Question

Abhay and Baldwin are partners sharing profit in the ratio 3:1. On 31st March 2021, firm's net profit is 1,25,000. The partnership deed provided interest on capital to Abhay and Baldwin 15,000 & 10,000 respectively and Interest on drawings for the year amounted to ₹6000 from Abhay and 4000 from Baldwin. Abhay is also entitled to commission @10% on net divisible profits. Calculate profit to be transferred to Partners Capital A/c's.

Answer 1

The correct answer is 1,00,000.

Particulars                                    Rs.

Firm's Net profit                     1,25,000

Add: Interest on Drawings       10,000

Less: Interest on Capital          (25,000)

                                                1,10,000

Less: Commission                     (10,000)

  (1,10,000 × 10 ÷ 110)                              

                                                 1,00,000

Therefore, the Profit to be transferred to Partner's Capital account is Rs. 1,00,000.

Note: It's divisible profit which means Commission allowed to Abhay is after charge such commission.

Answer 2

Answer:

here ,

commission is to be calculated as:

=110000×10/110

= 10000

We use 110 instead of 100 while converting from percentage because commission is on net divisible profit