Question

P, Q and R entered into partnership on 1st April, 2015 to share profits and losses in the ratio of 12 : 8 : 5. It was provided that in no case R’s share in profit be less then ₹ 30,000 p.a. The profits and losses for the period ended 31st March were: 2015-16 Profit ₹ 1,20,000 2016-17 Profit ₹ 1,80,000; 2017-18 Loss ₹ 1,20,000.
Pass the necessary Journal entries in the books of the firm.
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Answer 1

Solution:

                                               Journal  

Date                      Particulars                              Debit Rs.       Credit Rs.

2015 - 16             P's Capital A/c            Dr.          3,600

                          Q's Capital A/c             Dr.         2,400

                       To R's Capital A/c                                              6,000

                 (Being deficiency adjust)

2017 - 18            P's Capital A/c              Dr.          32,400

                         Q's Capital A/c              Dr.          21.600

             To Rs Capital A/c                                                         51,000

           (Being deficiency adjust)  

Working Notes:

Calculation of amount of deficiency of R's Minimum Guaranteed R's Profit = Rs.30,000

2015-16, R's Share Profit (actual) = 1, 20,000 x $\frac{5}{25}$ .= 24, 000

Deficiency in R's Profit = 30,000 - 24,000 = 6,000

Deficiency to borne by P and Q in the ratio =12:8  

2016 — 17 R's actual share profit = 1, 80, 000 x $\frac{5}{25}$ = 36, 000  

No deficiency in R's profit as his actual share exceeds his minimum guaranteed share.

2017 - 18, R's share of loss = 1, 20, 000 x $\frac{5}{25}$ = 24, 000  

Deficiency in R's Profit = 30,000 + 24,000 = 54,000

Deficiency to borne by P and Q in the ratio =12:8