Question

Radha, Mary and Fatima are partners sharing profits in the ratio of 5:4:1. Fatima is given a guarantee that her share of profit, in any year will not be less than Rs 5,000. The profits for the year ending March 31, 2017 amounts to Rs 35,000. Shortfall if any, in the profits guaranteed to Fatima is to be borne by Radha and Mary in the ratio of 3:2. Record necessary journal entry to show distribution of profit among partner.

Answer 1

Answer:

Profit of Radha = Rs 16,600

 Profit of Mary = Rs 13,400

 Profit of Fatima = Rs 5000      

Explanation:

Radha, Mary and Fatima are partners sharing profits in the ratio of 5:4:1.

According to the question, the profit at the year end was Rs 35000.

The condition in the above question is, whatever the shortfall may be, Fatima is supposed to get Rs 5000, and in the shortfall the remaining expense  is to be borne by Radha and Mary in the ratio of 3:2.

So, if the total profit at the year end is Rs 35,000, then share of each person is:

Radha= Rs(5/10) * 35000

    = Rs 17,500

Mary =  Rs(4/10) * 35000

    = Rs 14,000

Fatima =  Rs(1/10) * 35000

      = Rs 3500

In which case we could see there is a shortfall of Rs 1500 in case of Fatima.

So, now Radha has to give to Fatima= Rs (3/5) * 1500

                                   = Rs 900

And, Mary has to give to Fatima= Rs (2/5) * 1500

                              = Rs 600

So, Profit of Radha = Rs 17,500-900

                   = Rs 16,600

 Profit of Mary = Rs 14,000-600

                   = Rs 13,400

 Profit of Fatima = Rs 5000