a and b c are profit sharing ratio of 5:4:1 she is given guarantee that his share of profit in any year will not be less than rupees 20000. the profit for the year ending 31st March 2016 amount to be 14000 amout of shortfall profit given to sea will be born by a and b in the ratio of 3:2: pass jouranal entry regarding dificency born by a and n
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Share of profit
A- 40,000*5/10= 20,000
B-40,000*4/10=16,000
C-40,000*1/10=4000
C's share is less by 1000. So,the deficiency will be borne by A and B equally.
Journal entry for the same will be :
A's capital A/c Dr. 500
B's capital A/c Dr. 500
To C's capital A/c 1000
(Being deficiency contributed)
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