Net profit is Rs 18,000 before interest on capital and drawings. Interest on capital totals Rs 1,500 and interest on drawings totals Rs 500. The profit available for division is:

1. Build the profit and loss appropriation account from both sides. 2. The credit side carries the net profit of Rs 18,000 brought from the profit and loss account, plus interest on drawings of Rs 500, giving Rs 18,500. 3. The debit side carries interest on capital of Rs 1,500. 4. The balance available for division is Rs 18,500 minus Rs 1,500, that is Rs 17,000. 5. Interest on drawings is added because it is due from the partners to the firm, while interest on capital is deducted because it is due from the firm to the partners. 6. Option A subtracts the interest on drawings instead of adding it, which reverses the one adjustment students most often get backwards. _Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 3 "Accounts of Partnership Firms - Fundamentals", Illustration 21_