Assuming all other data to be the same and the capital of Rs.

1,00,000 is owned by the two partners Mani and Murthy as Rs. 30,000 and Rs. 70,000 respectively. Trial Balance of M/s Wearall Textlies as on 31st March 2006 Particulars Mani's Capital Murthy's Capital Opening Stock Closing Stock Purchases Rent Paid Sales Wages Commission Received Assets Debtors Creditors Total L/F Debit Amount Credit Amount (in Rs) (in Rs) 70,000 30,000 15,000 25,000 1,50,000 25,000 3,20,000 50,000 3,000 1,51,000 45,000 38,000 4,61,000 4,61,000

The Trading and profit and loss account would be the same Net Profit = Rs. 1,08,000. Dr Trading and Profit and Loss a/c Cr Amount Amount Amount Amount Particulars Particulars (in Rs) (in Rs) (in Rs) (in Rs) To Opening Stock 15,000 By Sales 3,20,000 To Purchases 1,50,000 By Closing Stock 25,000 To Wages 50,000 To Gross Profit 1,30,000 3,45,000 3,45,000 To Rent 25,000 By Gross Profit 1,30,000 To Net Profit c/d 1,08,000 By Commission Received 3,000 1,33,000 1,33,000 To Net Profit (Mani) 36,000 By Net Profit b/d 1,08,000 To Net Profit 72,000 (Murty) 1,08,000 1,08,000

Distribution of Profits among Partners

Partners profit sharing ratio Mani : Murthy = 1 : 2

1 2 : 3 3

Partners share of profits = Firms profit Profit sharing proportion Mani's Share = Rs. 1,08,000 Rs. 1,08,000 1 = Rs. 36,000 3 2 = Rs. 72,000 3 Rs. 72,000 Murthy (in Rs) 30,000 72,000 1,02,000 1,02,000

Murthy's Share =

Dr

Partners Capital a/c's Cr Mani Murthy Mani Particulars (in Rs) (in Rs) (in Rs) 1,06,00 1,02,00 To Balance c/d By Balance b/d 70,000 0 0 By Net Profit 36,000 1,06,00 1,02,00 1,06,00 0 0 0 1,06,00 By Balance b/d 0 Particulars

The difference that you can notice is that the profit of Rs. 1,08,000 instead of getting into the account representing a single owner (capital account) is distributed among all the owners i.e. their respective capital accounts.