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ACCOUNTANCY – XII
Case 5.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the profit of the firm was Rs.1,20,000. Prepare p & L appropriation a/c,
capital a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
PROFIT = 1,20,000
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000
To balance c/d 5,54,000 3,36,000 1,30,000 By bank a/c 1,00,000
By D.P. 54,000 36,000 30,000
5,54,000 3,36,000 1,30,000 5,54,000 3,36,000 1,30,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
27,000
18,000
15,000
Case 6.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the loss of the firm was Rs.1,20,000. Prepare p & L appropriation a/c, capital
a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
loss = 1,20,000
Page 2
ACCOUNTANCY – XII
Case 5.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the profit of the firm was Rs.1,20,000. Prepare p & L appropriation a/c,
capital a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
PROFIT = 1,20,000
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000
To balance c/d 5,54,000 3,36,000 1,30,000 By bank a/c 1,00,000
By D.P. 54,000 36,000 30,000
5,54,000 3,36,000 1,30,000 5,54,000 3,36,000 1,30,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
27,000
18,000
15,000
Case 6.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the loss of the firm was Rs.1,20,000. Prepare p & L appropriation a/c, capital
a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
loss = 1,20,000
ACCOUNTANCY – XII
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Moreover there are losses so P & L a/c will be prepared
P & L a/c
Particulars Rs. Particulars Rs.
To loss 1,20,000 By net loss / divisible loss 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
To P & L a/c 54,000 36,000 30,000 By balance b/d 5,00,000 3,00,000
To C’s capital a/c 50,000 By bank a/c 1,00,000
To balance c/d 3,96,000 2,64,000 1,20,000 By A’s capital a/c 50,000
5,00,000 3,00,000 1,50,000 5,00,000 3,00,000 1,50,000
Journal entry
Particulars L.f. Dr. Cr.
A’s capital a/c
B’s capital a/c
C’s capital a/c
To P & l a/c
(being profits distributed )
54,000
36,000
30,000
1,20,000
A’s capital a/c dr.
To C’s capital a/c ( 20,000 + 30,000)
( being adjustment entry passed for the deficiency)
50,000
50,000
Firm to partner
? Deficiency will be meet by partners in there profit sharing ratio if no information is available
? If ratio is given in which the deficiency will be meet it will be meet in that ratio
Case 1.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the profit of the firm
was Rs.60,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Firm had guaranteed C so the deficiency will be meet by A & B in ratio of 3:2 (as no info. Is available)
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 60,000 By net profit 60,000
A 30,000 – 3,000
B 20,000 – 2,000
C 10,000 + 5,000
60,000 60,000
Capital A/C
Particulars A B C Particulars A B C
To C’s capital a/c 3,000 2,000 By balance b/d 5,00,000 3,00,000 4,00,00
To balance c/d 5,27,000 3,18,000 4,15,000 By D.P. 30,000 20,000 10,000
By A’s capital a/c 3,000
By B’s capital a/c 2,000
Page 3
ACCOUNTANCY – XII
Case 5.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the profit of the firm was Rs.1,20,000. Prepare p & L appropriation a/c,
capital a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
PROFIT = 1,20,000
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000
To balance c/d 5,54,000 3,36,000 1,30,000 By bank a/c 1,00,000
By D.P. 54,000 36,000 30,000
5,54,000 3,36,000 1,30,000 5,54,000 3,36,000 1,30,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
27,000
18,000
15,000
Case 6.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the loss of the firm was Rs.1,20,000. Prepare p & L appropriation a/c, capital
a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
loss = 1,20,000
ACCOUNTANCY – XII
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Moreover there are losses so P & L a/c will be prepared
P & L a/c
Particulars Rs. Particulars Rs.
To loss 1,20,000 By net loss / divisible loss 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
To P & L a/c 54,000 36,000 30,000 By balance b/d 5,00,000 3,00,000
To C’s capital a/c 50,000 By bank a/c 1,00,000
To balance c/d 3,96,000 2,64,000 1,20,000 By A’s capital a/c 50,000
5,00,000 3,00,000 1,50,000 5,00,000 3,00,000 1,50,000
Journal entry
Particulars L.f. Dr. Cr.
