Question 89 Chapter 2 of +2-A
89. Ankur and Bobby were into the business of providing software solutions in India. They were sharing profits and losses in the ratio 3 : 2. They admitted Rohit for a 1/5 share in the firm. Rohit, an alumni or IIT, Chennai would help them to expand their business to various South African countries where he had been working earlier. Rohit is guaranteed a minimum profit of 2,00,000 for the year. Any deficiency in Rohit’s share is to be borne by Ankur and Bobby in the ratio 4 : 1. Loss for the year was 10,00,000. Pass the necessary Journal entries.
The solution of Question 89 Chapter 2 of +2-A:
| Date | Particulars |
L.F. | Debit | Credit | |
| Ankur’s Capital A/c*1 | Dr | 4,80,000 | |||
| Bobby’s Capital A/c *1 | Dr | 3,20,000 | |||
| Rohit’s Capital A/c *1 | Dr | 2,00,000 | |||
| To Profit and Loss A/c | 10,00,000 | ||||
| (Being loss for the year debited to Partners’ capital a/c) | |||||
| Ankur’s Capital A/c *2 | Dr | 3,20,000 | |||
| Bobby’s Capital A/c *2 | Dr | 80,000 | |||
| To Rohit’s Capital A/c | 4,00,000 | ||||
| (Being adjustment made for deficiency of R’s Capital) | |||||
Working Note: –
Calculation of New Profit Sharing Ratio
Old Profit Sharing Ratio =3 : 2
Let assume the total share of the firm is equal to Rs 1
Rohit’s admitted for share =1/5th share in profits
| Remaining share for Old Partners’= | 1 | – | 1 |
| 5 |
| = | 5 – 1 | ||
| 5 |
| = | 4 | ||
| 5 |
| Ankur’s New Profit share | = | 4 | X | 3 |
| 5 | 5 |
| Ankur’s New Profit share | 12 | ||
| 25 | |||
| Bobby’s New Profit share | = | 4 | X | 2 |
| 5 | 5 |
| Bobby’s New Profit share | 8 | ||
| 25 | |||
| Rohit’s New Profit share | = | 1 | X | 5 |
| 5 | 5 |
| Rohit’s New Profit share | 5 | ||
| 25 | |||
Old Profit Sharing Ratio = 12: 8: 5
*1 Calculation of Share of Profit/Loss
Loss of the year = 10,00,000
| Ankur’s Share of Profit | 10,00,000 | X | 12 |
| 25 |
Ankur’s Share of Profit = 4,80,000
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| Bobby’s Share of Profit | 10,00,000 | X | 8 |
| 25 |
Bobby’s Share of Profit = 3,20,000
| Rohit’s Share of Profit | 10,00,000 | X | 5 |
| 25 |
Rohit’s Share of Profit = 2,00,000
*2 Calculation of Rohit Deficiency
Rohit’s Minimum Guaranteed Profit = Rs 2,00,000
Rohit’s Actual loss Share i.e. 2,00,000 is less than his Minimum Guaranteed Profit i.e. 2,00,000
Deficiency in Rohit’s Profit Share = 2,00,000 − (-2,00,000) = Rs 4,00,000
This deficiency of Rs 54,000 is to be borne by Ankur and Bobby in the ratio of 4 : 1
| Ankur Share of Profit | 4,00,000 | X | 4 |
| 5 |
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Ankur Share of Profit = 3,20,000
| Bobby Share of Profit | 4,00,000 | X | 1 |
| 5 |
Bobby Share of Profit = 80,000
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
