A' and 'B' are partners in a firm. According to their partnership deed:
(1) profit up to ₹27, 000 are divided equally and exess of ₹27, 000 are divided in the ratio of 2:3.
(2) 'A' is entitled to get annual salaries ₹5, 000 and 'B' is entitled to get 2% commission on net profit after charging such commission and A's salary. Profit for the year was₹37, 844 before charging salary and commission. Distribute the profit and prepare profit and loss appropriation account.
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Answer :
Profit and Loss Appropriation Account is in the Attachment , Go Through it ;
Working Note :
A ' s Salary - 5,000
Recorded in Debit side.
B's Commission - 2% on Net Profit. ( Debit Side )
Net Profit = 37,844 × 2 / 100 = 757
Share Of Profit - ( Debit Side )
A = 32,087 × 2 / 5 = 12,835
B = 32,087 × 3 / 5 = 19,252
= 12,835 + 19,252 = 32,087
Attachments:
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