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Question
Abhay, Siddharth and Kusum are partners in a firm, sharing profits in the ratio of 5:3:2. Kusum is guaranteed a minimum amount of Rs 10,000 as per share in the profits. Any deficiency arising on that account shall be met by Siddharth. Profits for the years ending March 31, 2016 and 2017 are Rs 40,000 and 60,000 respectively. Prepare Profit and Loss Appropriation Account.
Solution
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Profit and Loss Appropriation Account as on March 31, 2016 |
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Dr. |
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Cr. |
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Particulars |
Amount Rs |
Particulars |
Amount Rs |
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Profit transferred to : |
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Profit and Loss |
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40,000 |
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Abhay’s Capital |
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20,000 |
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Siddharth’s Capital |
12,000 |
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Less: Guarantee to Kusum’s |
(2,000) |
10,000 |
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Kusum’s Capital |
8,000 |
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Add: Deficiency received from Siddharth |
2,000 |
10,000 |
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40,000 |
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40,000 |
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Profit and Loss Appropriation Account as on March 31, 2017 |
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Dr. |
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Cr. |
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Particulars |
Amount Rs |
Particulars |
Amount Rs |
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Profit transferred to |
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Profit and Loss |
60,000 |
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Abhay’s Capital |
30,000 |
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Siddharth’s Capital |
18,000 |
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Kusum’s Capital |
12,000 |
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60,000 |
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60,000 |
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