Question

Mohan, Sohan and Suresh were partners in a firm sharing profits in the ratio of 2:2:1. Suresh was guaranteed a profit of ₹ 70,000. Any deficiency on account of guarantee to Suresh was to be borne by Mohan and Sohan in 3:2 ratio. The profit of the firm for the year ended 31.3.2022 amounted to ₹ 2,00,000.

Prepare Profit and Loss Appropriation Account of the firm for the year ended 31.3.2022. 

Answer 1

Dr.	Profit & Loss Appropriation Account for the year ended 31st March, 2022				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Profit transferred to:			By Profit & Loss A/c  (Net profit transferred from profit & loss A/c)		2,00,000
Mohan's Capital A/c	80,000	62,000
Less: Suresh's deficiency	(18,000)
Sohan's Capital A/c	80,000	68,000
Less: Suresh's deficiency	(12,000)
Suresh's Capital A/c	40,000	70,000
Add: Mohan's contribution	18,000
Add: Sohan's contribution	12,000
		2,00,000			2,00,000

Working Notes:

Deficiency = ₹ 70,000 - 40,000

= ₹ 30,000 ( to be borne by Mohan and Sohan in the ratio of 3 : 2)

Deficiency to be borne by: 

Mohan =`30,000xx3/5= ₹ 18,000 `

Sohan = `30,000xx2/5 = ₹ 12,000`

Answer 2

Dr.	Profit & Loss Appropriation Account for the year ended 31st March 2022				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Profit transferred to:			By Profit & Loss A/c  (Net profit transferred from profit & loss A/c)		2,00,000
Mohan's Capital A/c	80,000	62,000
Less: Suresh's deficiency	(18,000)
Sohan's Capital A/c	80,000	68,000
Less: Suresh's deficiency	(12,000)
Suresh's Capital A/c	40,000	70,000
Add: Mohan's contribution	18,000
Add: Sohan's contribution	12,000
		2,00,000			2,00,000

Working Notes:

Deficiency = ₹ 70,000 - 40,000

= ₹ 30,000 ( to be borne by Mohan and Sohan in the ratio of 3 : 2)

Deficiency to be borne by: 

Mohan =`30,000xx3/5= ₹ 18,000 `

Sohan = `30,000xx2/5 = ₹ 12,000`