[ISC] Q. 35 Solution of Fundamentals of Partnership Firms TS Grewal Book ISC (2026-27)

Solution of Question number 35 of the Fundamentals of Partnership Accounts (Firm) chapter TS Grewal Book 2026-27 Edition ISC Board.

Paras, Pawan and Parul are partners. Pawan and Parul are paid through bank accounts salary at the beginning of the month starting May, 2025 of 25,000 per month. Each partner withdrew 10,000 per month in the middle of the month. Partnership Deed provides for charging interest on drawings @ 10% p.a. At the end of the year on preparation of final accounts, Profit & Loss Account showed loss of 7,50,000 after salary to partners.

You are required to determine:

(a) Net Profit/Loss for the year; and

(b) Interest on Drawings for the year.

Solution:-

(a) Net Profit/Loss for the year

The problem states that the Profit & Loss Account showed a loss of ₹7,50,000 after salary to partners.

Salary paid to partners is an appropriation of profit and should generally be debited to the Profit & Loss Appropriation Account, not the Profit & Loss Account. Since the loss is stated after debiting partner salaries, we need to add back the salaries to find the original Net Loss.

Number of partners receiving salary: 2 (Pawan and Parul).
Salary per partner: ₹25,000 per month.
Period: Starting May 2025 (assuming the financial year ends on March 31, 2026, this is 11 months).
Total Salary: 2 x ₹ 25,000 x 11 = ₹ 5,50,000.

Calculation of Net Loss:

Loss after salary: ₹7,50,000
Less: Salaries debited incorrectly to P&L: ₹5,50,000
Net Loss for the year: ₹ 7,50,000 – ₹ 5,50,000 = ₹2,00,000

(b) Interest on Drawings for the year

Interest on drawings is calculated based on the total annual drawings and the average period for drawings made in the middle of the month.

Drawings per partner: ₹10,000 per month.
Total drawings per partner: ₹10,000 x 12 = ₹ 1,20,000 (assuming a full 12-month period for drawings).
Total drawings for 3 partners: ₹1,20,000 x 3 = ₹ 3,60,000.
Rate of interest: 10% p.a..
Average period (middle of the month): 6 months.

Calculation:

Interest on Drawings = Total Drawings x Rate x 6/12

Interest = ₹3,60,000 x 10/100 x 6/12 = ₹18,000

Total Interest on Drawings: ₹18,000

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