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in Accounting for Partnership – Basic Concepts by (25.6k points)
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A and B are partners sharing profits in the ratio of 2: 3. On 1st January 2001, they admitted C into the firm for a sixth share of profits with a guaranteed minimum of Rs. 25000. A & B continue to share profits as before but agrees to suffer any excess over 1/6 of profit going to C equally. The profits of the firm for the year was Rs. 75,000. Prepare Profit and Loss appropriation account.

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Minimum amount guaranteed to C 25,000
C's actual share of profit 75,000 x 1/6 12,500
Difference to be borne by A & B 12,500

The ratio in which this difference is to be borne 1: 1 

Dr. Profit and Loss Appropriation Account Cr.

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