Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Three Chartered Accountants, Abhijit, Baljit and Charanjit, form a partnership, profits being shared in the ratio of 3 : 2 : 1 subject to the following: (a) Charanjit’s share of profit is guaranteed to be not less than ₹15,000 p.a.; (b) Baljit gives a guarantee that the gross fee earned by him for the firm shall be equal to his average gross fee of the preceding five years, which works out at ₹25,000. The profit for the first year of the partnership is ₹75,000. The gross fee earned by Baljit for the firm is ₹16,000. Show the Profit & Loss Appropriation Account after giving effect to the above.
Profit & Loss Appropriation Account
| Particulars (Dr.) | ₹ | Particulars (Cr.) | ₹ |
|---|---|---|---|
| To Profit transferred to Capital A/cs: | By Profit & Loss A/c (Net Profit) | 75,000 | |
| Abhijit | 41,400 | By Baljit’s Capital A/c (deficiency in fee) | 9,000 |
| Baljit | 18,600 | ||
| Charanjit | 15,000 | ||
| Total | 84,000 | Total | 84,000 |
Working Notes: Deficiency in fee guaranteed by Baljit = ₹25,000 – ₹16,000 = ₹9,000 (borne by Baljit and added to the firm’s profit). Total for distribution = ₹75,000 + ₹9,000 = ₹84,000 (3 : 2 : 1 → Abhijit ₹42,000, Baljit ₹28,000, Charanjit ₹14,000). Charanjit’s deficiency ₹1,000 is borne by Abhijit and Baljit in 3 : 2 (₹600 / ₹400). Final: Abhijit ₹41,400; Baljit ₹28,000 – ₹400 – ₹9,000 = ₹18,600; Charanjit ₹15,000.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 1 Q.90 - Accounting for Partnership Firm Fundamentals", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Accounting for Partnership Firm – Fundamentals.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "T.S. Grewal Class 12 Chapter 1 Q.90 - Accounting for Partnership Firm Fundamentals" instantly.