Question

Eliza, Fenn and Garry were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. Fenn was guaranteed ₹ 25,000 as his share in the profits. Any deficiency arising on that account was to be met by Eliza. The firm earned a profit of ₹ 80,000 for the year ended 31^st March, 2024. The amount of profit credited to Fenn’s capital account will be: 

Options

• ₹ 30,000

• ₹ 40,000

• ₹ 25,000

• ₹ 10,000

Answer 1

₹ 30,000

Explanation:

Fenn’s Share in Profits = ₹ 80,000 × `3/8` = ₹ 30,000.

The guaranteed amount for Fenn is ₹ 25,000, which is less than the actual share. Therefore, Fenn’s Capital Account will be credited with ₹ 30,000.