Question

Pinki, Deepati and Kaku are partner’s sharing profits in the ratio of 5:4:1. Kaku is given a guarantee that his share of profits in any given year would not be less than Rs 5,000. Deficiency, if any, would be borne by Pinki and Deepti equally. Profits for the year amounted to Rs 40,000. Record necessary journal entries in the books of the firm showing the distribution of profit.

Answer 1

Sr. no.	Particulars	Dr. (Rs.)	Cr. (Rs)
1.	Profit and Loss A/c   ...Dr.	40,000
	To Pinky's capital A/c		20,000
	To Dipti's Capital A/c		16,000
	To Kaku's capital A/c		4,000
	(Profit will be distributed among the partners in the ratio 5 : 4 : 1)
2.	Pinky's capital A/c   ...Dr.	500
	Dipti's Capital A/c   ...Dr.	500
	To Kaku's Capital A/c		1000
	(The loss will be shared equally by both the partners)

 

Dr.							Profit and Loss Appropriation Account					Cr.
Particulars							Amount Rs	Particulars				Amount Rs
Profit transferred to								Profit & Loss				40,000
Pinki’s Capital					20,000		19,500
Less: Gurantee to Kaku  {1,000 × (1/2)}					(500)
Deepti’s Capital					16,000		15,500
Less: Guarantee to Kaku  {1,000 × (1/2)}					(500)
Kaku’s Capital		4,000					5,000
Add: Deficiency received from
Pinki						500
Deepti						500
							40,000					40,000