Question

Asha, Disha and Raghav were partners in a firm sharing profits in the ratio of 2: 3 : 1. According to the partnership agreement. Raghav was guaranteed an amount of ₹ 40,000 as his share of profits. ‘The net profit for the year ended 31^st March, 2022 amounted to ₹ 1,20,000.

Prepare Profit and Loss Appropriation Account of the firm for the year ended 31^st March, 2022.

Answer 1

Dr.	Profit and Loss Appropriation Account for the year ended 31st March, 2022			Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)
To Profit transferred to:			By Profit and Loss A/c	1,20,000
Capital Accounts of :			(Net profit transferred)
Asha (2/6)	40,000	32,000
Less: Given to Raghav	(8,000)
Disha (3/6)	60,000	48,000
Less: Given to Raghav	(12,000)
Raghav (1/6)	20,000	40,000
Add: From Asha	8,000
From Disha	12,000
		1,20,000		1,20,000

Working Note:

Net profit = ₹ 1,20,000

Asha's share in profit = `₹ 1,20,000xx 2/6 = ₹  40,000 `

Disha's share in profit = `₹ 1,20,000 xx 3/6 = ₹ 60,000`

Raghav's share in profit = `₹ 1,20,000 xx 1/6 = ₹ 20,000`

However, Raghav guaranted profit is ₹ 40,000.

Deficiency will be borne by Asha and Disha in their profit sharing ratio, i.e, 2 : 3.

Deficiency borne by Asha = `₹ 20,000 xx 2/5 = ₹ 8,000`

Deficiency borne by Disha =`₹ 20,000 xx 3/5 =₹ 12,000.`