Vikas and Vivek were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2017, they admitted Vandana as a new partner for 1/8th share in the profits with a guaranteed profit of ₹ 1,50,000. The new profit-sharing ratio between Vikas and Vivek will remain same but they decided to bear any deficiency on account of guarantee to Vandana in the ratio 3 : 2. The profit of the firm for the year ended 31st March, 2018 was ₹ 9,00,000. Prepare Profit and Loss Appropriation Account of Vikas, Vivek and Vandana for the year ended 31st March, 2018.
Answers
Solution:
Profit and Loss Appropriation Account
for the year ended 31" March 18
Dr Cr
Particulars Rs. Particulars Rs.
To Profit transferred to : By Profit and Loss A/c 9,00,000 Vikas's Capital A/c 4,57,500
Vivek's Capital A/c 2,92,500
Vandana's Capital A/c 1,50,000 9,00,000
900000 900000
Working Notes:
Profit Share on Vandana's = 9,00,000 x =1,12,500
Remaining Profit = Rs.9,00,000 - Rs.1,12.500 = Rs.7,87,500
Profit on Vikas's Share = 7,87,500 x = 4,72,500
Profit on Vivek's Share = 7, 87,500 x =3,15, 000
Minimum Guaranteed Profit Vandana = Rs.1,50,000
Deficiency = 37,500 (1.50,000 - 1,12,500)
Deficiency to borne by Vikas and Vivek in the ratio =2:3
Vikas's - 37, 500 x = 15, 000
Vivek's - 37 500 x = 22 500
Profit of Vikas after adjusting after deficiency = Rs.4,72,500 - Rs.15,000
= Rs.4,57,500
Profit on Vivek after adjusting after deficiency = Rs.3,15,000 - Rs.22,500
= Rs.2,92,500