Question

X and Y are partners in a firm. X is entitled to a salary of Rs. 10,000 per month and commission of 10% of the net profit after partners' salaries but before charging commission. Y is entitled to a salary of Rs. 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, 2018 was Rs. 4,20,000. Show, distribution of profit.

Answer 1

PROFIT AND LOSS APPROPRIATION A/C

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

Particulars	Amount	Particulars	Amount
To Partner's Salary a/c - X (10000*12) - Y	120000 25000	By Net Profit a/c	420000
To Partner's Commission a/c - X - Y	27500 22500
To Profit transferred to: - X's Capital a/c - Y's Capital a/c	112500 112500
	420000		420000

Working Note:

Calculation of partner's commission:

Commission to X= Profit after partner's salary but before charging such commission

Profit after salary= 420000-145000

= 275000

X's commission= 275000* 10/100

= 27500

Commission to Y= Profit after partner's salary and commission

Profit after salary and commission= 420000-145000-27500

= 247500

Y's commission= 247500 * 10/110

= 22500