Model: Managerial remuneration salary as part of commission From the following profit and loss account of Seven Hills Ltd for the year ended 31 December 2010 and additional data given, calculate commission due to managing director @ 5% of net profit. Salary of managing director is to be treated as part statement of the commission.
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Particulars |
Particulars |
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|
To Opening Stock |
25,000 |
By Sales |
2,10,000 |
|
To Bonus (Including Z 2000 for 2009) |
15,000 |
By Closing Stock |
35,000 |
|
To Director”s Fees |
4,000 |
By other incomes: |
|
|
To Managing Director: |
Discount |
3,000 |
|
|
Salary |
3,000 |
Profit on Sale of investments |
2,000 |
|
Commission |
1,000 |
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|
To Development Rebate Reserve |
1,000 |
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To Provision for Tax |
5,000 |
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To Establishment Expenses |
50,000 |
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To Loss of Sale of Investments |
1,000 |
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|
To Net Profit c/d |
1,45,000 |
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|
2,50,000 |
2,50,000 |
The book value of fixed assets sold was Rs.4,000 and their original cost was Rs.5,000.