Question

A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1 respectively. A is entitled to a commission of 10% on the net profit. Net profit for the year is ₹ 1,10,000. Determine the amount of commission payable to A.

Answer 1

Answer:

A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1

A 's commission on the net profit

Net profit of the year 1,10,000

commission payable to A

= 1,10,000 × 10/100

= 11000 ans.

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Answer 2

Amount of commission payable is given below.

Explanation:

Though the profit and loss sharing ratio for A, B and C which are three partners is given, it is not needed for calculating the commission that needs to be given to A.

Net profit of the year given = Rs. 1,10,000

Commission A is entitled to is to be calculated at the rate of 10% of Net profit.  

So, A’s commission will be calculated with the formula

$= Net Profit \times \frac {rate}{100}$

$= 1,10,000 \times \frac {10}{100} = Rs. 11,000$

Thus, the amount of commission payable to A is Rs. 11000.