A’s capital a/c
B’s capital a/c
C’s capital a/c
To P & l a/c
(being profits distributed )
54,000
36,000
30,000
1,20,000
A’s capital a/c dr.
To C’s capital a/c ( 20,000 + 30,000)
( being adjustment entry passed for the deficiency)
50,000
50,000
Firm to partner
? Deficiency will be meet by partners in there profit sharing ratio if no information is available
? If ratio is given in which the deficiency will be meet it will be meet in that ratio
Case 1.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the profit of the firm
was Rs.60,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Firm had guaranteed C so the deficiency will be meet by A & B in ratio of 3:2 (as no info. Is available)
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 60,000 By net profit 60,000
A 30,000 – 3,000
B 20,000 – 2,000
C 10,000 + 5,000
60,000 60,000
Capital A/C
Particulars A B C Particulars A B C
To C’s capital a/c 3,000 2,000 By balance b/d 5,00,000 3,00,000 4,00,00
To balance c/d 5,27,000 3,18,000 4,15,000 By D.P. 30,000 20,000 10,000
By A’s capital a/c 3,000
By B’s capital a/c 2,000
ACCOUNTANCY – XII
5,30,000 3,20,000 4,15,000 5,30,000 3,20,000 4,15,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
30,000
20,000
10,000
A’s capital a/c dr.
B’s capital a/c dr.
To C’s capital a/c
( being adjustment entry passed for the deficiency)
3,000
2,000
5,000
Case 2.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the profit of the firm
was Rs.1,20,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 60,000
B 40,000
C 20,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000 4,00,00
To balance c/d 5,60,000 3,40,000 4,20,000 By D.P. 60,000 40,000 20,000
5,60,000 3,40,000 4,20,000 5,60,000 3,40,000 4,20,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
1,20,000
60,000
40,000
20,000
Case 3.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the loss of the firm was
Rs.60,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Firm had guaranteed C so the deficiency will be meet by A & B in ratio of 3:2 (as no info. Is available)
Moreover there are losses so P & L a/c will be prepared
P & L a/c
Particulars Rs. Particulars Rs.
To loss 60,000 By net loss / divisible loss 60,000
A 30,000
B 20,000
C 10,000
Page 4
ACCOUNTANCY – XII
Case 5.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the profit of the firm was Rs.1,20,000. Prepare p & L appropriation a/c,
capital a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
PROFIT = 1,20,000
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000
To balance c/d 5,54,000 3,36,000 1,30,000 By bank a/c 1,00,000
By D.P. 54,000 36,000 30,000
5,54,000 3,36,000 1,30,000 5,54,000 3,36,000 1,30,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
27,000
18,000
15,000
Case 6.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the loss of the firm was Rs.1,20,000. Prepare p & L appropriation a/c, capital
a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
loss = 1,20,000
ACCOUNTANCY – XII
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Moreover there are losses so P & L a/c will be prepared
P & L a/c
Particulars Rs. Particulars Rs.
To loss 1,20,000 By net loss / divisible loss 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
To P & L a/c 54,000 36,000 30,000 By balance b/d 5,00,000 3,00,000
To C’s capital a/c 50,000 By bank a/c 1,00,000
To balance c/d 3,96,000 2,64,000 1,20,000 By A’s capital a/c 50,000
5,00,000 3,00,000 1,50,000 5,00,000 3,00,000 1,50,000
Journal entry
Particulars L.f. Dr. Cr.
A’s capital a/c
B’s capital a/c
C’s capital a/c
To P & l a/c
(being profits distributed )
54,000
36,000
30,000
1,20,000
A’s capital a/c dr.
To C’s capital a/c ( 20,000 + 30,000)
( being adjustment entry passed for the deficiency)
50,000
50,000
Firm to partner
? Deficiency will be meet by partners in there profit sharing ratio if no information is available
? If ratio is given in which the deficiency will be meet it will be meet in that ratio
Case 1.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the profit of the firm
was Rs.60,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Firm had guaranteed C so the deficiency will be meet by A & B in ratio of 3:2 (as no info. Is available)
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 60,000 By net profit 60,000
A 30,000 – 3,000
B 20,000 – 2,000
C 10,000 + 5,000
60,000 60,000
Capital A/C
Particulars A B C Particulars A B C
To C’s capital a/c 3,000 2,000 By balance b/d 5,00,000 3,00,000 4,00,00
To balance c/d 5,27,000 3,18,000 4,15,000 By D.P. 30,000 20,000 10,000
By A’s capital a/c 3,000
By B’s capital a/c 2,000
ACCOUNTANCY – XII
5,30,000 3,20,000 4,15,000 5,30,000 3,20,000 4,15,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
30,000
20,000
10,000
A’s capital a/c dr.
