Guarantee of Profit to a Partner Video Lecture | Accountancy Class 12 - Commerce

guarantee of minimum profits a partner
is sometimes guaranteed a minimum profit
usually what happens is suppose a
manager who is been working for the
partnership he is now brought into the
partnership as a partner now when this
manager was managing the partnership
form managing all the affairs of the
partnership form he was given certain
salary he was given certain commission
when he becomes a partner he may want a
guarantee of the amount that he was
receiving as a manager so he is actually
a partner for let us say 1/5 share in
the partnership but he says that I used
to get 80,000 before or whatever is the
amount of Commission it may be based on
the profits it may be based on the
turnover I used to get and I want to
continue to get that at least that same
amount there should not be a shortfall
in that case if the profits are not
adequate if he has come in for 1/5 share
and his 1/5 share of profits is lower is
lower than that he would have earned had
he been a manager yeah so since it is
lower that shortfall amount is met by
the remaining partners in their profit
sharing ratio if nothing is mentioned
sometimes of particular partner
guarantees say mr. excess no any
shortfall in mr. zetz profit guaranteed
amount we give him a guaranteed amount
if there is any shortfall I will bear
that loss sometimes it is between the
partners this shortfall is borne by the
other partners in some agreed ratio it
all depends on the agreement if nothing
is mentioned we presume that if there is
such a shortfall this is met by the
other partners in their profit sharing
ratio so he may be guaranteed a minimum
profit and the shortfall would be as per
the agreement if nothing is mentioned it
would be in the profit sharing ratio of
the remaining partners say for example a
B and C a partner's sharing profits
equally and B is given a guarantee of
minimum profit of 12,000 total profit
for the year is 13,000 how much will
each partner get ABC are partners they
share profits equally so total of 30,000
divided by three partners a B and C they
will get 10,000 10,000 and 10,000 a B
and C but we should get a minimum
guaranteed he's been guaranteed a
minimum amount of 12,000
so another 2,000 mm this is shortfall so
12,000 has to be given to be so this
2,000 this shortfall will be borne by
the remaining partners a and C what is
the ratio between a and C again they are
equal so 2,000 is born equally by a and
by B therefore a will be 1000 C will
there not be M sorry C will bear 1,000
so that a will get 9,000 B was
guaranteed 12,000 therefore B will get
12,000 and C will also get 9,000