Question 87 Chapter 2 of +2-A
87. P, Q and R entered into partnership on 1st April, 2015 to share profits and losses in the ratio of 12 : 8 : 5. It was provided that in no case R’s share in profit be less then 30,000 p.a. The profits and losses for the period ended 31st March were: 2015-16 Profit 1,20,000 2016-17 Profit 1,80,000; 2017-18 Loss 1,20,000.
Pass the necessary Journal entries in the books of the firm.
The solution of Question 87 Chapter 2 of +2-A:
| Date | Particulars |
L.F. | Debit | Credit | |
| P’s Capital A/c*1 | Dr | 3,600 | |||
| Q’s Capital A/c *1 | Dr | 2,400 | |||
| To R’s Capital A/c | 6,000 | ||||
| (Being adjustment made for deficiency of R’s Capital) | |||||
| P’s Capital A/c *3 | Dr | 32,400 | |||
| Q’s Capital A/c *3 | Dr | 21,600 | |||
| To R’s Capital A/c | 54,000 | ||||
| (Being adjustment made for deficiency of R’s Capital) | |||||
Working Note: –
*1 Calculation of R’s share of Profits
Profit of 2015-16 = 1,20,000
| R’s Share of Profit | =1,20,000 | X | 5 |
| 25 |
R’s Share of Profit = 24,000
R’s Minimum Guaranteed Profit = Rs 30,000
R’s Actual Profit Share i.e. 24,000 is less than his Minimum Guaranteed Profit i.e. 30,000
Deficiency in R’s Profit Share= 30,000 − 24,000= Rs 6,000
This deficiency of Rs 10,000 is to be borne by P & Q in the ratio of 12:8.
| P’s Share of Profit | =6,000 | X | 12 |
| 20 |
P’s Share of Profit = 3,600
| Q’s Share of Profit | =6,000 | X | 8 |
| 20 |
Q’s Share of Profit = 2,400
*2 Calculation of R’s share of Profits
Profit of 2016-17 = 1,80,000
| R’s Share of Profit | 1,80,000 | X | 5 |
| 25 |
R’s Share of Profit = 36,000
R’s Minimum Guaranteed Profit = Rs 30,000
So, In this year no Deficiency in R’s Profit Share
*3 Calculation of R’s share of Profits
Loss of 2015-16 = 1,20,000
| R’s Share of Profit | =1,20,000 | X | 5 |
| 25 |
R’s Share of Profit = 24,000
R’s Minimum Guaranteed Profit = Rs 30,000
R’s Actual loss Share i.e. 24,000 is less than his Minimum Guaranteed Profit i.e. 30,000
Deficiency in R’s Profit Share = 30,000 − (-24,000) = Rs 54,000
This deficiency of Rs 54,000 is to be borne by P & Q in the ratio of 12:8.
| P’s Share of Profit | =54,000 | X | 12 |
| 20 |
P’s Share of Profit = 32,400
| Q’s Share of Profit | =54,000 | X | 8 |
| 20 |
Q’s Share of Profit= 21,600
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
