A and B are partner sharing profit and losses in the ratio of 3:2 they admitted C, their manager as a partner with effect from 1st April 2020, for 1/4th share of profits. C while a manager was in receipt of a salary of ₹27,000 p.a and a commission of 10% of net profit after charging such as salary and commission. In terms of the partnership deed, any excess amount which C will be entitled to receive as a partner average the amount which would have been due to him if he continued to be the Manager, will be born by A. Profit for the year ended 31st March 2020 amounted to₹2,25,000. Prepare profit and loss appropriation account for the year ended 31 March 2020.
Answers
PROFIT AND LOSS APPROPRIATION A/C
(Dr) Particular. ₹
To A's capital A/C 1,08,000
(-). Guarantee. 4,250. 96,750
To B's capital A/C 72,000
To C's capital A/C 45,000
(+). Guarantee. 11,250. 56,250
(Cr) Particular. ₹
By Profit and loss A/C. 2,25,000
NOTE:
After Charging Commission:
Net Profit * Rate Of Commission/ 100 + Rate Of Commission
ROUGH:
There are two partners A and B
Sharing profit in the ratio of 2:3
( ONCE A MANAGER ALWAYS BE A MANAGER )
Salary of C ( Manager ) = 27,000
Commission of C = 18,000 offer charging salary and commission 10%
Net Profit = 2,25,000
( - ) Salary = 27,000
1,98,000
Commission = 1,80,000
(By using the above formula)
C's being a Manager = ( 27,000 + 18,000 )
= 45,000