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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.
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Solution
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Profit and Loss Appropriation Account |
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Dr. |
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Cr. |
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Particulars |
Amount Rs |
Particulars |
Amount Rs |
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Profit transferred to |
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Profit & Loss |
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40,000 |
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Pinki’s Capital |
20,000 |
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Less: Gurantee to Kaku |
(500) |
19,500 |
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Deepti’s Capital |
16,000 |
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Less: Guarantee to Kaku |
(500) |
15,500 |
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Kaku’s Capital |
4,000 |
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Add: Deficiency received from |
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Pinki |
500 |
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Deepti |
500 |
5,000 |
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40,000 |
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40,000 |
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|
|
Sukesh (Rs) |
Verma* (Rs) |
|
Capital Accounts |
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Rakesh |
Month |
Rs. |
|
|
May 31, 2019 |
600 |
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|
June 30, 2019 |
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|
August 31, 2019 |
1,000 |
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400 |
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January 31, 2020 |
300 |
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March 01, 2020 |
700 |
|
Rohan |
At the beginning of each month |
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|
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