Question

Maanika, Bhavi and Komal are partners sharing profits in the ratio of 6 : 4 : 1. Komal is guaranteed a minimum profit of ₹ 2,00,000. The firm incurred a loss of ₹ 22,00,000 for the year ended 31st March, 2018. Pass necessary journal entry regarding deficiency borne by Maanika and Bhavi and prepare Profit and Loss Account.

Answer 1

Journal Entries For the year ended on 31 March, 2018
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2018
Mar 31	Maanika's Capital A/c   ...Dr.		12,00,000
	Bhavi's Capital A/c   ...Dr.		8,00,000
	Komal's Capital A/c   ...Dr.		2,00,000
	To Profit & Loss A/c			22,00,000
	(Being the net loss distributed among partners in 6 : 4 : 1 ratio)
Mar 31	Maanika's Capital A/c   ...Dr.		2,40,000
	Bhavi's Capital A/c   ...Dr.		1,60,000
	To Komal's Capital A/c			4,00,000
	(Being deficiency of Komal met by Maanika and Bhavi in 6:4 ratio)

 

Profit & Loss Account For the year ended 31st March, 2018
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Net Loss (before adjustments)	22,00,000	By Loss Transferred to Capital A/cs:
		Maanika	12,00,000
		Bhavi	8,00,000
		Komal	2,00,000	22,00,000
Total	22,00,000	Total		22,00,000

Working note:

Initial Distribution of Firm's Loss (6 : 4 : 1)

Total Loss to Distribute: ₹ 22,00,000

Maanika's Share: `22,00,000 xx 6/11 = 12,00,000`

Bhavi's Share: `22,00,000 xx 4/11 = 8,00,000`

Komal's Share: `22,00,000 xx 1/11 = 2,00,000`

Calculation of Deficiency:

Komal's Minimum Guaranteed Profit: + ₹ 2,00,000

Komal's Initial Share (Debit/Loss): – ₹ 2,00,000

Total Deficiency to Make Up: Guaranteed Profit + Initial Loss = 2,00,000 + 2,00,000 = 4,00,000

Deficiency Borne by Maanika and Bhavi (6 : 4)

Maanika: `4,00,000 xx 6/10 = 2,40,000`

Bhavi: `4,00,000 xx 4/10 = 1,60,000`