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Question 26 Chapter 2 of +2-A
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26. A, B, C, and D are partners in 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.
The solution of Question 26 Chapter 2 of +2-A:
| Profit and Loss Appropriation Account A/c for the year ended 31st March 2019 | ||||||
| Particulars | Amount | Particulars | Amount | |||
| To commission A/c *1 | By Profit and Loss Adjustment A/c | 1,80,000 | ||||
| A’s | 6,000 | |||||
| B’s | 9,000 | 7,800 | ||||
| C’s | 6,000 | |||||
| D’s | 9,000 | 30,000 | ||||
| To Profit Transferred to *2 | ||||||
| A’s Capital | 60,000 | |||||
| B’s Capital | 45,000 | |||||
| C’s Capital | 30,000 | |||||
| D’s Capital | 15,000 | 1,50,000 | ||||
| 1,80,000 | 1,80,000 | |||||
Working Note: –
Calculation of commission to all Partners
Net Profit before charging commission = Rs 1,80,000
Commission to all partners = 20% of the Net Profit After charging such commission
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Where the commission is charged after such on profit then there will different way of the calculation shown as follow:
| =Net Profit before charging a commission x | Rate |
| 100 + Rate |
| =1,80,000 X | 20 |
| 100 + 20 |
| =1,80,000 X | 20 |
| 120 |
Commission to Z=30,000/-
Calculation of commission to every partner
Commission sharing Ratio = 2:3:2:3 (Given)
| Total Commission x | Single partner share | |
| Total of ratio | ||
| Commission to A = | 30,000 x | 2 |
| 10 |
=6,000/-
| Commission to B = | 30,000 x | 3 |
| 10 |
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=9,000/-
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| Commission to C = | 30,000 x | 2 |
| 10 |
=6,000/-
| Commission to D = | 30,000 x | 3 |
| 10 |
=9,000/-
*2: -Calculation of share of profit of A’s, B’s, C’s, and D’s.
Profit-Sharing Ratio = 4:3:2:1
Profit after Commission = 1,50,000
The profit share of A’s=1,50,000 X 4/10
=60,000/-
Profit share of B’s=1,50,000 X 3/10
=45,000/-
Profit share of C’s=1,50,000 X 2/10
=30,000/-
Profit share of D’s=1,50,000 X 1/10
=15,000/-
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Also, Check out the solved question of previous Chapters: –
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
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