B’s capital a/c dr.
To C’s capital a/c
( being adjustment entry passed for the deficiency)
3,000
2,000
5,000
Case 2.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the profit of the firm
was Rs.1,20,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 60,000
B 40,000
C 20,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000 4,00,00
To balance c/d 5,60,000 3,40,000 4,20,000 By D.P. 60,000 40,000 20,000
5,60,000 3,40,000 4,20,000 5,60,000 3,40,000 4,20,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
1,20,000
60,000
40,000
20,000
Case 3.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the loss of the firm was
Rs.60,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Firm had guaranteed C so the deficiency will be meet by A & B in ratio of 3:2 (as no info. Is available)
Moreover there are losses so P & L a/c will be prepared
P & L a/c
Particulars Rs. Particulars Rs.
To loss 60,000 By net loss / divisible loss 60,000
A 30,000
B 20,000
C 10,000
ACCOUNTANCY – XII
60,000 60,000
Capital A/C
Particulars A B C Particulars A B C
To P & L a/c 30,000 20,000 10,000 By balance b/d 5,00,000 3,00,000 4,00,00
To C’s capital a/c 15,000 10,000 By A’s capital a/c 15,000
To balance c/d 4,55,000 2,70,000 4,15,000 By B’s capital a/c 10,000
5,00,000 3,20,000 4,25,000 5,00,000 3,20,000 4,25,000
Journal entry
Particulars L.f. Dr. Cr.
A’s capital a/c
B’s capital a/c
C’s capital a/c
To P & l a/c
(being profits distributed )
30,000
20,000
10,000
60,000
A’s capital a/c dr.
B’s capital a/c dr.
To C’s capital a/c ( 10,000 + 15,000)
( being adjustment entry passed for the deficiency)
15,000
10,000
25,000
Case 4.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital for 1/4
th
share and firm had guaranteed C that his share of
profits will not be less then Rs.20,000 however the profit of the firm was Rs.60,000. Prepare p & L appropriation a/c,
capital a/c and pass journal entries?
Solution- firm had guaranteed C so the deficiency will be meet by A & B
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
PROFIT = 60,000
C’s share = 60,000 X
1
4
= 15,000
Remaining share = 60,000 – 15,000 = 45,000
A’s new share=
3
5
X 45,000 = 27,000
B’s new share =
2
5
X 45,000 = 18,000
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 60,000 By net profit 60,000
A 27,000 – 3,000
B 18,000 – 2,000
C 15,000 + 5,000
60,000 60,000
Capital A/C
Particulars A B C Particulars A B C
To C’s capital a/c 3,000 2,000 By balance b/d 5,00,000 3,00,000
To balance c/d 5,24,000 3,16,000 1,20,000 By bank a/c 1,00,00
By D.P. 27,000 18,000 15,000
By A’s capital a/c 3,000
By B’s capital a/c 2,000
5,27,000 3,18,000 1,20,000 5,27,000 3,18,000 1,20,000
Journal entry
Page 5
ACCOUNTANCY – XII
Case 5.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the profit of the firm was Rs.1,20,000. Prepare p & L appropriation a/c,
capital a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
PROFIT = 1,20,000
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000
To balance c/d 5,54,000 3,36,000 1,30,000 By bank a/c 1,00,000
By D.P. 54,000 36,000 30,000
5,54,000 3,36,000 1,30,000 5,54,000 3,36,000 1,30,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
27,000
18,000
15,000
Case 6.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital 1/4
th
share and A had guaranteed C that his share of profits
will not be less then Rs.20,000 however the loss of the firm was Rs.1,20,000. Prepare p & L appropriation a/c, capital
a/c and pass journal entries?
Solution- A had guaranteed C so the deficiency will be meet by A
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
loss = 1,20,000
ACCOUNTANCY – XII
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Moreover there are losses so P & L a/c will be prepared
P & L a/c
Particulars Rs. Particulars Rs.
