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Prepare the Profit and Loss Appropriation Account - Accountancy

Ledger

Arun, Boby and Chintu are partners in a firm sharing profit in the ratio or 2:2:1. According to the terms of the partnership agreement, Chintu has to get a minimum of Rs 60,000, irrespective of the profits of the firm. Any Deficiency to Chintu on Account of such guarantee shall be borne by Arun. Prepare the profit and loss appropriation account showing distribution of profits among partners in case the profits for year 2015 are: (i) Rs 2,50,000; (ii) 3,60,000.

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Solution

Case (i)

Profit and Loss Appropriation Account as on March 31, 2015

Dr.

 

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to

 

 

Profit and Loss

2,50,000

Arun’s Capital

1,00,000

 

 

 

Less: Chintu’s share of deficiency

(10,000)

90,000

 

 

Bobby’s Capital

 

1,00,000

 

 

Chintu’s Capital

50,000

 

 

 

Add: Deficiency received from Arun

10,000

60,000

 

 

 

 

2,50,000

 

2,50,000

Case (ii)

Profit and Loss Appropriation Account as on March 31, 2015

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to :

 

Profit and Loss

3,60,000

Arun’s Capital {3,60,000 × (2/5)}

1,44,000

 

 

Bobby’s Capital {3,60,000 × (2/5)}

1,44,000

 

 

Chintu’s Capital {3,60,000 × (1/5)}

72,000

 

 

 

3,60,000

 

3,60,000

  Is there an error in this question or solution?
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 2 Accounting for Partnership Firms-Fundamentals
Exercise | Q 32 | Page 105
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