Distributing profit with salary and interest: Class 12 practice
From net profit, first allow partners' salaries and interest on capital (as per the deed), then share the remaining divisible profit in the profit-sharing ratio.. Read the method, follow the three worked examples, then try the six questions.
What you should know first
- Ratios
- Percentages
The idea behind distributing profit with salary and interest
From net profit, first allow partners' salaries and interest on capital (as per the deed), then share the remaining divisible profit in the profit-sharing ratio.
Step-by-step method
- Interest on capital = capital × rate.
- Divisible profit = net profit − salaries − interest on capital.
- Share the rest in the ratio and total each partner's amount.
Worked example 1 (Basic)
A and B (ratio 3 : 1) have capitals ₹4,00,000 and ₹3,50,000; interest on capital 8%. Net profit is ₹1,08,000. Find the divisible profit and each partner's share of it.
- Interest: A ₹32,000, B ₹28,000
- Divisible = ₹48,000
- Shares: A ₹36,000, B ₹12,000
- Answer: Divisible ₹48,000; A ₹36,000, B ₹12,000
Worked example 2 (Standard)
A and B (ratio 1 : 1) have capitals ₹4,00,000 and ₹1,50,000; interest on capital 10%; A gets a salary of ₹24,000. Net profit is ₹91,000. Find the divisible profit and each partner's share of it.
- Interest: A ₹40,000, B ₹15,000
- Divisible = ₹12,000
- Shares: A ₹6,000, B ₹6,000
- Answer: Divisible ₹12,000; A ₹6,000, B ₹6,000
Worked example 3 (Challenge)
A and B (ratio 3 : 2) have capitals ₹4,00,000 and ₹3,00,000; interest on capital 5%; A gets a salary of ₹48,000. Net profit is ₹1,73,000. Find each partner's total share.
- Interest: A ₹20,000, B ₹15,000
- Divisible = ₹90,000
- Shares: A ₹54,000, B ₹36,000
- Answer: A ₹1,22,000, B ₹51,000
Common mistakes and misconceptions
- Sharing before deducting appropriations
- Charging interest on the wrong capital
Practice questions
- (Basic) A and B (ratio 1 : 1) have capitals ₹2,50,000 and ₹2,00,000; interest on capital 8%. Net profit is ₹52,000. Find the divisible profit and each partner's share of it.
- (Basic) A and B (ratio 2 : 1) have capitals ₹2,00,000 and ₹1,00,000; interest on capital 5%. Net profit is ₹69,000. Find the divisible profit and each partner's share of it.
- (Standard) A and B (ratio 1 : 1) have capitals ₹2,00,000 and ₹1,00,000; interest on capital 8%; A gets a salary of ₹36,000. Net profit is ₹80,000. Find the divisible profit and each partner's share of it.
- (Standard) A and B (ratio 1 : 1) have capitals ₹2,50,000 and ₹4,00,000; interest on capital 6%; A gets a salary of ₹12,000. Net profit is ₹87,000. Find the divisible profit and each partner's share of it.
- (Challenge) A and B (ratio 3 : 1) have capitals ₹4,00,000 and ₹1,00,000; interest on capital 6%; A gets a salary of ₹12,000. Net profit is ₹1,06,000. Find each partner's total share.
- (Challenge) A and B (ratio 1 : 1) have capitals ₹1,00,000 and ₹1,50,000; interest on capital 6%; A gets a salary of ₹12,000. Net profit is ₹43,000. Find each partner's total share.
Answer key with full working
- Q1: Interest: A ₹20,000, B ₹16,000 → Divisible = ₹16,000 → Shares: A ₹8,000, B ₹8,000 → Answer: Divisible ₹16,000; A ₹8,000, B ₹8,000
- Q2: Interest: A ₹10,000, B ₹5,000 → Divisible = ₹54,000 → Shares: A ₹36,000, B ₹18,000 → Answer: Divisible ₹54,000; A ₹36,000, B ₹18,000
- Q3: Interest: A ₹16,000, B ₹8,000 → Divisible = ₹20,000 → Shares: A ₹10,000, B ₹10,000 → Answer: Divisible ₹20,000; A ₹10,000, B ₹10,000
- Q4: Interest: A ₹15,000, B ₹24,000 → Divisible = ₹36,000 → Shares: A ₹18,000, B ₹18,000 → Answer: Divisible ₹36,000; A ₹18,000, B ₹18,000
- Q5: Interest: A ₹24,000, B ₹6,000 → Divisible = ₹64,000 → Shares: A ₹48,000, B ₹16,000 → Answer: A ₹84,000, B ₹22,000
- Q6: Interest: A ₹6,000, B ₹9,000 → Divisible = ₹16,000 → Shares: A ₹8,000, B ₹8,000 → Answer: A ₹26,000, B ₹17,000
Syllabus note
This skill is listed under "Accounting for Partnership Firms" for Class 12 in the NCERT/CBSE books. ICSE, IGCSE, IB and state boards may teach it in a different chapter or year.
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.
Related practice and notes
Frequently asked questions
Which chapter is distributing profit with salary and interest in?
"Accounting for Partnership Firms", Class 12 Accountancy (NCERT/CBSE). Other boards may place it differently.
How were the answers checked?
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.