Q.X, Y and Z are partners sharing profits and losses in the ratio 3:2:1. Their capitals as on 1st April 2023 were X ₹3,00,000, Y ₹2,00,000 and Z ₹1,00,000. The partnership deed provides:

This problem has more moving parts than a simple appropriation account — a commission that depends on an intermediate profit figure, and interest on drawings that must be added on the credit side rather than deducted.

Commission to Z = 5% of (₹2,04,000 − ₹36,000 − ₹18,000) = 5% of ₹1,50,000 = ₹7,500.

Step 1: Interest on Capital @6% p.a.

X = ₹3,00,000 × 6% = ₹18,000

Y = ₹2,00,000 × 6% = ₹12,000

Z = ₹1,00,000 × 6% = ₹6,000

Total = ₹36,000

Step 2: Salary to Y

₹1,500 × 12 = ₹18,000

Step 3: Commission to Z

Profit remaining after interest on capital and salary, before charging commission = ₹2,04,000 − ₹36,000 − ₹18,000 = ₹1,50,000

Commission to Z @5% = ₹1,50,000 × 5% = ₹7,500

Step 4: Divisible Profit

Net Profit ₹2,04,000 + Interest on Drawings ₹2,700 (X ₹1,200 + Y ₹900 + Z ₹600) − Interest on Capital ₹36,000 − Salary ₹18,000 − Commission ₹7,500 = ₹1,45,200

Shared 3:2:1 (total 6 parts, ₹24,200 per part): X = 3 × ₹24,200 = ₹72,600; Y = 2 × ₹24,200 = ₹48,400; Z = 1 × ₹24,200 = ₹24,200

Profit and Loss Appropriation Account for the year ended 31st March 2024

Debit side:

Credit side:

Cross-check the commission figure independently: the base for Z's commission (₹1,50,000) should equal net profit minus only interest on capital and salary, not minus interest on drawings or the commission itself, since the question specifies commission is on the profit remaining before charging such commission. ₹2,04,000 − ₹36,000 − ₹18,000 = ₹1,50,000 confirms this base is correctly isolated before applying the 5% rate.

The most common error here is treating interest on drawings like another deduction (debiting it) instead of recognising it as a gain to the firm that must be added on the credit side. A second common error is computing Z's commission on the full ₹2,04,000 net profit instead of on the profit remaining after interest on capital and salary, as this question specifically requires.