Ownclasses

Ali, Bimal and Deepak are partners in a firm. On 1st April, 2011 their capital accounts stood at Rs. 4,00,000, Rs. 3,00,000 and Rs. 2,00,000 respectively. They shared profits and losses in the proportion of 5:3:2. Partners are entitled to interest on capital @ 10% per annum and salary to Bimal and Deepak @ 2,000 per month and Rs. 3,000 per quarter respectively as per the provisions of the partnership deed.
Bimal's share of profit (excluding interest on capital but including salary) is guaranteed at a minimum of Rs. 50,000 p.a. Any deficiency arising on that account shall be met by Deepak. The profits of the firm for the year ended 31st March, 2012 amounted to Rs. 2,00,000. Prepare Profit & Loss Account for the year ended on 31st March, 2012.

Answer


Working Notes:
Profit available for distribution = 2,00,000 - (90,000 + 36,000) = 74,000
Profit sharing ratio = 5 : 3 : 2
Ali’s share of profit = 74000* 5/10 = 37,000
Bimal’s share of profit = 74000 * 3/10 = 22,200
Deepak’s share of profit = 74000 * 2 / 10 = 14,800
Bimal’s guaranteed profit = 50000
It includes profit 22,200+ Salary 24000 = 46,200.
50000 excludes interest.
Hence additional amount needed to give minimum guaranteed profit = 50,000- 46,200 = 3800
This deficiency is to be borne by Deepak.
Therefore,
Deepak’s New Profit Share = 14,800 - 3,800 = Rs 11,000