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

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.

Particulars		Amount Rs	Particulars	Amount Rs
Profit transferred to:			Profit & Loss	40,000
Pinki’s Capital	20,000
Less: Gurantee to Kaku  {1,000 × (1/2)}	(500)	19,500
Deepti’s Capital	16,000
Less: Guarantee to Kaku  {1,000 × (1/2)}	(500)	15,500
Kaku’s Capital	4,000
Add: Deficiency received from
Pinki	500
Deepti	500	5,000
		40,000		40,000

Chapter-2 Partnership Basic: Accounts

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