To loss 1,20,000 By net loss / divisible loss 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
To P & L a/c 54,000 36,000 30,000 By balance b/d 5,00,000 3,00,000
To C’s capital a/c 50,000 By bank a/c 1,00,000
To balance c/d 3,96,000 2,64,000 1,20,000 By A’s capital a/c 50,000
5,00,000 3,00,000 1,50,000 5,00,000 3,00,000 1,50,000
Journal entry
Particulars L.f. Dr. Cr.
A’s capital a/c
B’s capital a/c
C’s capital a/c
To P & l a/c
(being profits distributed )
54,000
36,000
30,000
1,20,000
A’s capital a/c dr.
To C’s capital a/c ( 20,000 + 30,000)
( being adjustment entry passed for the deficiency)
50,000
50,000
Firm to partner
? Deficiency will be meet by partners in there profit sharing ratio if no information is available
? If ratio is given in which the deficiency will be meet it will be meet in that ratio
Case 1.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the profit of the firm
was Rs.60,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Firm had guaranteed C so the deficiency will be meet by A & B in ratio of 3:2 (as no info. Is available)
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 60,000 By net profit 60,000
A 30,000 – 3,000
B 20,000 – 2,000
C 10,000 + 5,000
60,000 60,000
Capital A/C
Particulars A B C Particulars A B C
To C’s capital a/c 3,000 2,000 By balance b/d 5,00,000 3,00,000 4,00,00
To balance c/d 5,27,000 3,18,000 4,15,000 By D.P. 30,000 20,000 10,000
By A’s capital a/c 3,000
By B’s capital a/c 2,000
ACCOUNTANCY – XII
5,30,000 3,20,000 4,15,000 5,30,000 3,20,000 4,15,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
30,000
20,000
10,000
A’s capital a/c dr.
B’s capital a/c dr.
To C’s capital a/c
( being adjustment entry passed for the deficiency)
3,000
2,000
5,000
Case 2.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the profit of the firm
was Rs.1,20,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 60,000
B 40,000
C 20,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000 4,00,00
To balance c/d 5,60,000 3,40,000 4,20,000 By D.P. 60,000 40,000 20,000
5,60,000 3,40,000 4,20,000 5,60,000 3,40,000 4,20,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
1,20,000
60,000
40,000
20,000
Case 3.
A, B & C are partners with capital of Rs.5,00,000 ; Rs.3,00,000 and Rs.4,00,000 are sharing profits in proportion of
3:2:1. Firm had guaranteed C that his share of profits will not be less then Rs.15,000 however the loss of the firm was
Rs.60,000.
Prepare p & L appropriation a/c, capital a/c and pass journal entries?
Solution- Firm had guaranteed C so the deficiency will be meet by A & B in ratio of 3:2 (as no info. Is available)
Moreover there are losses so P & L a/c will be prepared
P & L a/c
Particulars Rs. Particulars Rs.
To loss 60,000 By net loss / divisible loss 60,000
A 30,000
B 20,000
C 10,000
ACCOUNTANCY – XII
60,000 60,000
Capital A/C
Particulars A B C Particulars A B C
To P & L a/c 30,000 20,000 10,000 By balance b/d 5,00,000 3,00,000 4,00,00
To C’s capital a/c 15,000 10,000 By A’s capital a/c 15,000
To balance c/d 4,55,000 2,70,000 4,15,000 By B’s capital a/c 10,000
5,00,000 3,20,000 4,25,000 5,00,000 3,20,000 4,25,000
Journal entry
Particulars L.f. Dr. Cr.
A’s capital a/c
B’s capital a/c
C’s capital a/c
To P & l a/c
(being profits distributed )
30,000
20,000
10,000
60,000
A’s capital a/c dr.
B’s capital a/c dr.
To C’s capital a/c ( 10,000 + 15,000)
( being adjustment entry passed for the deficiency)
15,000
10,000
25,000
Case 4.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital for 1/4
th
share and firm had guaranteed C that his share of
profits will not be less then Rs.20,000 however the profit of the firm was Rs.60,000. Prepare p & L appropriation a/c,
capital a/c and pass journal entries?
