Question

P, Q and R were partners in a firm sharing profits in 2:1:1 ratio. R was guaranteed a

profit of 25,000 P agreed to meet the liability arising out of guaranteed amount to R.

The firm earned a profit र 80,000 for the year ended 31-3-2006. Show the calculation

of the working clearly.
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Answer 1

Explanation:

Calculation of Share of profits

P's Share -3,50,000*5/10 = 1,75,000

Q's share - 3,50,000*4/10 = 1,40,000

R's share - 3,50,000*1/10 = 35,000

R's guaranteed share is 50,000. So,the deficiency of 15,000 (50,000-35,000) is to be contributed by P and Q in the ratio of 3:2

P's contribution = 15,000*3/5=9,000

Q's contribution= 15,000*2/5 =6000

Journal entry is as follows:-

P's capital A/c Dr 9,000

Q's capital A/c Dr 6,000

To R's capital A/c 15,000

(Being deficiency contributed by partners)