Question

A, B, C, and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹ 1,80,000 for the year ended 31st March, 2018. As per the Partnership Deed, they are to charge a commission @ 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3. You are required to show appropriation of profits among the partners.

Answer 1

Appropriation of profits by each of partners is given below.

Explanation:

Total amount of profit earned by the end of the year= Rs. 1,80,000

Commission to be charged at the rate of = 20%

$Profit commission = Profit \times \frac {Rate}{100+Rate}$

$= 1,80,000 \times \frac {20}{100+20}= Rs. 30,000$

This commission would be ‘shared’ in the ratio of = 2:3:2:3

Calculation of Partner’s commission:

$A = 30,000 \times \frac {2}{10} = Rs. 6000\\\\B = 30,000 \times \frac {3}{10} = Rs. 9000\\\\C = 30,000 \times \frac {2}{10} = Rs. 6000\\\\D = 30,000 \times \frac {3}{10} = Rs. 9000$

Calculation of Profit Share of Each partner:

Profit is to be distributed in the ratio of 4:3:2:1

Amount on which profit will be calculated 1,80,000-30,000 = Rs. 1,50,000

A’s profit

$= 1,50,000 \times \frac {4}{10} = Rs. 60,000$

B’s profit

$= 1,50,000 \times \frac {3}{10} = Rs. 45,000$

C’s profit

$= 1,50,000 \times \frac {2}{10} = Rs. 30,000$

D’s profit

$= 1,50,000 \times \frac {1}{10} = Rs. 15,000$

Answer 2

Answer:

profits of the partners