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Question
X and Y are partners in a firm sharing profits in the ratio of 3 :2.They have a manager, Z, who gets Rs.10,0000 salary plus commission of 5% of the profit after charging his salary and commission. Now, they decided to admit Z as a partner, giving him 1/5th share in the profits of the firm. Any excess amount which Z received as a partner (over his salary and commission) will be borne by X. The profit for the year ended 31st Ma 2018 amounted to Rs. 8,40,000 after charging Z's salary. Prepare Profit and Loss Appropriation Account showing the division of profit for the year.
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Solution
Profit & Loss Appropriation a/c Particulars (Dr.) Amount Particulars (Cr.) Amount To profit on apppropriation
X's capital a/c 4,08,000
+ Z's capital +1.20,000 =5,28,000
Y's capital a/c 272,000
Z's capital a/c 50,000 8,50,000 By P&L a/c 8,40,000
+ Z's salary +10,000 8,50,000
Profit & Loss Appropriation a/c
| Particulars (Dr.) | Amount | Particulars (Cr.) | Amount |
| To profit on apppropriation X's capital a/c 4,08,000 + Z's capital +1.20,000 =5,28,000 Y's capital a/c 272,000 Z's capital a/c 50,000 | 8,50,000 | By P&L a/c 8,40,000 + Z's salary +10,000 | 8,50,000 |
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