Advertisement Remove all ads

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. - Accountancy

Advertisement Remove all ads
Advertisement Remove all ads
Advertisement Remove all ads

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.

Advertisement Remove all ads

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

Concept: Preparation of Profit and Loss Appropriation Account
  Is there an error in this question or solution?

Video TutorialsVIEW ALL [1]

Advertisement Remove all ads
Share
Notifications

View all notifications


      Forgot password?
View in app×