P,Q and R are partners,sl sharing profit in ratio 3:2:1. 1.R would get minimum profit of ₹30000, 2.Q made guarantee to the firm that he would earn minimum ₹480000, firm earned ₹1520000 for the current year it included 320000 earned by Q. prepare profit and loss appropriation account for distribution of profit among partners?

Question

Answer

Profit and Loss Appropriation Account for the year ended [Date]

Partners' Capital Accounts

P's Capital Account

Q's Capital Account

R's Capital Account

Profit and Loss Account

Profit for the year [Amount]

Add: Q's guaranteed minimum profit [Amount]

Total Profit [Amount]

Less: R's guaranteed minimum profit [Amount]

Balance Profit [Amount]

Appropriation of Profit

Transfer to P's Capital Account [Amount]

Transfer to Q's Capital Account [Amount]

Transfer to R's Capital Account [Amount]

Balance carried forward [Amount]

Total [Amount]

Calculation of Profit and Loss Appropriation Account

Profit earned by the firm = ₹1520000

Profit shared in ratio 3:2:1

Profit share of R = 1/6 of total profit

R's guaranteed minimum profit = ₹30000

Balance profit for R = ₹(1/6 of total profit - ₹30000)

Q's guaranteed minimum profit = ₹480000

Profit earned by Q = ₹320000

Balance profit for Q = ₹(1/2 of total profit - ₹320000 + ₹480000)

Profit share of P = 3/6 of total profit

Balance profit for P = ₹(3/6 of total profit - balance profit for R - balance profit for Q)

Explanation

The Profit and Loss Appropriation Account is a statement that summarizes the distribution of profits amongst the partners of a firm. The account is divided into three sections, including partners' capital accounts, profit and loss account, and appropriation of profit.

In this case, the partners are P, Q, and R, sharing profits in the ratio of 3:2:1. The firm earned a total profit of ₹1520000, which includes Q's guaranteed minimum profit of ₹480000. R is guaranteed a minimum profit of ₹30000.

The Profit and Loss Appropriation Account is prepared by calculating the balance profit for each partner after deducting their guaranteed minimum profit. The balance profit is then distributed amongst the partners in their respective profit-sharing ratios.

In this case, the balance profit for R is ₹(1/6 of total profit - ₹30000), the balance profit for Q is ₹(1/2 of total profit - ₹320000 + ₹480000), and the balance profit for P is ₹(3/6 of total profit - balance profit for R - balance profit for Q). These amounts are then transferred to the respective partners' capital accounts.

The

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