Question

Vikas and Vivek were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2018, they admitted Vandana as a new partner for 1/8th share in the profits with a guaranteed profit of ₹ 1,50,000. New profit-sharing ratio between Vikas and Vivek will remain same but they decided to bear any deficiency on account of guarantee to Vandana in the ratio 3 : 2. Profit of the firm for the year ended 31st March, 2019 was ₹ 9,00,000. Prepare Profit and Loss Appropriation Account of Vikas, Vivek and Vandana for the year ended 31st March, 2019.

Answer 1

Profit and Loss Appropriation Account for the year ended March 31, 2019
Dr.				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Profit transferred to:			Profit and Loss A/c	9,00,000
Vikas’s Capital A/c	4,50,000
Vivek’s Capital A/c	3,00,000
Vandana’s Capital A/c	1,50,000	9,00,000
		9,00,000		9,00,000

Working Notes:

$$\begin{gathered} \mathrm{Vandana}\text{'}\mathrm{s}\mathrm{Share}\mathrm{in}\mathrm{Profit}=9,00,000\times \frac{1}{8}=\mathrm{Rs}1,12,500 \\ \mathrm{Remaining}\mathrm{Profit}=9,00,000-1,12,500=\mathrm{Rs}7,87,500 \\ \mathrm{Vikas}\text{'}\mathrm{s}\mathrm{Profit}\mathrm{Share}=7,87,500\times \frac{3}{5}=\mathrm{Rs}4,72,500 \\ \mathrm{Vivek}\text{'}\mathrm{s}\mathrm{Profit}\text{'}\mathrm{s}\mathrm{Share}=7,87,500\times \frac{2}{5}=\mathrm{Rs}3,15,000 \\ \mathrm{Minimum}\mathrm{Guaranteed}\mathrm{Profit}\mathrm{to}\mathrm{Vandana}=\mathrm{Rs}1,50,000 \\ \mathrm{Deficiency}=\mathrm{Rs}37,500(1,50,000-1,12,500) \\ \mathrm{Deficiency}\mathrm{to}\mathrm{be}\mathrm{borne}\mathrm{by}\mathrm{Vikas}\&\hspace{0.17em}\mathrm{Vivek}\mathrm{in}\mathrm{the}\mathrm{ratio}\mathrm{of}3:2 \\ \mathrm{Amount}\mathrm{to}\mathrm{be}\mathrm{borne}\mathrm{by}\mathrm{Vikas}=37,500\times \frac{3}{5}=\mathrm{Rs}22,500 \\ \mathrm{Amount}\mathrm{to}\mathrm{be}\mathrm{borne}\mathrm{by}\mathrm{Vivek}=37,500\times \frac{2}{5}=\mathrm{Rs}15,000 \\ \mathrm{So},\mathrm{Vikas}\text{'}\mathrm{s}\mathrm{profit}\mathrm{share}\mathrm{after}\mathrm{adjustment}\mathrm{of}\mathrm{deficiency}=4,72,500-22,500=\mathrm{Rs}4,50,000 \\ \&,\mathrm{Vivek}\text{'}\mathrm{s}\mathrm{profit}\mathrm{share}\mathrm{after}\mathrm{adjustment}\mathrm{of}\mathrm{deficiency}=3,15,000-15,000=\mathrm{Rs}3,00,000 \end{gathered}$$