Pinki, Deepati and Kaku are Partner’s Sharing Profits in the Ratio of 5:4:1. Kaku is Given a Guarantee that His Share of Profits in any Given Year - Bzziii.com Solution

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Pinki, Deepati and Kaku are partner’s sharing profits in the ratio of 5:4:1. Kaku is given a guarantee that his share of profits in any given year would not be less than Rs 5,000. Deficiency, if any, would be borne by Pinki and Deepti equally. Profits for the year amounted to Rs 40,000. Record necessary journal entries in the books of the firm showing the distribution of profit.





Profit and Loss Appropriation Account

Dr.                                                                                          Cr.

ParticularsAmount RsParticularsAmount Rs
Profit transferred to: Profit & Loss40,000
Pinki’s Capital20,000
Less: Gurantee to Kaku 
{1,000 × (1/2)}		(500)  19,500
Deepti’s Capital16,000
Less: Guarantee to Kaku 
{1,000 × (1/2)}		(500)  15,500
Kaku’s Capital4,000
Add: Deficiency received from
Pinki500
Deepti500      5,000
 40,00040,000

Chapter-2 Partnership Basic: Accounts



Location: India

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