Amita and Kabuliwala are partners, sharing profits in the ratio of 2:2 with capitals of Rs. 1,50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. A commission of Rs. 5000 is to be allowed to manager. During the financial year 2024-25, on Oct. 01, 2024, Amita gave a loan of Rs. 1,00,000 to the firm without any agreement. During the year 2024-2025, a profit of Rs. 2,22,250 was earned. Calculate the profit that would be transferred to Profit & Loss Appropriation A/C.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 2,14,250
The profit that reaches the Profit & Loss Appropriation A/c is the profit after the charges against it, here the interest on a partner’s loan and the manager’s commission. Interest on capital is an appropriation of profit, so it is not deducted at this stage.
Interest on Amita’s loan (no agreement, so 6% p.a., from October 01, 2024 to March 31, 2025):
Rs. 1,00,000 × 6/100 × 6/12 = Rs. 3,000
Manager’s commission:
Rs. 5,000
Profit transferred to the Appropriation Account:
Rs. 2,22,250 − Rs. 3,000 − Rs. 5,000 = Rs. 2,14,250
Interest on capital (Rs. 9,000 for Amita and Rs. 1,800 for Kabuliwala) is shown inside the Appropriation Account, out of this Rs. 2,14,250.
Note: NTA picked this question from an NCERT (2026-27) illustration and changed the figures. Do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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