Question

P, Q and R entered into partnership on 1st April, 2015 to share profits and losses in the ratio of 12 : 8 : 5. It was provided that in no case R's share in profit be less then ₹ 30,000 p.a. The profits and losses for the period ended 31st March were: 2015-16 Profit ₹ 1,20,000 2016-17 Profit ₹ 1,80,000; 2017-18 Loss ₹ 1,20,000.
Pass the necessary Journal entries in the books of the firm.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2015-16	P’s Capital A/c	Dr.		3,600
	Q’s Capital A/c	Dr.		2,400
	To R’s Capital A/c				6,000
	(Deficiency adjusted)
2017-18	P’s Capital A/c	Dr.		32,400
	Q’s Capital A/c	Dr.		21,600
	To R’s Capital A/c				54,000
	(Deficiency adjusted)

Working Notes:

WN1: Calculation of amount of deficiency of R
$\begin{array}{l}\text{R's Minimum Guaranteed Profit = Rs 30,000}\\ \text{For 2015-16, R's actual share of profit = 1,20,000}\times \frac{5}{25}=\text{Rs 24,000}\\ \text{Deficiency\hspace{0.17em}in\hspace{0.17em}R's\hspace{0.17em}Profit\hspace{0.17em}= 30,000\hspace{0.17em}- 24,000 = Rs 6,000}\\ \text{This deficiency is to be borne by P \& Q in the ratio of 12:8.}\\ \text{For 2016-17, R's actual share of profit =}1,80,000\times \frac{5}{25}=\text{Rs 36,000}\\ ThisimpliesthatthereisnodeficiencyinR\text{'}sprofitshareashisactualshareexceedshisminimum\\ guaranteedshare.\\ \text{For 2017-18, R's share of loss =}1,20,000\times \frac{5}{25}=\text{Rs 24,000}\\ \text{Deficiency in R's Profit = 30,000 + 24,000 = Rs 54,000}\\ \text{This deficiency is to be borne by P \& Q in the ratio of 12:8.}\end{array}$