Question

A and B are partners sharing profits in the ratio of 2 : 1. They decided to admit C, their manager, as a partner from 1st April, 2017, giving him 1/5th share of profit. C, while a manager, was getting a salary of Rs. 50,000 p.a. plus a commission of 10% of the net profit after charging such salary and commission. It also agreed that any excess amount which C receives as a partner (over his salary and commission), be borne by A. Profit for the year ended 31st March, 2018 amounted to Rs. 6,44,000, before payment of salary and commission. Prepare Profit and Loss Appropriation Account.

Answer 1

Profit & Loss Appropriation a/c

Particulars(Dr.),	Amount	Particulars(Cr.)	Amount
To Profit on appropriation A's capital a/c 3,43,467 +C's capital +74,800= 4,18,267 B's capital a/c 1,71,733 C's capital a/c 54,000	6,44,000	By P&L a/c	6,44,000