Question 27 Chapter 2 of +2-A
27. X and Y are partners in a firm. X is entitled to a salary of 10,000 per month and commission of 10% of the net profit after partners’ salaries but before charging a commission. Y is entitled to a salary of 25,000 p.a. and commission of 10% of the net profit after charging all commission and partners’ salaries. Net profit before providing for partners’ salaries and commission for the year ended 31st March 2019 was 4,20,000. Show the distribution of profit.
The solution of Question 27 Chapter 2 of +2-A:
| Profit and Loss Appropriation Account A/c for the year ended 31st March 2019 |
||||||
| Particulars |
Amount | Particulars |
Amount | |||
| To Salary to Partners A/c | By Profit and Loss Adjustment A/c | 4,20,000 | ||||
| X’s 10,000 X 12 | 1,20,000 | |||||
| Y’s | 25,000 | 1,45,000 | ||||
| To commission A/c | ||||||
| X’s *1 | 27,500 | |||||
| Y’s *2 | 22,500 | 50,000 | ||||
| To Profit Transferred to *3 | ||||||
| X’s Capital | 30,000 | |||||
| Y’s Capital | 15,000 | 2,25,000 | ||||
| 4,20,000 | 4,20,000 | |||||
Working Note: –
*1: – Calculation of commission to X
Net Profit after charging Partner’s Salary = Rs 4,20,000 – 1,45,000 = 2,75,000
Commission to X = 10% of the Net Profit before charging such commission
| =2,75,000 X | 10 |
| 100 |
Commission to X =27,500/-
*1: – Calculation of commission to Y
Net Profit after charging Partner’s Salary and Commission = Rs 4,20,000 – 1,45,000 – 27,500 = 2,47,500/-
Commission to Y = 10% of the Net Profit After charging such commission
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 |
| =2,47,500 | X | 10 |
| 100 + 10 |
| =2,47,500 | X | 10 |
| 110 |
Commission to Y=22,500/-
*3: -Calculation of share of profit of A’s, B’s, C’s, and D’s.
Profit Sharing Ratio = 1:1
Net Profit after Commission = 2,25,000
Advertisement-X
| Profit share of X’s | =2,25,000 X 1/2 |
| =1,12,500/- |
| Profit share of Y’s | =1,50,000 X 1/2 |
| =1,12,500/- |
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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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
