wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

Ram, Mohan and Sohan are partners with capitals of Rs 5,00,000, Rs 2,50,000 and 2,00,000 respectively. After providing interest on capital @ 10% pa the profits are divisible as follows Ram 12, Mohan 13 and Sohan 16. But Ram and Mohan have guaranteed that Sohan's share in the profit shall not be less than Rs 25,000, in any year. The net profit for the year ended March 31, 2007 is Rs 2,00,000, before charging interest on capital.

You are required to show distribution of profit.

Open in App
Solution

Profit and Loss Appropriation Account

Dr For the year ending 31 March, 2007 Cr

ParticularsAmt. (Rs)ParticularsAmt. (Rs)Interest on Capital Profit and Loss2,00,000Ram's Capital A/c50,000Mohan's Capital A/c25,000Sohan's Capital A/c20,000––––––95,000 Profits Transferred toRam's Capital A/c52,500(-) Deficiency(7,500×35)(4,500)––––––48,000Mohan's Capital A/c35,000(-) Deficiency(7,500×25)(3,000)––––––32,000Sohan's Capital A/c17,500(+) Deficiency Received fromRam4,500Mohan3,000––––25,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯2,00,000––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯2,00,000––––––––––––––––

Working Note Profit Sharing Ratio =12:13:16

=3:2:16=3:2:1


flag
Suggest Corrections
thumbs-up
74
similar_icon
Similar questions
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Identification and Comminution
CHEMISTRY
Watch in App
Join BYJU'S Learning Program
CrossIcon