Partnership and LLP AccountsQ-4 | Partnership and LLP AccountsQuestion 5193 of 108
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X and Y were partners in a firm, sharing profit and losses in the ratio of 3:2. They admit Z for 1/6th share in profits and guaranteed that his share of profits will not be less than 50,00,000. Total profits of the firm for the year ended 31st March, 2022 were 1,80,00,000. Calculate share of profit for each partner when: (i) Guarantee is given by firm (ii) Guarantee is given by A and B equally. [June 2023, 5 Marks]

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Detailed Solution & Explanation

(i) When Guarantee is given by Firm Profit & loss Appropriation A/ c for the year ending on 31 March, 2022 Particulars Amount Particulars Amount To X's Capital A/ c (3/5 of 1,30,00,000) To Y's Capital A/ c (2/5 of 1,30,00,000) To Z's Capital A/ c (1/6 of 1,80,00,000 Or 50,00,000 whichever is less) 78,00,000 52,00,000 50,00,0000 By Net Profit 1,80,00,000 1,80,00,000 1,80,00,000 (ii) When Guarantee is given by A & B equally Profit & loss Appropriation A/ c for the year ending on 31 March, 2022 Particulars Amount Particulars Amount To X's Capital A/ c 90,00,000 (3/5 of 1,50,00,000) Less: Deficiency for Z 10,00,000 80,00,000 By Net Profit 1,80,00,000 To Y's Capital A/ c 60,00,000 (2/5 of 1,50,00,000) Less: Deficiency for Z 10,00,000 To Z's Capital A/ c 30,00,000 (l/6 of 1,80,00,000) Add: Deficiency 20,00,000 50,00,000 50,00,000 1,80,00,000 1,80,00,000

About This Chapter: Partnership & Companies

Paper

Paper 1: Accounting

Weightage

15-20%

Key Topics

Admission, Retirement, Death, Shares, Debentures

This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Guarantee

A contract to perform the promise, or discharge the liability, of a third person in case of his default (Section 126, ICA 1872). It involves three parties: Principal Debtor, Creditor, and Surety. A guarantee is secondary liability.

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More Questions from Partnership and LLP Accounts

Following are the details of Assets and Liabilities of Mr. Sarthak for the year ended 31 March, 2023 and 31 March, 2024: 31.03.2023 31.03.2024 Assets Buildings Furniture Inventory Sundry debtors Cash at bank Cash in hand Liabilities: Loans Sundry Creditors 2,00,000 75,000 1,05,000 68,000 72,500 2,400 1,50,000 58,400 ? ? 1,95,000 94,000 86,800 3,800 1,25,000 79,500 It was decided to depreciate Building by 5% p.a. and Furniture by 10% p.a. On 1st June, 2023 an additional capital of 40,000 was brought in the business. Proprietor has withdrawn @ ₹ 2,500 p.m. for meeting the family expenses. Prepare Statement of Affairs as on 31 March, 2023 and 31 March, 2024. Find the profit or loss earned by Mr. Sarthak for the year ended 31st March, 2024. [Jan. 2025, 5 Marks]

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