Question

what is the treatment for manager's commission while mking profit and loss appropriation account? we have to put it in profit and loss appropriation ac or profit and loss ac? please explain for both the cases- before charging such commission and after charging such commission.

Answer 1

we treat it in profit and loss a/c on dr. side.

it is calculated by two methods:-

1.) ON PROFIT BEFORE CHARGING SUCH COMMISSION

example- if the before charging managers commission is 30000 and manager allowed a commission of 10% on that profit , then the profit wil be:-

  ( amt. x rate/100)   30000 x 10/100 = 3000.

ON PROFIT AFTER CHARGING SUCH COMMISSION

example-  if the before charging managers commission is 30000 and manager allowed a commission of 10% on the profit after charging such commission , then the commission will be calculated as:-  (amt. x rate/100+rate)

  30000 x 10/100+10