Question

A, B & C are partners in a firm sharing profits and losses in the ratio of 3:2:1. According to the partnership deed C should be guaranteed Rs.7,500 every year as profit share. Profit for the year 31st March 2018 is Rs.30,000. Show the Profit& Loss Appropriation A/c.

Answer 1

Answer:

ANSWER

C's share of profit is (1,57,500*1/7)  22,500. So,the deficiency of (37,500-22,500) i.e 15,000 is to be borne by A and B in the ratio of 4:2.

Journal Entries are:-

   Profit and Loss A/c      Dr. 1,57,500

     To Profit and Loss appropriation A/c  1,57,500

(Being profit transferred to P&L appropriation account)

Profit and Loss Appropriation A/c   Dr. 1,57,500

    To A's capital A/c                                              90,000

    To B's capital A/c                                              45,000

    To C's capital A/c                                              22,500

(Being actual distribution of profit)

A's capital A/c  Dr. 10,000

B's capital A/c  Dr.  5000

    To C's capital A/c          15,000

(Being deficiency of C,contributed by A and B)

                      PROFIT AND LOSS APPROPRIATION ACCOUNT Particulars Amount ParticularsAmount  To A's capital A/c           90,000

    Less:C's deficiency    (10,000)

To B's capital A/c           45,000

    Less: C's deficiency   (5000)

To C's capital A/c           22,500

    Add: share from 

            A&B                    15,000

 1,57,500 By Net profit 1,57,500 Total 1,57,500 Total 1,57,500

Answer 2

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