Question

Amann, Babita and Suresh are partners in a firm. Their profit sharing ratio is 2:2:1. Suresh is guaranteed a minimum amount of Rs 10,000 as share of profit, every year. Any deficiency on that account shall be met by Babita. The profits for two years ending March 31, 2016 and March 31, 2017 were Rs 40,000 and Rs 60,000, respectively. Prepare the Profit and Loss Appropriation Account for the two years.

Answer 1

Profit and Loss Appropriation Account for the year ended ${\mathbf{31}}^{\mathbf{st}}$ March 2016
Dr.					Cr.
Particulars		Amount Rs	Particulars		Amount Rs
Profit transferred to			Profit and Loss		40,000
Amann’s Capital 16,000		16,000
Babita’s Capital (16,000 – 2,000)		14,000
Suresh’s Capital (8,000 + 2,000)		10,000
		40,000			40,000

Profit and Loss Appropriation Account for the year ended ${\mathbf{31}}^{\mathbf{st}}$ March 2017
Dr.					Cr.
Particulars		Amount Rs	Particulars		Amount Rs
Profit transferred to			Profit and Loss		60,000
Amann’s Capital		24,000
Babita’s Capital		24,000
Suresh’s Capital		12,000
		60,000			60,000