ajoo and bajoo were in partnership sharing profits and losses in the proportion of 4:5 respectively. in appreciation of the services of their employee sajoo who was in reciept of salary of rs. 2400 p.a. and a commission of 5% on the net profits after charging such salary and commission, they took him into partnership as from 1-04-2011 giving him 1/8th share of profit.the agreement provided that any excess over his former remuneration to which sajoo becomes entitled will be paid out of ajoo's share of profits.the profits for the year ended 31st march, 2012 amountes to rs.57000. divide this between the partners.
Dear Student,
The solution to your query is provided below:
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Profit and Loss Appropriation Account for the year ended |
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Dr. |
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Cr. |
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Particulars |
Amount Rs |
Particulars |
Amount Rs |
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Profit transferred to: |
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Profit and Loss A/c |
57,000 |
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Ajoo’s Capital A/c (41,600-2,125) |
39,475 |
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Bajoo’s Capital A/c |
10,400 |
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Sajoo’s Capital A/c (5,000 + 2,125) |
7,125 |
57,000 |
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57,000 |
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57,000 |
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Profit before Manager’s Salary and commission = 57,000
Less: Manager’s Salary 2,400
54,600
Less: 5% Commission 2,600
Net Distributable Profits 52,000
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