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model managerial remuneration salary as part of commission from the following profit 619422

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.

Particulars

Particulars

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

To Development Rebate Reserve

1,000

To Provision for Tax

5,000

To Establishment Expenses

50,000

To Loss of Sale of Investments

1,000

To Net Profit c/d

1,45,000

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.

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