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Commission Based on Profit

Commission on net profit before charging such commission:

 

Description: 27596.png

 

Commission on net profit after charging such commission:

 

 

Illustration 9

Net profit of A Ltd. amounts to ₹ 21,000 before charging commission. The manager is entitled to a commission of 5% on net profits. Calculate the commission payable in each of the following cases.
 

Case (a): If the commission allowed on the net profit is before charging such commission
 

Case (b): If the commission allowed on the net profit is after charging such commission
 

Also show its treatment in final accounts for the year ending on 31-03-2014.


Solution:

 

Case (a): If the commission allowed on the net profit is before charging such commission

 

Description: 27699.png

 

Case (b): If the commission allowed on the net profit is after charging such commission

 

Description: 27730.png

 





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