Arun, Boby and Chintu are Partners in a Firm Sharing Profit in the Ratio or 2:2:1. According to the Terms of the Partnership Agreement - Bzziii.com

Arun, Boby and Chintu are partners in a firm sharing profit in the ratio or 2:2:1. According to the terms of the partnership agreement, Chintu has to get a minimum of Rs 60,000, irrespective of the profits of the firm. Any Deficiency to Chintu on Account of such guarantee shall be borne by Arun. Prepare the profit and loss appropriation account showing distribution of profits among partners in case the profits for year 2015 are: (i) Rs 2,50,000; (ii) 3,60,000.

Case (i)

Profit and Loss Appropriation Account 

as on March 31, 2015

Particulars		Amount (Rs.)	Profit and Loss	Amount (Rs.)
To Profit transferred to			By Profit and loss A/c	2,50,000
Arun’s Capital	1,00,000
Less: Chintu’s share of deficiency	(10,000)	90,000
To Bobby’s Capital	1,00,000
To Chintu’s Capital	50,000
Add: Deficiency received from Arun	10,000	60,000
	2,50,000			2,50,000

Case (ii)

Profit and Loss Appropriation Account
as on March 31, 2015

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Profit transferred to		By Profit and Loss	3,60,000
Arun’s Capital [3,60,000 × (2/5)]	1,44,000
Bobby’s Capital [3,60,000 × (2/5)]	1,44,000
Chintu’s Capital [3,60,000 × (1/5)]	72,000
	3,60,000		3,60,000

Chapter-2 Partnership Basic: Accounts

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