X and Y are partners sharing profits equally. Z was manager and received the salary of ₹8,000 p.m in addition to commission of 5% on net profit before charging such commission. Profit for the year is ₹12,00,000 before charging salary. Find the total remuneration of Z.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹1,51,200.
Salary per month = ₹8,000
Total salary = 8000 X 12
= ₹96,000
*Salary of manager is a charge against profit so it is debited to profit and loss account.
Net profit = 12,00,000 - SALARY
= 12,00,000 - 96,000
= 11,04,000
Commission = (Net profit X rate of commission) / 100
Commission of Z =11,04,000 X 5/100
= ₹55,200
Total remuneration of Z = Salary + Commission
= 96,000 + 55,200
= 1,51,200