Asha and lata are partners sharing profit in the ratio of 1:2.Asha is entitled to a salary of 2 lakh per annum and a commission of 8% of net profit before charging and commission.lata is entitled to a commission of 8% off the net profit after charging her commission.Net profit for the year ended 31st March 2018 amounted to 540000.
Prepare profit and loss appropriation account
Dear Student
​Regards
| Profit and Loss Appropriation A/c | |||||||
| Date | Particulars | Amount | Date | Particulars | Amount | ||
| (Rs) | (Rs) | ||||||
| Salary : | Net profit | 540,000 | |||||
| Asha | 200,000 | ||||||
| Commission : | |||||||
| Asha | 27,200 | ||||||
| Lata | 23,170 | 50,370 | |||||
| Profit Transferred : | |||||||
| Asha | 96,543 | ||||||
| Lata | 193,087 | 289,630 | |||||
| 540,000 | 540,000 | ||||||
| Calculation | ||
| Profit before any appropriation | 540,000 | |
| Less : Salary of Asha | (200,000) | |
| Profit after salary but before commission | 340,000 | |
| Less : Commission | ||
| Asha @ 8% of Net Profit before Charging any commission | (3,40,000 x 8%) | (27,200) |
| Profit after Asha's Commission | 312,800 | |
| Less : Lata's Commission @ 8% of Net Profit after Charging any commission | (3,12,800 x 8/108) | (23,170) |
| Profit available for Distribution | 289,630 | |
| Share of Profit : | ||
| Asha | (2,89,630 x 1/3) | 96,543 |
| Lata | (2,89,630 x 2/3) | 193,086 |
​Regards