A, B and C are partners in a firm. A is entitled a commission of 10% of the net profit before
charging his commission. B is entitled a commission of 10% of the net profit after charging his
commission. C is entitled a commission of 10% of the net profit after charging all commission
including his commission. Net profit for the year ended 31st March, 2018, before charging any
commission is Rs. 2,20,000. Calculate Partners’ commission.
Answers
Answer:
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Rs Particulars Rs
To, General Reserve A/c 200000 By Profit and loss A/c (Net Profit) 755000
To, Interest on Capital A/c
A ( 500000*8%) 40000
B ( 400000*8%) 32000
C ( 350000*8%) 28000
100000 By Interest on Drawing A/cs (WN 1)
A (84000*10%*6.5/12) 4,550
B (72000*10%*6.5/12) 3,900
C (60000*105*6.5/12) 3,250
11,700
To, Partners Salary A/c
B 30000
C 45000
75000
To, A's Commission A/c (WN 3) 35,609
To, Profit transferred to:
A's Capital A/c 1,18,697
B's Capital A/c 1,18,697
C's Capital A/c 1,18,697
3,56,091
7,66,700 7,66,700
PARTNERS CAPITAL ACCOUNT
Particulars A B C Particulars A B C
To, Drawings A/c 84,000 72000 60000 By, Balance b/d 500000 400000 350000
To, Interest on Drawings A/c 4,550 3,900 3,250 By, Interest on capital A/c 40000 32000 28000
To, Balance c/d 6,05,756 4,74,797 4,78,447 By, Partners Salary A/c _ 30000 45,000
By, A's Commission A/c 35,609 _ _
By, Profit and loss Appropriation A/c 118697 118697 118697
Total 6,94,306 5,50,697 5,41,697 Total 6,94,306 5,50,697 5,41,697
Explanation: