1 day ago - Shurenai - Direct link
Yes, Melee damage bonuses apply to knuckles. The confusion you're encountering stems from an expectation vs reality situation.

Your Expectation is that +60% damage means...well, +60% damage. And that's a fair expectation.
The reality, though, is that that +60% gets applied in a different part of the formula than you're expecting. It's not +60% , It's +60% "

The result is that the +60% pans out to in the formula used to be more like a +10-20ish% increase in final damage. Which is in the ballpark of what you've encountered.
111 x 1.18 (an 18% increase) = 130.98 rounding up to 131.
111->131