[sherrykalra]

journalise the following information available on 31st march, 2011, make necessary adjustment entries in the journal for the year ending on that date.

• commision due to manager 6% on net profit after charging such commision. the profit before charging such commision was 1,06,000.
• interest due on loan bt not paid. Loan of 1,50,000 was taken at 9% p.a. ; 9 months before end of the year

.
plzz answer this..

[pready]

First you need to calculate how much commission is due and how much interest is due.

Now you have to figure out what accounts to use. Hint: Both of your journal entries will include an expense account and a payable account.

[sherrykalra]

Cn you xplain it by sloving this..? That will be more helpful to me

[pready]

1. Profit of $106,000 * 6% = $6,360 Commission Payable.
Debit Commission Expense (or other appropriate expense account) for 6,360
Credit Commission Payable for 6,360

2. Interest = Principal * Rate (annual rate) * Time (in years or months/12 months for partial year). Therefore your loan of $150,000 * 9% rate * 9/12 time = $10,125 Interest Payable
Debit Interest Expense of 10,125
Credit Interest Payable of 10,125

[Just Looking]

I would do #1 differently to compute the amount of the commission. First, I was wondering if you meant $106,000 or if we are talking a different currency than dollars. The question states "6% on net profit after charging such commision", so you need a basic algebra equation to solve. Assuming we are talking dollars, we solve for commissions as follows:

x = .06 * (106,000-x)


x=6360-.06x
1.06x=6360
x=6360/1.06=6,000

You can check this by saying your sales were $106,000, your commission was $6,000, and your net sales are therefore $100,000. As the problem states, the commission is 6% of net sales, and 6% of $100,000 is $6,000.