Question

$P,Q$ and $R$ are partners sharing profits in the ratio of $5:4:1$ respectively. $R$ is guaranteed that his share of profit in any year will not be less than $Rs.50,000$. The profit for the year ending 31st March, 2018 is $Rs.3,50,000$. Amount of shortfall in the profits of $R$ will be borne by $P$ and $Q$ in the ratio of $3:2$ respectiyely. Pass necessary Journal entry regarding deficiency borne by $P$ and $Q$.

Answer 1

Calculation of Share of profits

P's Share -3,50,000*5/10 = 1,75,000

Q's share - 3,50,000*4/10 = 1,40,000

R's share - 3,50,000*1/10 = 35,000

R's guaranteed share is 50,000. So,the deficiency of 15,000 (50,000-35,000) is to be contributed by P and Q in the ratio of 3:2

P's contribution = 15,000*3/5=9,000

Q's contribution= 15,000*2/5 =6000

Journal entry is as follows:-

P's capital A/c Dr 9,000

Q's capital A/c Dr 6,000

To R's capital A/c 15,000

(Being deficiency contributed by partners)