Answer:
Calculation of New Profit Sharing Ratio Suppose the Profit of the Whole Firm = 1 Share given to \[C=\frac{1}{4}\] Thus, the Remaining Profit \[=1-\frac{1}{4}=\frac{3}{4}\] Now A and B will share this \[\frac{3}{4}\] remaining Profit in their old profit sharing ratio. Thus A?s Share \[=\frac{2}{3}\times \frac{3}{4}=\frac{2}{4}\] B?s Share \[=\frac{1}{3}\times \frac{3}{4}=\frac{1}{4}\] \[C's\,Share=\frac{1}{4}\] Thus, the new profit sharing ratios of A, B and C will be \[\frac{2}{4}:\frac{1}{4}:\frac{1}{4}=2:1:1\] Calculation of Share of Excess Profit to be Borne by A and B
Dr Profit and Loss Appropriation Account Cr Particulars A (Rs.) B (Rs.) C (Rs.) Total Profit 7,20,000 (-) Interest on Capitals (10% on Rs. 12,00,000) (1,20,000) 6,00,000 Divide in New Ratio 2 : 1 : 1 3,00,000 1,50,000 1,50,000 Minimum Guaranteed Amount Payable to C is Rs. 2,00,000 Therefore, 2,00,000 ? 1,50,000 = 50,000 Excess Payable to C will be Borne by A and be in 4 : 1 (-) 40,000 (-) 10,000 (+) 50,000 2,60,000 1,40,000 2,00,000
Particulars Amt (Rs.) Particulars Amt (Rs.) To Interest on Capital By Profit 7,20,000 A 50,000 B 40,0000 C 30,000 1,20,000 To Profit Transferred to A?s Capital A/c 2,60,000 B?s Capital A/c 1,40,000 C?s Capital A/c 2,00,000 6,00,000 7,20,000 7,20,000
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