Vikas and Vivek were partners in a firm sharing profits in the ratio of 3: 2.
On 1.4.2014 they admitted Vandana as a new partner for 1/8th the share in the profits with a guaranteed profit of Rs.1,50,000. The new profit sharing ratio between Vivek and Vikas will remain the same but they decided to bear any deficiency on account of guarantee to Vandana in the ratio 2: 3. The profit of the firm for the year ended 31.3.2015 was Rs.9, 00,000.
Prepare Profit and Loss Appropriation Account of Vikas, Vivek and Vandana for the year ended 31.3.2015.
Solution
Profit and Loss Appropriation Account
for the year ended March 31,2015
Dr. Cr
| Particular | Amount (Rs.) | Particulars | Amount (Rs.) |
|
Profit transferred to : Vikas’s Capital A/c 4,50,000 Vivek’s Capital A/c 3,00,000 Vandana’s Capital A/c 1,50,000
|
9,00,000
|
Profit and Loss A/c
|
9,00,000
|
| 9,00,000 | 9,00,000 |
Working Notes :
Vandana's Share in Profit = 9,00,000 x (1/8) = 1,12,500
Minimum Guaranteed Profit to Vandana = 1,50,000
Deficiency = 37,500 (1,50,000 - 1,12,500)
Deficiency to be borne by Vikas and Vivek in the ratio of 2:3
Amount to be borne by Vikas = 37,500 x (2/5) = 15,00
Amount to be borne by Vivek = 37,500 x (3/5) = 22,500
Remaining Profit Share = 7,50,000
∴ Vikas's Profit Share = 7,50,000 x (3/5) = 4,50,000
& Vivek's Profit Share = 7,50,000 x (2/5) = 3,00,000
