Ankur, Bhavns and Disha are partners in a firm. On 1st April, 2017, the balance in their Capital Accounts stood at ₹ 14,00,000, ₹ 6,00,000 and ₹ 4,00,000 respectively. They shared profits in the proportion of 7 : 3 : 2 respectively. Partners are entitled to interest on capital @ 6% per annum and salary to Bhavna @ ₹ 50,000 p.a. and a commission of ₹ 3,000 per month to Disha as per the provisions of the partnership Deed. Bhavna’s share of profit (excluding interest on capital) is guaranteed at not less than ₹ 1,70,000 p.a. Disha’s share of profit (including interest on capital but excluding commission) is guaranteed at not less than ₹ 1,50,000 p.a. Any deficiency arising on that account shall be met by Ankur. The profit of the firm for the year ended 31st March, 2018 amounted to ₹ 9,50,000. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.

Ankur, Bhavns and Disha are partners in a firm. On 1st April, 2017, th

1.	Ankur, Bhavns and Disha are partners in a firm. On 1st April, 2017, the balance in their Capital Accounts stood at ₹ 14,00,000, ₹ 6,00,000 and ₹ 4,00,000 respectively. They shared profits in the proportion of 7 : 3 : 2 respectively. Partners are entitled to interest on capital @ 6% per annum and salary to Bhavna @ ₹ 50,000 p.a. and a commission of ₹ 3,000 per month to Disha as per the provisions of the partnership Deed. Bhavna’s share of profit (excluding interest on capital) is guaranteed at not less than ₹ 1,70,000 p.a. Disha’s share of profit (including interest on capital but excluding commission) is guaranteed at not less than ₹ 1,50,000 p.a. Any deficiency arising on that account shall be met by Ankur. The profit of the firm for the year ended 31st March, 2018 amounted to ₹ 9,50,000. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.
Answer» n: Profit and LOSS Appropriation Account for the year ended March 31,2018 Dr Cr Particulars Rs. Particulars Rs. To Interest on CAPITAL to : By Profit and Loss A/c (Net Profit) 9,50,000 ANKUR 84,000 Bhavna 36,000 Disha 24,000 1,44,000 To Salary to Bhavna 50,000 To Commission to Disha(3,000 x 12 36,000 To Profit transferred to : Ankur 4,14,000 Bhavna 1,80,000 Disha 1,26,000 7,20,000 9,50,000 9,50,000 Working Notes : Profit available for distribution = Rs.9,50,000 - (Rs.1,44,000 + Rs.50,000 + Rs.36,000) = Rs.7,20,000 Profit sharing ratio = 7 : 3 :2 Ankur's Profit Share = 7,20,000 x = 4,20,000 Bhavna's Profit Share = 7,20,000 x = 1, 80,000 Disha's Profi t Share = 7,20,000 x = 120,000 Bhavna's Minimum Guaranteed Profit = Rs.1,70,000 (excluding interest on capital) But, Bhavna's Actual Profit Share = Rs.1,80,000 No DEFICIENCY Disha's Minimum Guaranteed Profit = Rs.1,50,000 (including interest on capital but excluding salary) Disha's Minimum Guaranteed Profit (excluding interest) = Rs.1,50,000 - Rs.24,000 = Rs.1,26,000 But, Disha's Actual Profit Share = Rs.1,20,000 Deficiency in Disha's Profit Share = Rs.1,26,000 - Rs.1,20,000 = Rs.6,000 This deficiency is to be borne by Ankur alone THEREFORE, Ankur's New Profit Share = Rs.420000 - Rs.6000 = Rs.414000

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