# 12th Ts grewal 2021-22 Question 76 to 80 Accounting for partnership firm- fundamentals

#### Question 76:

Mohit and Sobhit are partners sharing profits in the ratio of 3 : 2. Rohit was admitted for 1/6th share of profit with a minimum guaranteed amount of  `10,000. At the close of the first financial year the firm earned a profit of  ` 54,000. Find out the share of profit which Mohit, Sobhit and Rohit will get.

 Profit and Loss Appropriation Account Dr. For the year ended 31st March, ………. Cr. Particulars Amount ( `) Particulars Amount ( `) Profit transferred to: Profit and Loss A/c (Net Profit) 54,000 Mohit’s Capital a/c 26,400 Sobhit’s Capital a/c 17,600 Rohit’s Capital a/c 10,000 54,000 54,000 54,000

Working Note

Rohit will get higher of the two:

(i) Share of Profit as per profit sharing ratio, i.e., 54,000×1/6=9,000

(ii) Minimum guaranteed profit, i.e. ` 10,000
Thus from net profit of ` 54,000, minimum guaranteed profit to Rohit of ` 10,000 is to be adjusted first.

And the balance profit of ` 44,000 (54,000 – 10,000) is to be shared by Mohit and Sobhit in the ratio 3:2

final share :

Mohit’s share =44,000×3/5=26,400

Sobhit’s share =44,000×2/5=17,600

Rohit’s share =10,000 (minimum guarantee)

#### Page No 2.96

Question 77

A, B and C were in partnership sharing profits and losses in the ratio of 4 :2 : 1. It was provided that Cs share in profit for a year would not be less than `75,000. Profit for the year ended 31st March, 2021 amounted to `3,15,000. You are required to show the appropriation among the partners. The Profit and Loss Appropriation Account is not required.

Minimum Earnings Guaranteed by a Partner

 Profit and loss appropriation account for year ended 31 March Particulars ` Particulars ` To Profit A-     1,80,000-20,000   =1,60,000 B-     90,000-10,000     =  80,000 C-     45,000+30,000    =75,000 3,15,000 By net profit 3,15,000 3,15,000 3,15,000

Note; initial profit distributed 30,000 in 4:2 or 2:1 in the absence of any information in the question No profit and loss a/c is required we can appropriate as below;

Appropriation of profit

 A-    1,80,000-20,000   =1,60,000 B-    90,000-10,000     =  80,000 C-    45,000+30,000     = 75,000 3,15,000

#### Question 78:

X, Y and Z entered into partnership on 1st October, 2020 to share profits in the ratio of 4 : 3 : 3. X, personally guaranteed that Z's share of profit after charging interest on capital @ 10% p.a. would not be less then `80,000 in any year. Capital contributions were: X ` 3,00,000, Y ` 2,00,000 and Z ` 1,50,000.
Profit for the year ended 31st March, 2021 was  ` 1,60,000. Prepare Profit and Loss Appropriation Account.

 Profit and Loss Appropriation Account for the year ended March 31, 2021 Dr. Cr. Particulars Amount ( `) Particulars Amount ( `) Interest on Capital: Net Profit b/d 1,60,000 X’s Capital a/c 15,000 Y’s Capital a/c 10,000 Z’s Capital a/c 7,500 32,500 Profit transferred to: X (51,000 – 1,750) 49,250 Y (38,250) 38,250 Z (38,250 + 1,750) 40,000 1,27,500 1,60,000 1,60,000

Note: Since Z is admitted on 1st October, 2019 and Profit is ascertained on March 31, 2021, therefore, interest on capital is calculated for 6 months and guaranteed amount is considered as ` 40,000 (half of the total amount).

#### Question 79:

A, B and C are partners sharing profits in the ratio of 5 : 4 : 1. C is given a guarantee that his minimum share of profit in any given year would be at least ` 5,000. Deficiency, if any, would be borne by A and B equally. Profit for the year ended 31st March 2021 was `40,000.
Pass necessary Journal entries in the books of the firm.

 Profit and Loss Appropriation Account for the year ended 2020–21 Dr. Cr. Particulars Amount ( `) Particulars Amount ( `) Profit transferred to: Profit and Loss A/c (Net Profit) 40,000 A’s Capital A/c 19,500 B’s Capital A/c 15,500 C’s Capital A/c 5,000 40,000 40,000 40,000

Working Notes:

Profit for the year = ` 40,000

Profit sharing ratio = 5 : 4 : 1

C is given a guarantee of minimum profit of ` 5,000

A’s profit share =40,000×5/10=20,000

B’s profit share =40,000×4/10=16,000

C’s profit share =40,000×1/10=4,000

Deficiency in C’s share = 5,000 - ` 4,000 = ` 1,000

This deficiency is to be borne by A and B equally.

deficiency is to be borne by A=1000×1/2=500

deficiency is to be borne by B=1000×1/2=500

Therefore,

Final Profit Share of A = 20,000 - 500 = ` 19,500

Final Profit Share of B = 16,000 -500 = ` 15,500

Final Profit Share of C = 4,000 + 1,000 = ` 5,000

#### Question 80:

A, B and C are partners in a firm. Their profit-sharing ratio is 2 : 2 : 1. C is guaranteed a minimum of  ` 1,00,000 as share of profit every year. Any deficiency arising on that amount shall be met by B. The profits for the two years ended 31st March, 2020 and 2021 were  ` 4,00,000 and  ` 6,00,000 respectively. Prepare Profit and Loss Appropriation Account for the two years.

 Profit and Loss Appropriation Account for the year ended 31st March, 2020 Dr. Cr. Particulars Amount ( `) Particulars Amount ( `) Profit transferred to: (WN 1) Profit and Loss A/c (Net Profit) 4,00,000 A’s Capital A/c 1,60,000 B’s Capital A/c 1,40,000 C’s Capital A/c 1,00,000 4,00,000 4,00,000 4,00,000

 Profit and Loss Appropriation Account for the year ended 31st March, 2021 Dr. Cr. Particulars Amount ( `) Particulars Amount ( `) Profit transferred to: Profit and Loss A/c (Net Profit) 6,00,000 A’s Capital A/c 2,40,000 B’s Capital A/c 2,40,000 C’s Capital A/c 1,20,000 6,00,000 6,00,000 6,00,000

Working Notes:

WN 1 Distribution of Profit for the year 2019-20

Profit for 2020 = ` 4,00,000

Profit sharing ratio = 2 : 2 : 1

C is given a guarantee of minimum profit of ` 1,00,000

A’s profit share =4,00,000×2/5=1,60,000

B’s profit share =4,00,000×2/5=1,60,000

C’s profit share =4,00,000×1/5=80,000

Deficiency in C’s Profit Share = 1,00,000 - ` 80,000 = ` 20,000

This deficiency is to be borne by B.

Therefore,

Final Profit Share of A = 1,60,000

Final Profit Share of B = 1,60,000- ` 20,000 = ` 1,40,000

Final Profit Share of C = 80,000 + 20,000 = ` 1,00,000

WN 2 Distribution of Profit for the year 2020-21

Profit for 2021 = ` 6,00,000

Profit sharing ratio = 2 : 2 : 1

C is given a guarantee of minimum profit of ` 1,00,000

A’s profit share =6,00,000×2/5=2,40,000

B’s profit share =6,00,000×2/5=2,40,000

C’s profit share =6,00,000×1/5=1,20,000