Solution- firm had guaranteed C so the deficiency will be meet by A & B
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
PROFIT = 60,000
C’s share = 60,000 X
1
4
= 15,000
Remaining share = 60,000 – 15,000 = 45,000
A’s new share=
3
5
X 45,000 = 27,000
B’s new share =
2
5
X 45,000 = 18,000
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 60,000 By net profit 60,000
A 27,000 – 3,000
B 18,000 – 2,000
C 15,000 + 5,000
60,000 60,000
Capital A/C
Particulars A B C Particulars A B C
To C’s capital a/c 3,000 2,000 By balance b/d 5,00,000 3,00,000
To balance c/d 5,24,000 3,16,000 1,20,000 By bank a/c 1,00,00
By D.P. 27,000 18,000 15,000
By A’s capital a/c 3,000
By B’s capital a/c 2,000
5,27,000 3,18,000 1,20,000 5,27,000 3,18,000 1,20,000
Journal entry
ACCOUNTANCY – XII
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
27,000
18,000
15,000
A’s capital a/c dr.
B’s capital a/c dr.
To C’s capital a/c
( being adjustment entry passed for the deficiency)
3,000
2,000
5,000
Case 5.
A & B are partners with capital of Rs.5,00,000 and Rs.3,00,000 are sharing profits in proportion of 3:2. They
admitted C for which he brings Rs.1,00,000 as his capital for 1/4
th
share and firm had guaranteed C that his share of
profits will not be less then Rs.15,000 however the profit of the firm was Rs.1,20,000. Prepare p & L appropriation
a/c, capital a/c and pass journal entries?
Solution- Firm had guaranteed C so the deficiency will be meet by A & B
First we will distribute the profits in the new ratio
A B
3
5
2
5
1
4
= C’s share
PROFIT = 1,20,000
C’s share = 1,20,000 X
1
4
= 30,000
Remaining share = 1,20,000 – 30,000 = 90,000
A’s new share=
3
5
X 90,000 = 54,000
B’s new share =
2
5
X 90,000 = 36,000
Since C had earned sufficient profits there is no need of guarantee
P & L appropriation a/c
Particulars Rs. Particulars Rs.
To Divisible profit 1,20,000 By net profit 1,20,000
A 54,000
B 36,000
C 30,000
1,20,000 1,20,000
Capital A/C
Particulars A B C Particulars A B C
By balance b/d 5,00,000 3,00,000
To balance c/d 5,54,000 3,36,000 1,30,000 By bank a/c 1,00,000
By D.P. 54,000 36,000 30,000
5,54,000 3,36,000 1,30,000 5,54,000 3,36,000 1,30,000
Journal entry
Particulars L.f. Dr. Cr.
P & l appropriation a/c dr.
To A’s capital a/c
To B’s capital a/c
To C’s capital a/c
(being profits distributed )
60,000
54,000
36,000
30,000
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FAQs on Others Cases (Part -2) - Partnership Fundamentals - Crash Course of Accountancy - Class 12 - Commerce
| 1. What are the key fundamentals of partnership in commerce? |  |
Ans. The key fundamentals of partnership in commerce include mutual agreement, shared profit and loss, joint ownership and management, unlimited liability, and legal recognition.
| 2. How is mutual agreement important in partnership? | |
Ans. Mutual agreement is important in partnership as it establishes the consent and understanding between partners regarding the terms and conditions of their business relationship. It ensures that all partners are on the same page and have agreed to work together for a common goal.
| 3. What is meant by shared profit and loss in partnership? | |
Ans. Shared profit and loss in partnership refer to the distribution of profits and losses among the partners according to the agreed-upon terms. Partners share the profits generated by the business in a predetermined ratio, and similarly, they also share the losses incurred by the business.
| 4. Why is joint ownership and management significant in partnership? | |
Ans. Joint ownership and management in partnership mean that all partners have equal rights and responsibilities in running the business. This allows for the pooling of resources, skills, and expertise of multiple individuals, leading to better decision-making and efficient management of the business.
| 5. What is unlimited liability in partnership? | |
Ans. Unlimited liability in partnership means that each partner is personally liable for the debts and obligations of the business. This implies that if the business assets are not sufficient to cover the debts, the personal assets of the partners can be used to fulfill the obligations. It is important for partners to be aware of this risk before entering into a partnership agreement.
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