Question

Sanjay, a partner of a dissolved firm, was to get 1% of the value of assets realised as his remuneration and 10% of the amount distributed to the partners. Sundry assets realised ₹ 2,50,000, cash in hand was ₹ 2,500 and creditors to be paid ₹ 1,12,500.

Calculate Sanjay’s remuneration and pass the necessary journal entry for remuneration.

Answer 1

1% of assets realised:

Commission on Assets reassised = `₹ 2,50,000 xx1/100`

= ₹ 2,500

Cash available for partners and commission based on cash distribution to partners:

= ₹ 2,50,000 + ₹ 2,500 − ₹ 1,12,500 − ₹ 2,500 (Commission)

= ₹ 1,37,500

Commission on Cash Distribution = `₹ 1,37,500 × 10/110`

= ₹ 12,500

Hence, total remuneration = ₹ 2,500 + ₹ 12,500

= ₹ 15,000

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Realisation A/c   ...Dr.		15,000	-
	To Sanjay’s Capital A/c		-	15,000
	(Remuneration due)