Question

John and mathew share profits and losses in the ratio of 3:2 they admit mohanty into their firm to 1/6share in profits.john personally guaranteed that mohantys share of profit after charging interest on capital @10% per annum would not be less than rs30000 in any year.the capital provided as follows:john250000,mathew rs200000 and mohanty rs150000.the profit for year ending march 31 2006 amounted to 150000 before providing interest on capital.show profit and loss appropriation account if new profit sharing ration is 3:2:1​

Answer 1

Answer:

Profit and liss appropriation a/c

particular. amt. particular. amt

Interest on. P& L a/c. 150000

capital

John. 25000

Mathrw. 20000

Mohanty. 15000

Divisble profit

transferred to

capital a/c

John. 45000

Mathew 30000

Mohanty. 15000

total. 150000. total. 150000

Explanation:

Divisble profit rs 90000 was distributed in ratio of 3:2:1

John share in profit =90000*3/6=45000

Mathew share in profit = 90000*2/6=30000

Mohanty share inprofit = 90000*1/6=15000

As given in question that John is guaranteed rs 30000 in profit but John share in profit is rs 45000 which is greater than guaranteed amount of profit so there is no deficiency