Question

6. Sandesh and Kailesh share profits and losses in the ratio of 2:1. From April01, 2015 they admit Basavesh into their firm who is to be given a share of 1/10of the profits with a guaranteed minimum of 50,000. Sandesh and Kaileshcontinue to share profits as before but agree to bear any deficiency on accountof guarantee to Basavesh in the ratio of 3:2 respectively. The profits of the firmfor the year ending March 31, 2016 amounted to ? 2,40,000. Prepare Profitand Loss Appropriation Account.(Ans: Deficiency from Sandesh ? 15,600, Kailesh 7 10,400 )​

Answer 1

Answer:

Profit & Loss Appropriation Account

particular. Amt. Particular. Amt.

To profit By profit &

transferred to loss a/c. 240000

capital account

Sandesh 144000

(-) paid to

Bhavesh 15600. 128400

Kailesh 72000

(-) Paid to

Bhavesh. 10400. 61600

Bhavesh. 24000

(+) received

from Sandesh 15600

(+) received

from kailesh. 10400. 50000

total. 240000. 240000

Explanation:

Byavesh share in profit of rs 240000 is 240000*1/10=24000 but he is guaranteed minimum profit of rs 50000 so yis deficiency of profit is 50000-24000=26000 which is borne by Sandesh and Kailesh in ratio 2:1