Question

S, T, W and X are partners sharing profits in the ratio of 4 : 3 : 2 : 1. X is given a guarantee that his share of profits in any given year would be ₹ 80,000. Deficiency, if any, would be borne by other partners equally. The profits for the year ended 31st March, 2025, amounted to ₹ 6,50,000. Pass necessary entries in the books of the firm.

Answer 1

Journal Entries In the books of S, T, W and X
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2025
March 31	Profit and Loss Appropriation A/c   ...Dr.		6,50,000	-
	To S’s Capital A/c		-	2,55,000
	To T’s Capital A/c		-	1,90,000
	To W’s Capital A/c		-	1,25,000
	To X’s Capital A/c		-	80,000
	(Being profit distributed among partners in their agreed ratio after adjustment of deficiency.)

Working Note:

X’s share of Profit = `6,50,000 xx 1/10`

= 65,000

Guaranteed profit to X = 80,000

Deficiency = 80,000 − 65,000

= 15,000

Deficiency borne by S = `15,000 xx 1/3`

= 5,000

Deficiency borne by T = `15,000 xx 1/3`

= 5,000

Deficiency borne by W = `15,000 xx 1/3`

= 5,000

Adjusted profit shares of the partners:

S = 2,60,000 – 5,000

= ₹ 2,55,000

T = 1,95,000 – 5,000

= ₹ 1,90,000

W = 1,30,000 – 5,000

= ₹ 1,25,000

X = 65,000 + 15,000

= ₹ 80,000