing ratio = 4 : 3 : 2 : 1

T. S. Grewal Solution for Class 12 Commerce Accountancy Chapter 1 - Accounting for Partnership FIRMS – Fundamentals Page/Excercise 1.84

Solution Ex. 28

Profit and Loss Appropriation Account

for the year ended March 31,2018

Dr.

 

Cr.

Particulars

 

`

Particulars

`

To Partner’s Salary A/c

 

 

By Profit and Loss A/c

4,20,000

 

X (10,000 ´ 12)

1,20,000

 

----(Net Profit)

 

 

Y

25,000

1,45,000

 

 

To Partner’s Commission

 

 

 

 

 

X’s A/c

27,500

 

 

 

 

Y’s A/c

22,500

50,000