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M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account?
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M, B and K are partners sharing profit in the ratio of 6 4 1 . K is gu...
Journal Entry for Deficiency Borne by M and B:
To record the deficiency borne by M and B due to the loss incurred by the firm:
Profit and Loss Appropriation Account:
The Profit and Loss Appropriation Account is prepared to show the allocation of profits or losses among the partners according to their profit-sharing ratio. In this case, since the firm incurred a loss, the deficiency will be borne by the partners in their profit-sharing ratio.
Explanation:
- The total loss incurred by the firm is Rs 2200000.
- The profit-sharing ratio of M, B, and K is 6:4:1.
- K is guaranteed a minimum profit of Rs 200000.
- To calculate the deficiency borne by M and B, we need to first determine the total profit available for sharing after deducting K's guaranteed profit.
- Total profit available for sharing = Total loss - K's guaranteed profit
- Total profit available for sharing = Rs 2200000 - Rs 200000 = Rs 2000000
- M's share of profit = 6/11 * Rs 2000000 = Rs 1090909.09
- B's share of profit = 4/11 * Rs 2000000 = Rs 727272.73
- Since the total profit available for sharing is less than M and B's share of profit, they will bear the deficiency in their profit-sharing ratio.
- The deficiency borne by M = M's share of profit - Actual profit available for sharing = Rs 1090909.09 - Rs 200000 = Rs 890909.09
- The deficiency borne by B = B's share of profit - Actual profit available for sharing = Rs 727272.73 - Rs 200000 = Rs 527272.73
The journal entry for the deficiency borne by M and B will be recorded by debiting their respective capital accounts and crediting the Profit and Loss Account. The Profit and Loss Appropriation Account will show the allocation of the loss among the partners based on their profit-sharing ratio.
To record the deficiency borne by M and B due to the loss incurred by the firm:
Profit and Loss Appropriation Account:
The Profit and Loss Appropriation Account is prepared to show the allocation of profits or losses among the partners according to their profit-sharing ratio. In this case, since the firm incurred a loss, the deficiency will be borne by the partners in their profit-sharing ratio.
Explanation:
- The total loss incurred by the firm is Rs 2200000.
- The profit-sharing ratio of M, B, and K is 6:4:1.
- K is guaranteed a minimum profit of Rs 200000.
- To calculate the deficiency borne by M and B, we need to first determine the total profit available for sharing after deducting K's guaranteed profit.
- Total profit available for sharing = Total loss - K's guaranteed profit
- Total profit available for sharing = Rs 2200000 - Rs 200000 = Rs 2000000
- M's share of profit = 6/11 * Rs 2000000 = Rs 1090909.09
- B's share of profit = 4/11 * Rs 2000000 = Rs 727272.73
- Since the total profit available for sharing is less than M and B's share of profit, they will bear the deficiency in their profit-sharing ratio.
- The deficiency borne by M = M's share of profit - Actual profit available for sharing = Rs 1090909.09 - Rs 200000 = Rs 890909.09
- The deficiency borne by B = B's share of profit - Actual profit available for sharing = Rs 727272.73 - Rs 200000 = Rs 527272.73
The journal entry for the deficiency borne by M and B will be recorded by debiting their respective capital accounts and crediting the Profit and Loss Account. The Profit and Loss Appropriation Account will show the allocation of the loss among the partners based on their profit-sharing ratio.
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M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account?
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M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account?.
M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account?.
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M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account?, a detailed solution for M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account? has been provided alongside types of M, B and K are partners sharing profit in the ratio of 6 4 1 . K is guaranteed a minimum profit of Rs200000. the firm incurred a loss of Rs 2200000 for the year ended 31st March 2018 . pass the necessary journal entry regarding deficiency borne by M and B and prepare profit and loss appropriation account? theory, EduRev gives you an
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