Question

$X$ and $Y$ are partners sharing profits in the ratio of $3:2$ with capitals of $Rs.80,000$ and $Rs.60,000$ respectively. Interest on capital is agreed @ 5% p.a. $Y$ is to be allowed an annual salary of $Rs.6,000$ which has not been withdrawn. Profit for the year ended 31st March, 2018 before interest on capital but after charging Y's salary amounted to $Rs.24,000$.
A provision of 5% of the profit is to be made in respect of commission to the Manager. Prepare an account showing the allocation of profits.

Answer 1

(i) Profit and Loss Adjustment a/c
Dr. Cr.

Particulars	Amount	Particulars	Amount
To Manager's Commission (30000*5%)	1500	By Profit and loss a/c (after Y's salary)	24000
To Profit transferred to Profit and loss appropriation a/c	28500	By Y's salary	6000
	30000		30000

(ii) Profit and Loss Appropriation a/c

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

Particulars	Amount	Particulars	Amount
To Salary to Y	6000	By Profit and Loss Adjustment a/c	28500
To Interest on Capital: - X's Capital a/c - Y's Capital a/c	4000 3000
To Profit transferred to: - X's Capital a/c - Y's Capital a/c	9300 6200
	28500		28500