    Question

# A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. They earned a profit of ₹ 30,000 during the year ended 31st March, 2019. Distribute profit among A, B and C if: (a) C's share of profit is guaranteed to be ₹ 6,000 Minimum. (b) Minimum profit payable to C amounting to ₹ 6,000 is guaranteed by A. (c) Guaranteed minimum profit of ₹ 6,000 payable to C is guaranteed by B. (d) Any deficiency after making payment of guaranteed ₹ 6,000 will be borne by A and B in the ratio of 3 : 1.

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Solution

## Case (a) Profit and Loss Appropriation Account for the year ended 31st March, 2019 Dr. Cr. Particulars Amount (₹) Particulars Amount (₹) Profit transferred to: Profit and Loss A/c 30,000 A’s Capital A/c 14,400 B’s Capital A/c 9,600 C’s Capital A/c 6,000 30,000 30,000 30,000 Working Notes: Profit = Rs 30,000 Profit sharing ratio = 3 : 2 : 1 C is given a guarantee of minimum profit of Rs 6,000 Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000 This deficiency is to be borne by A and B in their profit sharing ratio i.e. 3 : 2 Therefore, Final Profit Share of A = 15,000 − 600 = Rs 14,400 Final Profit Share of B = 10,000 − 400 = Rs 9,600 Final Profit Share of C = 5,000 + 1,000 = Rs 6,000 Case (b) Profit and Loss Appropriation Account for the year ended 31st March, 2019 Dr. Cr. Particulars Amount (₹) Particulars Amount (₹) Profit transferred to: Profit and Loss A/c 30,000 A’s Capital A/c 14,000 B’s Capital A/c 10,000 C’s Capital A/c 6,000 30,000 30,000 30,000 Working Notes: Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000 This deficiency is to be borne by A only. Therefore, Final Profit Share of A = 15,000 − 1,000 = Rs 14,000 Final Profit Share of B = 10,000 Final Profit Share of C = 5,000 + 1,000 = Rs 6,000 Case (c) Profit and Loss Appropriation Account for the year ended 31st March, 2019 Dr. Cr. Particulars Amount (₹) Particulars Amount (₹) Profit transferred to: Profit and Loss A/c 30,000 A’s Capital A/c 15,000 B’s Capital A/c 9,000 C’s Capital A/c 6,000 30,000 30,000 30,000 Working Notes: Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000 This deficiency is to be borne by B only. Therefore, Final Profit Share of A = 15,000 Final Profit Share of B = 10,000 − 1,000 = Rs 9,000 Final Profit Share of C = 5,000 + 1,000 = Rs 6,000 Case (d) Profit and Loss Appropriation Account for the year ended 31st March, 2019 Dr. Cr. Particulars Amount (₹) Particulars Amount (₹) Profit transferred to: Profit and Loss A/c 30,000 A’s Capital A/c 14,250 B’s Capital A/c 9,750 C’s Capital A/c 6,000 30,000 30,000 30,000 Working Notes: Deficiency in C’s Profit Share = 6,000 − 5,000 = Rs 1,000 This deficiency is to be borne by A and B in the ratio of 3 : 1. Therefore, Final Profit Share of A = 15,000 − 750 = Rs 14,250 Final Profit Share of B = 10,000 − 250 = Rs 9,750 Final Profit Share of C = 5,000 + 1,000 = Rs 6,000  Suggest Corrections  3      Related Videos   VAT
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