Question

77. A, B and C were in partnership sharing profits and losses in the ratio of 4 : 2:1. It was provided tha
C's share in profit for a year would not be less than 75,000. Profit for the year ended 31st March, 202
amounted to 3,15,000. You are required to show the appropriation among the partners. The Profit an
Loss Appropriation Account is not required.

Answer 1

Answer:

Here is your answer

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Answer 2

Appropriation A/c

Explanation:

  Working Notes:

Profit for the year = 31,500

Profit sharing ratio = 4 : 2 : 1

Minimum profit guaranteed to C = 75,000

A's Profit = 31,500 x $\frac{4}{7}$

                = 18,000

B's Profit = 31,500 x $\frac{2}{7}$

               = 9,000

C's Profit = 31,500 x $\frac{1}{7}$

               = 4,500

C'S Actual profit share (i.e Rs. 4,500) is less than his Minimum Guaranteed profit (i.e 7,500)

Deficiency in C's profit share = 7,500 - 4,500 = 3000

This deficiency is to be borne by A and B in their profit sharing ratio i.e., 4 : 2

Deficiency borne by A = 3000 x $\frac{4}{6}$ = 2000

Deficiency borne by B = 3000 x $\frac{2}{6}$ = 1000

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