Dear Student Actual Appropriation Total Profits 405,000 Less : Profit share to R from firm (Note) 55,000 Profit available for other partners to be distributed in ratio 4:3) 350,000 Profit share of P (3,50,000 x 4/7) 200,000 Less : Borne for R (12,500 x 3/5) 7,500 Net profit credited 192,500 Profit share of Q (3,50,000 x 3/7) 150,000 Less : Borne for R (12,500 x 2/5) 5,000 Net profit credited 145,000 Profit share of R from firm 55,000 Add : Borne by P 7,500 Add : Borne by Q 5,000 Net profit credited 67,500 Calculation of Remuneration of R and amount to be borne by P and Q for R's share Remuneration of R Profit before Salary and Commission (B Fig) 405,000 Less : Salary 20,000 Profit before Commission 385,000 Less : Commission @ 10% on profit after charging commission 3,85,000 x 10/110 35,000 Profit after commission 350,000 Therefore Total Remuneration of R (20,000 + 35,000) 55,000 Profit share of R as per PSR (4,05,000 x 1/6) 67,500 Therefore R would get profit from firm to the extent of remuneration 55,000 Excess of Remuneration to be borne by P and Q in 3:2 (67,500 - 55,000) 12,500 Regards

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68 2•.27PM to Prepare Profit & Loss Account year Share of Ali 07.000. Of by O A'OO were •urine •n of 4' S I'S resvx•.t.vcly In of the services Sa»» in receipt of of t2.40•ii p. of prvtib aner such salary and him partygr-•iup from 14201 G giving 118th share profit agreement provided any excess his to which entitled paid out of Aioo•s share profits the year cruled 3 1st March. 201 7 arnounu•d to t SI,OOO, Divide thus t*luecn Profit Ajoo Bajoo 00.400, Q and R are in partnership p siuring profits ot aral R receiving a of p a plus the IS aner charging his salary and commission. or Lth of tbc wofit of the finn is Any excess Of the the former received by R is. under the to tx»rne by P and Q in the r,uio of . 2, profit tbc Much. 2017 came to chargipg among partners. IA... Profit p Q e 1.4±000 and ADDITIONAL QUESTIONS Shankar Manu are partners in firm. on April. 2014. fixed balance of and respectively balances were !50.000 and

Dear Student

Actual Appropriation

Total Profits		405,000
Less : Profit share to R from firm (Note)		55,000
Profit available for other partners to be distributed in ratio 4:3)		350,000

Profit share of P	(3,50,000 x 4/7)	200,000
Less : Borne for R	(12,500 x 3/5)	7,500
Net profit credited		192,500

Profit share of Q	(3,50,000 x 3/7)	150,000
Less : Borne for R	(12,500 x 2/5)	5,000
Net profit credited		145,000

Profit share of R from firm		55,000
Add : Borne by P		7,500
Add : Borne by Q		5,000
Net profit credited		67,500

Calculation of Remuneration of R and amount to be borne by P and Q for R's share
Remuneration of R
Profit before Salary and Commission (B.Fig)		405,000
Less : Salary		20,000
Profit before Commission		385,000
Less : Commission @ 10% on profit after charging commission	3,85,000 x 10/110	35,000
Profit after commission		350,000

Therefore Total Remuneration of R	(20,000 + 35,000)	55,000
Profit share of R as per PSR	(4,05,000 x 1/6)	67,500
Therefore R would get profit from firm to the extent of remuneration		55,000
Excess of Remuneration to be borne by P and Q in 3:2	(67,500 - 55,000)	12,500

Regards

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