write:14. Manager’s Commission:Sometimes the manager is entitled to a commission on profits at a fixed percentage. Such commission is calculated as follows:(i) Commission on profits

500-Total interest for the full year is 60
000 x 10% = `6
000. However
only `4
500 has been paid. The remaining `1
500 is due for payment at the end of the year i.e. it is outstanding. In the Profit and Loss Account and Balance Sheet it will appear as follows:Profit and Loss AccountDr. Cr.“To Interest on loan 4
500Add: outstanding 1
5006
000 Balance Sheet“Loan 60
000Add: interest outstanding 1
50061
500 In case interest is on deposit or investment
it will appear in the credit side of P&L Account and in the assets side of balance sheet.14. Manager’s Commission:Sometimes
the manager is entitled to a commission on profits at a fixed percentage. Such commission is calculated as follows:(i) Commission on profits before charging such commission: In such a case
commission is calculated as follows:Profit before commission × Suppose
profit before commission is `1
0
000 and commission is payable at 5%
then the amount of commission will be: `1
0
000 x 5% = ` 5
000.Profit after commission will be `1
0
000 – 5
000 = 95
000(ii) Commission on profits after charging such commission:In this case
commission is calculated by the following formula:Profit before commission × Rate of Commission100+ Rate of Commission In the above example
commission will be:Rs. 1
0
000 × 5100 = Rs. 4
762 (Approx.)Profit after commission will be `1
0
000 – 4
762= ` 95
238The following entry is passed (with the amount of commission):Profit and Loss Account …. Dr. To Commission Outstanding AccountCommission payable is shown as an expense in Profit and Loss Account and in the balance sheet on the liability side.Rate of Commission100