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Question
Arun, Boby and Chintu are partners in a firm sharing profit in the ratio or 2:2:1. According to the terms of the partnership agreement, Chintu has to get a minimum of Rs 60,000, irrespective of the profits of the firm. Any Deficiency to Chintu on Account of such guarantee shall be borne by Arun. Prepare the profit and loss appropriation account showing distribution of profits among partners in case the profits for year 2015 are: (i) Rs 2,50,000; (ii) 3,60,000.
Solution
Case (i)
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Profit and Loss Appropriation Account as on March 31, 2015 |
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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 |
2,50,000 |
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Arun’s Capital |
1,00,000 |
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Less: Chintu’s share of deficiency |
(10,000) |
90,000 |
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Bobby’s Capital |
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1,00,000 |
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Chintu’s Capital |
50,000 |
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Add: Deficiency received from Arun |
10,000 |
60,000 |
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2,50,000 |
2,50,000 |
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Case (ii)
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Profit and Loss Appropriation Account as on March 31, 2015 |
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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 |
3,60,000 |
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Arun’s Capital {3,60,000 × (2/5)} |
1,44,000 |
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Bobby’s Capital {3,60,000 × (2/5)} |
1,44,000 |
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Chintu’s Capital {3,60,000 × (1/5)} |
72,000 |
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3,60,000 |
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3,60,000 |
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|
|
Rs |
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June 30 |
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December 31 |
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Rakesh |
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|
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|
|
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|
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Rohan |
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400 |
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