X and Y are partners in a firm, sharing profits and losses equally. X is entitled to a salary of Rs.5,000 p.m. Y is entitled to a commission of 10% of Net profit after charging such commission. Net profit before charging commission and salary was Rs.1,48,000. Show profit and loss appropriation account
Answers
Answer:
PROFIT AND LOSS APPROPRIATION A/C
(for the year ended 31st March, 2018)
Dr. Cr.
Particulars Amount Particulars Amount
To Partner's Salary a/c
- X (10000*12)
- Y
120000
25000 By Net Profit a/c 420000
To Partner's Commission a/c
- X
- Y
27500
22500
To Profit transferred to:
- X's Capital a/c
- Y's Capital a/c
112500
112500
420000 420000
Working Note:
Calculation of partner's commission:
Commission to X= Profit after partner's salary but before charging such commission
Profit after salary= 420000-145000
= 275000
X's commission= 275000* 10/100
= 27500
Commission to Y= Profit after partner's salary and commission
Profit after salary and commission= 420000-145000-27500
= 247500
Y's commission= 247500 * 10/110
= 22500