Question

4 X, Y and Z are partners in a firm sharing profits in the ratio of 5:3:2. As per deed, Z is to get minimum amount of Rs.10,000 as profit. Net profit for the year is Rs. 40,000. Calculate deficiency (if any) to Z. A) Rs. 750 B) Rs. 2,000 C) Rs. 1,500 D) None of these

Answer 1

Answer:

X,Y and Z are partners in a firm. Their profit sharing ratio is 5:3:2. Z is guaranteed a minimum profit of Rs.10,000 every year. Any deficiency arising is to be met by Y. The profits for the two years ended 31st March, 2017 and 2018 were Rs.40,000 and Rs.60,000 respectively. Prepare Profit and Loss Appropriation Account for the two years.

Medium

Solution

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PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE YEAR 2017

Particulars Amount Particulars Amount

To profit transferred to

X's capital A/c=20,000

Y's capital A/c=12,000

Less:-Z's share=(2000)

Z's capital A/c=8000

Add:-Y's share=2000 40,000 By net profit 40,000

Total 40,000 Total 40,000

PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE YEAR 2018

Particulars Amount Particulars Amount

To Profit transferred to

X's capital A/c=30,000

Y's capital A/c=18,000

Z's capital A/c=12,000

60,000 By net profit 60,000

Total 60,000 Total

Explanation:

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