Question

P, Q and R are partners in a firm sharing profits/ losses in the ratio of 5:3:2. But R is guaranteed with a minimum amount of Rs. 15,000/- as his share of profit every year. Any deficiency arising on that account shall be met by Q. The profits for the 2 years ending on 31st December 2008 and 2009) were Rs. 60,000 and Rs. 90,000 respectively.

Prepare Profit and Loss Appropriation Account for the two years.

Answer 1

Profit and Loss Appropriation A/c for the year 2008 & 2009)

Note: 

P’s Share of profit in the year 2008 – 60000 x 5/10 = 30000 

P’s Share of profit in the year 2009) – 90000 x 5/100 = 45000 

Q’s Share of profit in the year 2008 – 60000 x 3/100 = 18000 

Less : Guaranteed amount 15000, 3000 

Q’s Share of profit in the year 2009) – 90000 x 3/100 = 27000