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If a bonus is 20% of the remaining profit after charging the bonus, and profit before the bonus is Rs 96,000, what is the bonus?

Answer and explanation

Correct answer: 16,000 rupees

The governing concept is a bonus calculated after charging the bonus itself. When the stated rate is 20%, the amount of bonus is not found by simply taking 20% of the original profit, because the bonus reduces the base on which it is calculated. The applicable formula is Bonus = profit before bonus × rate/(100 + rate). Substituting the figures gives Bonus = Rs 96,000 × 20/120 = Rs 16,000. Verification confirms the result: Rs 96,000 − Rs 16,000 = Rs 80,000, and 20% of Rs 80,000 is Rs 16,000. Thus option A is correct. Option B is the direct 20% calculation on the original profit, option C has no valid basis, and option D understates the amount.

Related tags

Bonus After ChargingCommission CalculationProfit DistributionPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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