Explanation:

- The net profit from the Profit and Loss Account is Rs 4,20,000.

- We need to deduct the partner's salary and commission from the net profit in the Profit and Loss Appropriation Account.

- Partner's salary is Rs 5,000 per month, totaling Rs 60,000 annually (5,000 x 12).

- Another partner's commission is Rs 10,000. These are subtracted from the net profit.

- Interest on drawings of Rs 4,000 is added back to the profit since it is an income for the firm.

- Adjusted net profit calculation: Rs 4,20,000 - Rs 60,000 - Rs 10,000 + Rs 4,000 = Rs 3,54,000.

Option 1: Rs 3,54,000 is correct.

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