Question

A, B, C and D are partners in a 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.

Answer 1

Profit and Loss Appropriation a/c

(for the year ended 31st March, 2018)
Dr. Cr.

Particulars	Amount	Particulars	Amount
To Partner's Commission - A - B - C - D	6000 9000 6000 9000	By Profit and loss a/c	180000
To Profit transferred to: - A's Capital a/c - B's Capital a/c - C's Capital a/c - D's Capital a/c	60000 45000 30000 15000
	180000		180000

Working Note:

1. Calculation of Partner's Commission:

Partner's rate = Rate/[100+rate]

= 20/[100+20]

= 20/120

Partner's commission= 180000 * [20/120]

= 30000

2. Distribution of commission in the ratio of 2:3:2:3 =

A's commission= 2/10 * 30000= 6000

B's commission= 3/10 * 30000= 9000

C's commission= 2/10 * 30000= 6000

D's commission= 3/10 * 30000= 9000