P and Q were partners in a firm, sharing profit and losses in the ratio of 3:2. They admit R for 1/6th share in profits and guaranteed that his…

CA Foundation · Accounting · MTP · September 2024
P and Q were partners in a firm, sharing profit and losses in the ratio of 3:2. They admit R for 1/6th share in profits and guaranteed that his share of profits will not be less than - 50,00,000. Total profits of the firm for the year ended 31st March, 2024 were - 1,80,00,000. Calculate share of profit for each partner when: (i) Guarantee is given by firm (ii) Guarantee is given by P and Q equally.

Suggested Answer and Working Notes:

(i) If Guarantee is given by firm Profit and Loss Appropriation Account for the year ending on 31st March, 2024 Particulars ₹ Particulars ₹ To P’s Capital A/c (₹ 3/5 of 1,30,00,000) 78,00,000 By Profit and Loss A/c 1,80,00,000 To Q’s Capital A/c (₹ 2/5 of 1,30,00,000) 52,00,000 To R’s Capital A/c (₹ 1/6 of 1,80,00,000 or - 50,00,000 whichever is more) 50,00,000 1,80,00,000 1,80,00,000 (ii) If Guarantee is given by P and Q equally Profit and Loss Appropriation Account for the year ending on 31st March, 2024 Particulars ₹ Particulars ₹ To P’s Capital A/c (₹ 3/6 of 1,80,00,000) 90,00,000 By Profit and Loss, A/c (net profits) 1,80,00,000 Less: Deficiency borne for R (₹ 1/2 of20,00,000) (₹ 10,00,000) 80,00,000 To Q’s Capital A/c (₹ 2/6 of 1,80,00,000) 60,00,000 Less: Deficiency borne for R (₹ 1/2 of20,00,000) (₹ 10,00,000) 50,00,000 To R’s Capital A/c (₹ 1/6 of 1,80,00,000) 30,00,000 Add: Deficiency Recovery from P 10,00,000 Add: Deficiency Recovery from Q 10,00,000 50,00,000 1,80,00,000 1,80,00,000

Topics: Admission of a New Partner

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