Sarthaks Test
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X and Y are partners sharing profits in proportion 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 Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of Rs.6,000 which has not been withdrawn.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, 2016 prior to calculation of 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.

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Working notes:

1. Calculation of manager  commission

profit for making managers commission =21,000+6,00(y's salary) = Rs. 30,000

2.calculation of interest on capital

3.calculation of profit share of each partner profit available for distribution =28,500 - 6000 -7000 =Rs.15,500

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