Question

Q. 12. P and Q share profits in 3 : 2. On 1st April, 2016, they admit R and S with
1
4
and share respectively. The profit of the firm for the year ended 31st March 2017
5
amounted to 2,00,000. Prepare necessary journal entries for the distribution of profit.
O​

Answer 1

Answer:

P and Q were partners in a firm sharing profits in the ratio of 5:3. On 1st April, 2014 they admitted R as a new partner for

8

1

th share in the profits with a guaranteed profit of Rs.75,000. The new profit-sharing ratio between P and Q will remain the same but they agreed to bear any deficiency on account of guarantee to R in the ratio 3:2. The profit of the firm for the year ended 31st March, 2015 was Rs.4,00,000.

Prepare Profit and Loss Appropriation Account of P,Q and R for the year ended 31st March, 2015.

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ANSWER

Calculation of New profit sharing Ratio

Let total share be 1.

Share of incoming partner= 1-1/8=7/8

P's New Share= 7/8*5/8=35/64

Q's New Share =7/8*3/8=21/64

R's share = 8/64

Share of partners in profit :

P's share=4,00,000*35/64=2,18,750

Q's share=4,00,000*21/64=1,31,250

R's share=4,00,000*8/64=50,000

R's share of deficiency i.e 25,000 is to be borne by P and Q in the ratio of 3:2.

PROFIT AND LOSS APPROPRIATION ACCOUNT

Particulars Amount Particulars Amount

To profit transferred to :

P's capital A/c 2,18,750

Less:R's share (15,000)

Q's capital A/c 1,31,250

Less:R's share (10,000)

R's capital A/c 50,000

Add:share from P&Q 25,000 4,00,000 By net profit 4,00,000

Total 4,00,000 Total 4,00,000

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