Question

Vikas and Vivek were partners in a firm sharing profits in the ratio of 3.:2. On 1st April, 2017, they admitted Vandana as a new partner for 1/8th share in the profits with a guaranteed profit of Rs. 1,50,000. The 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. The profit of the firm for the year ended 31st March, 2018 was Rs. 9,00,000. Prepare Profit and Loss Appropriation Account of Vikas, Vivek and Vandana for the year ended 31st March, 2018.

Answer 1

Working Notes:

Vandana's Share in profit $=9,00,000\times \left(1/8\right)=1,12,500$

Minimum Guaranteed Profit to Vandana $=1,50,000$

Deficiency $=37,500(1,50,000-1,12,500)$

Deficiency to be borne by Vikas and Vivek in the ratio of $2:3$

Amount to be borne by Vikas $=37,500\times \left(2/5\right)=15,00$

Amount to be borne by Vivek $=37,500\times \left(3/5\right)=22,500$

Remaining profit share $=7,50,000$

$\therefore$ Vikas's Profit Share $=7,50,000\times \left(3/5\right)=4,50,000$

& Vivek's Profit Share $=7,50,000\times \left(2/5\right)=3,00,000$