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(Guarantee of Profit to a Partner in Case of Loss). A, B and C are partners having capitals of 10,00,000; 8,00,000 and 6,00,000 respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of 1,00,000 as share of profit every year. The firm incurred a loss of 3,00,000 for the year ended 31st March. 2020. You are required to show the necessary accounts for division of loss and giving effect to minimum guaranteed profit to C.?
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(Guarantee of Profit to a Partner in Case of Loss). A, B and C are par...
Division of Loss and Guaranteed Profit to C
Capital Contribution of Partners
- A - 10,00,000
- B - 8,00,000
- C - 6,00,000
Distribution of Loss
The loss of 3,00,000 will be divided equally among the partners:
- A's share of loss = 1,00,000
- B's share of loss = 1,00,000
- C's share of loss = 1,00,000
Guaranteed Profit to C
C is guaranteed a minimum profit of 1,00,000 as share of profit every year. Therefore, the firm must give effect to this guarantee even in case of losses.
Adjustment of Guaranteed Profit
To adjust for the guaranteed profit to C, the following entry will be made:
- Profit and Loss A/c Dr. 1,00,000
- To C's Capital A/c 1,00,000
This entry will reduce the loss of C to zero and give effect to the guaranteed profit of 1,00,000 to C. The remaining loss of 2,00,000 will be shared equally among A and B.
Final Distribution of Loss
- A's share of loss = 1,00,000 + (1,00,000/2) = 1,50,000
- B's share of loss = 1,00,000 + (1,00,000/2) = 1,50,000
- C's share of loss = 0 + (1,00,000/2) = 50,000
After the adjustment of guaranteed profit, A and B will bear a higher share of the loss, while C's loss will be reduced to zero due to the guarantee.
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(Guarantee of Profit to a Partner in Case of Loss). A, B and C are partners having capitals of 10,00,000; 8,00,000 and 6,00,000 respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of 1,00,000 as share of profit every year. The firm incurred a loss of 3,00,000 for the year ended 31st March. 2020. You are required to show the necessary accounts for division of loss and giving effect to minimum guaranteed profit to C.?
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(Guarantee of Profit to a Partner in Case of Loss). A, B and C are partners having capitals of 10,00,000; 8,00,000 and 6,00,000 respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of 1,00,000 as share of profit every year. The firm incurred a loss of 3,00,000 for the year ended 31st March. 2020. You are required to show the necessary accounts for division of loss and giving effect to minimum guaranteed profit to C.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about (Guarantee of Profit to a Partner in Case of Loss). A, B and C are partners having capitals of 10,00,000; 8,00,000 and 6,00,000 respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of 1,00,000 as share of profit every year. The firm incurred a loss of 3,00,000 for the year ended 31st March. 2020. You are required to show the necessary accounts for division of loss and giving effect to minimum guaranteed profit to C.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for (Guarantee of Profit to a Partner in Case of Loss). A, B and C are partners having capitals of 10,00,000; 8,00,000 and 6,00,000 respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of 1,00,000 as share of profit every year. The firm incurred a loss of 3,00,000 for the year ended 31st March. 2020. You are required to show the necessary accounts for division of loss and giving effect to minimum guaranteed profit to C.?.
(Guarantee of Profit to a Partner in Case of Loss). A, B and C are partners having capitals of 10,00,000; 8,00,000 and 6,00,000 respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of 1,00,000 as share of profit every year. The firm incurred a loss of 3,00,000 for the year ended 31st March. 2020. You are required to show the necessary accounts for division of loss and giving effect to minimum guaranteed profit to C.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about (Guarantee of Profit to a Partner in Case of Loss). A, B and C are partners having capitals of 10,00,000; 8,00,000 and 6,00,000 respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of 1,00,000 as share of profit every year. The firm incurred a loss of 3,00,000 for the year ended 31st March. 2020. You are required to show the necessary accounts for division of loss and giving effect to minimum guaranteed profit to C.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for (Guarantee of Profit to a Partner in Case of Loss). A, B and C are partners having capitals of 10,00,000; 8,00,000 and 6,00,000 respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of 1,00,000 as share of profit every year. The firm incurred a loss of 3,00,000 for the year ended 31st March. 2020. You are required to show the necessary accounts for division of loss and giving effect to minimum guaranteed profit to C.?.
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