Radha, Mary and Fatima are Partners Sharing Profits in the Ratio of 5:4:1 :- Accountancy - Bzziii.com

Radha, Maryand Fatima are partners sharing profits in the ratio of 5:4:1. Fatima is given a guarantee that her share of profit, in any year will not be less than Rs 5,000. The profits for the year ending March 31, 2017 amounts to Rs 35,000. Shortfall if any, in the profits guaranteed to Fatima is to be borne by Radha and Mary in the ratio of 3:2. Record necessary journal entry to show distribution of profit among partner.

Profit and Loss Appropriation Account

Dr.				Cr.
Particulars		Amount (Rs.)	Particulars	Amount (Rs.)
Profit transferred to			Profit and Loss	35,000
Radha’s Capital	17,500
Less: Fatima’s Deficiency {1,500 × (3/5)}	(900)	16,600
Mary’s Capital	14,000
Less: Fatima’s Deficiency {1,500 × (2/5)}	(600)	13,400
Fatima’s Capital	3,500
Add: Deficiency born by
Radha	900
Mary	600	5,000
		35,000		35,000

Journal

Date	Particulars		L.F.	Amount (Rs)	Amount (Rs)
	Profit and Loss Appropriation A/c	Dr.		35,000
	To Radha’s Capital A/c				16,600
	To Mary’s Capital A/c				13,400
	To Fatima’s Capital A/c				5,000
	(Profit distributed among Partners)

Alternative Method

Journal

Date	Particulars	L.F.	Amount (Rs)	Amount (Rs)
	Profit and Loss Appropriation A/c	Dr.	35,000
	To Radha’s Capital A/c			17,500
	To Mary’s Capital A/c			14,000
	To Fatima’s Capital A/c			3,500
	(Profit distributed among Partners)
	Radha’s Capital A/c	Dr.	900
	Mary’s Capital A/c	Dr.	600
	To Fatima’s Capital A/c			1,500
	(Deficiency of Fatima’s Share taken from Radha andMary)

Chapter-2 Partnership Basic: Accounts

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