Partnership
Amit, Babu and Charu set up a partnership firm on April 1, 2022. They contributed ₹50,000, ₹40,000 and ₹30,000, respectively as their capitals and agreed to share profits and losses in the ratio of 2 : 2 : 1. Amit is to be paid a salary of ₹1,000 per month and Babu, a commission of ₹5,000. It is also provided that interest to be allowed on capital at 6% p.a. The drawings for the year were Amit ₹6,000, Babu ₹4,000 and Charu ₹2,000. Interest on drawings of ₹300 was charged on Amit's drawings, ₹200 on Babu's drawings and ₹100, on Charu's drawings. The net profit as per Profit and Loss Account for the year ending March 31, 2023 was ₹55,000 before charging manager's commission. Manager was allowed commission @ 10% on net profit after charging such commission.
From the above information answer.
Net divisible profit credited to Babu's Capital A/c is:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹10,560.
Profit and loss Appropriation Account
| Particulars | Amount | Particulars | Amount |
| To Amit's A/c (salary) 1,000 x 12 |
12,000 | By profit and loss A/c | 50,000 |
| To Babu's A/c (Commission) | 5,000 | By Partner's Capital A/c (Total Interest on drawings of all partners) |
600 |
| To partner's Capital A/c (Total Interest on capital) (1,20,000 x 6/100) |
7,200 | ||
| To divisible profit | 26,400 | ||
| 50,600 | 50,600 |
Total divisible profit = 26,400
Babu's share = 2/5
Share in profit = 26,400 x 2/5
= 10,560