# Solve this Q28. ( Commission to partners and reserve ) Alpha and Beta are partners with a capital Rs. 1,00,000 and Rs. 80,000 respectively. The net profit of the firm for the year ending 31st March, 2016 amounted to Rs.1,05, 625 before considering the following adjustments:       (i) Alpha advanced loan to firm amounting to Rs.50,000 on 1st October, 2015.       (ii) Interest on capital and interest on drawing is 5% p.a.       (iii) Drawing of Alpha is Rs. 20,000 and Beta is Rs. 15,000.       (iv) Alpha was allowed commission @ 3% on conducting sales Rs. 4,00,000.       (v) Beta was allowed commission @ 5% on distributable profit after charging all commission.       (vi) It was also decided to keep 10% of divisible profit to Reserve Fund.    You are required to prepare their Profit and Loss Appropriation Account.       [ Ans. Commission to Beta = Rs.84,000 × 5/105 = Rs. 4,000, Reserve Fund Rs. 8,000, Divisible profit Rs. 72,000 in ratio 1 : 1]

Dear student,

 Profit and Loss Appropriation Account for the year ended Dr. Cr. Particulars Amount Rs Particulars Amount Rs Interest on Capital A/c: Profit and Loss A/c (1,05,625 – 1,500) 1,04,125 Alpha 5,000 Interest on Drawings A/c: Beta 4,000 9,000 Alpha 500 Alpha’s Capital A/c (Commission) 12,000 Beta 375 875 Beta’s Capital A/c (Commission)$\left(84,000×\frac{5}{105}\right)$ 4,000 Reserve$\left(80,000×\frac{10}{100}\right)$ 8,000 Profit transferred to: Alpha’s Capital A/c 36,000 Beta’s Capital A/c 36,000 72,000 1,05,000 1,05,000

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