Question

A, B and C are partners in a firm. Their profit sharing ratio is 2 : 2 : 1. C is guaranteed a minimum amount of Rs. 10,000 as share of profit every year. Any deficiency arising on that amount shall be met by B. The profits for the two years-ended 31st March, 2017. and 2018 were Rs. 40,000 and Rs. 60,000 respectively. Prepare Profit and Loss Appropriation Account for the years.

Answer 1

PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE YEAR 2017

Particulars	Amount	Particulars	Amount
To Profit transferred to- A's capital A/c- 16000 B's capital A/c-16,000 Less:deficiency-(2000) C's capital A/c-8000 Add:share 2000	40,000	By net profit	40,000
Total	40,000	Total	40,000

PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE YEAR 2018

Particulars	Amount	Particulars	Amount
To profit transferred to- A's capital A/c-24,000 B's capital A/c-24,000 C's capital A/c-12,000	60,000	By net profit	60,000
Total	60,000	Total	60,000