Accountancy, asked by purvaja8286, 1 month ago

John and Mathew share profits and losses in the ratio of 3:2. They admit Mohanty into their
firm for 1/6 share in profits. John personally guaranteed that Mohanty’s share of profit, after charging
interest on capital @ 10 per cent per annum, would not be less than Rs. 30,000 in any year. The
capital provided was as follows:
John Rs. 2,50,000, Mathew Rs. 2,00,000 and Mohanty Rs. 1,50,000. The profit for the year
ending March 31,2015 amounted to Rs. 1,50,000 before providing interest on capital. Show the
Profit & Loss Appropriation Account if the new profit sharing ratio is 3:2:1.

Answers

Answered by Anonymous
0

Profit & loss Appropriation account

Dr. Cr.

Particulars. Amt. particulars. Amt.

int on capital Net profit. 1,50,000

john. 25,000

Mathew. 20,000

Mohanty. 15,000. 60,000

Capital account

john. 45,000

less:

Share of

deficiency 15,000. 30,000

Mathew. 30,000

Mohanty. 15,000

add:

deficiency

receiving. 15,000. 30,000

from john

1,50,000. 1,50,000

Working notes:

Profit after interest on capital is Rs. 90,000, which is to be distributed in the ratio of 3:2:1 as follows:

John gets Rs. 45,000 (3/6 × Rs. 90,000),

Mathew Rs. 30,000,

Mohanty Rs. 15,000.

Deficiency of Mohanty from the guaranteed profit of Rs. 15,000 will be borne by John.

John will therefore get Rs. 45,000 – Rs. 15,000 = Rs. 30,000, Mathew Rs. 30,000 and Mohanty Rs. 30,000.

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