Question

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.

Answer 1

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: