Question 77 Chapter 2 of +2-A
77. A, B and C were in partnership sharing profits and losses in the ratio of 4 : 2 : 1. It was provided that C’s share in profit for a year would not be less than 7,500. Profit for the year ended 31st March 2019 amounted to 31,500. You are required to show the appropriation among the partners. The profit and Loss Appropriation Account is not required.
The solution of Question 77 Chapter 2 of +2-A:
| Balance Sheet (for the year ended 31st March 2019) |
|||||
| Liabilities |
Amount | Assets |
Amount | ||
| By Profit and Loss A/c | 31,500 | ||||
| To Profit Transferred to *2 | |||||
| A’s Capital A/c | 16,000 | ||||
| B’s Capital A/c | 8,000 | ||||
| C’s Capital A/c | 7,500 | 31,500 | |||
| 31,500 | 31,500 | ||||
Working Note: –
*1 Calculation of Remuneration to C as a Manager
| Profit for the year | = | 31,500/- |
| Profit-sharing ratio | = | 4: 2: 1 |
C is given a guarantee of a minimum profit of Rs 7,500
| A’s Share of Profit | = | 31,500 | X | 4 | |
| 7 |
A’s Share of Profit= 18,000
| B’s Share of Profit | = | 31,500 | X | 2 |
| 7 |
B’s Share of Profit= 9,000
| C’s Share of Profit | = | 31,500 | X | 1 |
| 7 |
C’s Share of Profit = 4,500
| C’s Profit Share | = | 6,44,000 | X | 1 |
| 5 | ||||
| = | 1,28,800/- |
C’s Actual Profit Share i.e. Rs 4,500 is less than his Minimum Guaranteed Profit i. e. Rs7, 500
Deficiency in C’s Profit Share = 7,500 − 4,500 = Rs 3,000
This deficiency is to be borne by A and B in their profit sharing ratio i.e. 4 : 2
| A’s Share of Profit | = | 3,000 | X | 4 |
| 7 |
A’s Share of Profit = 2,000
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| B’s Share of Profit | = | 3,000 | X | 2 |
| 7 |
B’s Share of Profit = 1,000
Now, Final distributed among the partners
| A’s Share of Profit | = | 18,000-2,000 = 16,000 |
| B’s Share of Profit = | 9,000- 1,000 = 8,000 | |
| C’s Share of Profit = | 4,500 + 3,000 = 7,500 |
Also, Check out the solved question of previous Chapters: –
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
