Asgar, Chaman and Dholu are partners in a firm. Their Capital Accounts stood at ₹ 6,00,000; ₹ 5,00,000 and ₹ 4,00,000 respectively on 1st April, 2017. They shared Profits and Losses in the proportion of 4 : 2 : 3. Partners are entitled to interest on capital @ 8% per annum and salary to Chaman and Dholu @ ₹ 7,000 per month and ₹ 10,000 per quarter respectively as per the provision of the Partnership Deed. Sholu’s share of profit ( excluding interest on capital but including salary) is guaranteed at a minimum of ₹ 1,10,000 p.a. Any deficiency arising on that account shall be met by Asgar. The profit for the year ended 31st March, 2018 amounted to ₹ 4,24,000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.
Answers
The profit transferred to Asgar Capital A/C = Rs. 70000, Chaman Capital Account =Rs. 40000, and Dholu Capital Account =Rs. 70000
Explanation:
In the given problem,
Profit available for distribution= Rs. 424000 -( Rs. 120000+84000+40000)
= Rs. 180000
Profit sharing ratio = 4:2:3
Asgar's Share of Profit =180000 x 4/9 = Rs. 80000
Chaman's Share of Profit = 180000 x 2/9 = Rs. 40000
Dholu's Share of Profit = 180000 x 2/9 = Rs. 60000
Dholu's minimum guaranteed profit = Rs. 110000 (excluding interest on capital but including salary)
Dholu's minimum guaranteed profit( excluding salary) = Rs. 110000- Rs. 40000 = Rs. 70000
Dholu's actual share of profit = Rs. 60000
Deficiency in Dholu's share = Rs. 70000-Rs. 60000= Rs. 10000
This deficiency to be borne only by Asgar
Therefore, Asgar's New Profit Share= Rs. 80000-Rs. 10000
= Rs. 10000
________
424000
________
Answer:
asgar share of profit- 70000
chaman - 40000
dholu - 70000