# Usha and Uma Were Partners in a Firm Sharing Profits in the Ratio of 3:2. on 1-4-2014 They Admitted Urmila as a New Partner with 1/5th Share in the Profits with a Guaranteed Profit of Rs 30,000. - Accountancy

Usha and Uma were partners in a firm sharing profits in the ratio of 3:2. On 1-4-2014 they admitted Urmila as a new partner with 1/5th share in the profits with a guaranteed profit of Rs 30,000. The new profit sharing ratio between Usha and Uma will remain the same but they agreed to bear any deficiency on account of guarantee to Urmila in the ratio of 7:3. The profit of the firm for the year ended 31-3-2015 was Rs 1, 35,000.

Prepare Profit and Loss Appropriation Account of Usha, Uma and Urmila for the year ended 31-3-2015.

#### Solution

Profit and Loss Appropriation Account
for the year ended March 31,2015

Dr                                                                                                                                                   Cr

 Particulars Amount Rs Particulars Amount Rs To Profit transferred to :     Usha’s Capital A/c        63,000     Uma’s Capital A/c        42,000     Urmila’s Capital A/c    30,000 1,35,000 By Profit and Loss A/c 1,35,000 1,35,000 1,35,000

Working Notes :

Urmila's Share in Profit =135000xx1/5=27000

Minimum Guranteed Profit to Urmila = 30,000

Deficiency = 3,000 (30,000 - 27,000)

Deficiency to be borne by E and F in the ratio of 7:3

Amount to be borne by Usha =3000xx7/10=21000

Amount to be borne by Uma =3000xx3/10=900

Remaining Profit to be distributed between Usha and Uma in the ratio of 3:2

∴ Usha's Profit Share =105000xx3/5=63000

& Uma's Profit Share = 105000xx2/5=42000

Concept: Preparation of Profit and Loss Appropriation Account
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