Question
Write a note on guarantee of profit to a partner.
✓
Answer
Guarantee to a partner refers to the guarantee of certain minimum amount of profit by all the other partners or any one partner of a firm. The difference amount is paid to the guaranteed partner, if and only if his/ her share in the profit is lesser than the assured amount (or the minimum amount guaranteed).
There are usually two cases:
Case 1: If a partner is guaranteed by all the other partners for minimum profit,
Step I: Calculate the profit earned by the firm.
Step II: Calculate the share of profit of the guaranteed partner.
Step III: Deficiency, if any, will be borne by all the other partners either in their profit ratio or in any other agreed ratio.
Case 2: If a partner is guaranteed by any other partner for minimum profit,
Step I: Calculate the profit earned by the firm.
Step II: Calculate the share of profit of all the partners.
Step III: Calculate the deficiency of the guaranteed partner.
Step IV: Deduct the amount of deficiency from the profit of the guarantor partner and add the deficiency amount to the guaranteed partner's profit.
There are usually two cases:
Case 1: If a partner is guaranteed by all the other partners for minimum profit,
Step I: Calculate the profit earned by the firm.
Step II: Calculate the share of profit of the guaranteed partner.
Step III: Deficiency, if any, will be borne by all the other partners either in their profit ratio or in any other agreed ratio.
Case 2: If a partner is guaranteed by any other partner for minimum profit,
Step I: Calculate the profit earned by the firm.
Step II: Calculate the share of profit of all the partners.
Step III: Calculate the deficiency of the guaranteed partner.
Step IV: Deduct the amount of deficiency from the profit of the guarantor partner and add the deficiency amount to the guaranteed partner's profit.
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A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1. Calculate new profit-sharing ratio sacrificing ratio and gaining ratio in each of the following cases:
Case 1: C acquires $\frac{1}{5}\text{th}$ share from A.
Case 2: C acquires $\frac{1}{5}\text{th}$ share equally form A and B.
Case 3: A, B and C will share future profits and losses equally.
Case 4: C acquires $\frac{1}{10}\text{th} $ share of A and $\frac{1}{2}$ share of B.
→Case 1: C acquires $\frac{1}{5}\text{th}$ share from A.
Case 2: C acquires $\frac{1}{5}\text{th}$ share equally form A and B.
Case 3: A, B and C will share future profits and losses equally.
Case 4: C acquires $\frac{1}{10}\text{th} $ share of A and $\frac{1}{2}$ share of B.
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- Next ₹ 80,000 in the proportion of their capitals.
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Ashish and Aakash are partners sharing profit in the ratio of 3 : 2. Their Capital Accounts showed a credit balance of ₹ 5,00,000 and ₹ 6,00,000 respectively as on 31st March, 2018 after debit of drawings during the year of ₹ 1,50,000 and ₹ 1,00,000 respectively. Net profit for the year ended 31st March was ₹ 5,00,000. Interest on capital is to be allowed @ 10% p.a. Pass the journal entry for interest on capital and prepare Profit and Loss Appropriation Account.
Dev, Swati and Sanskar were partners in a firm sharing profits in the ratio of $2 : 2 : 1$. On $31-3-2014$ their Balance Sheet was as follows:
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On $1-4-2014$, Dev withdrew ₹ $15,000$ to pay for his medical bills. Prepare Dev’s account to be presented to his executors.
→On $30^{th}$ June, $2014$ Dev died. According to partnership agreement Dev was entitled to interest on capital at $12\%$ per annum. His share of profit till the date of his death was to be calculated on the basis of the average profits of last four years. The profits of the last four years were:
| Years | Profit |
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|
| 2010-2011 | 2,04,000 |
| 2011-2012 | 1,80,000 |
| 2012-2013 | 90,000 |
| 2013-2014 (Loss) | 57,000 |
L, M and N are partners sharing profits in the ratio of 3 : 2 : 1. They admit O into partnership. O brings in cash ₹ 4,50,000 as capital and ₹ 1,50,000 as goodwill for $\frac{1}{5}\text{th}$ share of profits. Pass journal entries and find out new profit sharing ratios when:Goodwill is withdrawn by old partners.
→C and D are partners in a firm; C has contributed ₹ 1,00,000 and D ₹ 60,000 as capital. Interest in payable @ 6% p.a. and D is entitled to a salary of ₹ 3,000 per month. In 2017–18, the profit was ₹ 80,000 before interest and salary. Divide the amount between C and D.
Nitin, Tarun and Amar are partners sharing profits equally and decide to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2018 The extract of their Balance Sheet as at 31st March, 2018 is as follows:
Pass the journal entries in each of the following situations:
Pass the journal entries in each of the following situations:
- When its Market Value is not given:
- When its Market Value is given as ₹ 4,00,000
- When its Market Value is given as ₹ 4,24,000
- When its Market Value is given as ₹ 3,70,000
- When its Market Value is given as ₹ 3,10,000
A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. It was provided that B's share of profit will not be less than ₹ 1,50,000 per annum. The losses for the year ended 31st March, 2015 were ₹ 85,000, before allowing interest on Loan of₹ 1,00,000. taken from A on 1st June 2014.
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The authorised capital of Suhas Ltd is Rs. 50,00,000 divided into 25,000 shares of Rs. 200 each. Out of these, the company issued 12,000 shares of Rs. 200 each at a premium of 10%. The amount per share was payable as follows
Rs. 60 on application
Rs. 60 on allotment (including premium)
Rs. 30 on first call and balance on final call.
Public applied for 11,000 shares. All the money was duly received.
Prepare an extract of balance sheet of Suhas Ltd as per Revised Schedule III, Part I of the Companies Act, 2013 disclosing the above information. Also prepare 'Notes to accounts' for the same.
Rs. 60 on application
Rs. 60 on allotment (including premium)
Rs. 30 on first call and balance on final call.
Public applied for 11,000 shares. All the money was duly received.
Prepare an extract of balance sheet of Suhas Ltd as per Revised Schedule III, Part I of the Companies Act, 2013 disclosing the above information. Also prepare 'Notes to accounts' for the same.
Rishi is a partner in a firm. He withdrew the following amounts during the year ended March 31, 2017.
Interest on drawings is charged @ 9% p.a. Calculate interest on drawings.
|
May 01, 2017
|
₹ 12,000
|
|
July 31, 2017
|
₹ 6,000
|
|
September 30, 2017
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₹ 9,000
|
|
November 30, 2017
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₹ 12,000
|
|
January 01, 2018
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₹ 8,000
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|
March 31, 2018
|
₹ 7,000
|