(a) Profit shall be divided in the ratio of 2 : 2 : 1. |
(b) Amit's share of profit guaranteed to be not less than Rs. 1,25,000 in any year. |
(c) Ramit gives guarantee to the effect that the gross fee earned by him for the firm shall not be less than average fees of preceding four years when he was carrying on the profession alone. |
(d) Their capital accounts shall be fixed. |
Answer:
Profit and Loss Appropriation Account Dr for the year ended... Cr
Working Notes (i) Calculation of Shortage of Guarantee Fees by Ramit Average fees of last four years = \[\frac{40,000+60,000+30,000+35,000}{4}=\frac{1,65,000}{4}=Rs.\,41,250\] Shortage of fees = 41,250 - 40,000 = Rs. 1,250 (ii) Deficiency in Amit's guaranteed amount Rs. 24,000 shall be borne by Sumit and Ramit in their profit sharing ratio, i.e. 2:1. Particulars Amt (Rs.) Particulars Amt (Rs.) To Profit Transferred to By Net Profit as per Profit and Loss A/c 2,51,250 Amit's Current A/c 1,01,000 By Ramit?s Current A/c 1,250 \[\left( 2,52,500\times 2/5 \right)\] (Shortage of Guarantee fees) (+) Deficiency from Sumit 16,000 Deficiency from Ramit 8,000 1,25,000 Sumit's Current A/c 1,01,000 \[\left( 2,52,500\times 2/5 \right)\] (-) Guarantee to Amit (16,000) 85,000 Ramit's Current A/c 50,500 \[\left( 2,52,500\times 1/5 \right)\] (-) Guarantee to Amit (8,000) 42,500 2,52,500 2,52,500
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