Question 81 Chapter 2 of +2-A
81. A, B and C are partners sharing profits in the ratio of 5 : 4: 1. C is given a guarantee that his minimum share of profit in any given year would be at least 5,000. Deficiency, if any, would be borne by A and B equally. Profit for the year ended 31st March 2019 was 40,000.
Pass necessary Journal entries in the books of the firm.
The solution of Question 81 Chapter 2 of +2-A:
| Balance Sheet (for the year ended 31st March 2019) |
|||||
| Liabilities |
Amount | Assets |
Amount | ||
| By Profit and Loss A/c | 40,000 | ||||
| To Profit Transferred to *2 | |||||
| A’s Capital A/c | 19,500 | ||||
| B’s Capital A/c | 15,500 | ||||
| C’s Capital A/c | 5,000 | 40,000 | |||
| 40,000 | 40,000 | ||||
Working Note: –
Calculation of Actual Amount of Interest on A’s, B’s, & C’s Capital
Profit for 2018= 40,000
Profit-sharing ratio 5: 4: 1
| Interest on A’s Capital | = | 40,000 | X | 5 |
| 10 |
Interest on A’s Capital = 20,000/-
| Interest on B’s Capital | = | 40,000 | X | 4 |
| 10 |
Interest on B’s Capital = 16,000/-
| Interest on C’s Capital | = | 40,000 | X | 1 |
| 10 |
Interest on C’s Capital = 4,000 /-
C’s Actual Profit Share i. e. Rs 4,000 is less than his Minimum Guaranteed Profit i. e. Rs 5,000
Deficiency in C’s Profit Share = = 5,000 − 4,000 = Rs 1,000
This deficiency is to be borne by A and B equally.
This deficiency of Rs 1,000 is to be borne by A and B equally.
| A’s Share of Profit | = | 1,000 | X | 1 |
| 2 |
A’s Share of Profit = 500
| B’s Share of Profit | = | 1,000 | X | 1 |
| 2 |
B’s Share of Profit= 500
Now, Final distributed among the partners
| A’s Share of Profit | = | 20,000 | – | 500 | =19,500 |
| B’s Share of Profit | = | 16,000 | – | 500 | =15,500 |
| C’s Share of Profit | = | 4,000 | + | 1,000 | =5,000 |
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
