- The document contains worked examples of profit and loss appropriation accounts and current accounts for partnerships with guaranteed partners. - It allocates profits between partners based on their capital ratios and guarantees minimum profit shares for some partners. - Any shortfall between the guaranteed amount and the partner's share based on capital ratio is made up from the other partners' shares.

1. Ms. K. KALAI SELVI
Assistant Professor of Commerce
PG & Research Department of Commerce
Bon Secours College for Women, Thanjavur

2. GUARANTEE

3. Sum No. 34
(Answer for Sum No.34)
Working Notes:
Suraj’s Share = 1 / 10
Ratio of Arun Kumar and Suresh = 2 : 1
(i) Calculationof Profit share :
Net Profit = 4,00,000
(Note : First Calculate the Guarnteed partner’s Share of Profit)
Suraj’s Capital = 4,00,000 x 1/10 = Rs,40,000
Gurantee Amount for Suraj = Rs.64,000
(Suraj’s profit share is less than guaranteed amount. Hence we took Rs. 64,000 as his profit share)

4. Remaining profit amount = Net Profit – Suraj’s Profit share
= Rs.4,00,000 – Rs.64,000
= Rs. 3,36,000
Arun Kumar’s Profit share = 3,36,000 x 2/3 = Rs. 2,24,000
Suresh’s Capital Profit share = 3,36,000 x 1/3 = Rs.1,12,000
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008 To Profit share :
Arun Kumar’s Capital A/c
Suresh’s Capital A/c
Suraj’s Capital A/c
2,24,000
1,12,000
64,000
31.12.2008 By P & L A/c
Net Profit b/d 4,00,000
4,00,000 4,00,000

5. Sum No. 35
(Answer for Sum No.35)
Working Notes:
Calculationof Share of Profit :
Profit for the year ending 31.12.2008 = 1,00,000
(Note : First Calculate the Guarnteed partner’s Share of Profit)
Share of Profit for Z :
Z’s share of profit = 1,00,000 x 2 / 10 = 20,000
Guaranteed amount for Z is = Rs.30,000
Hence shortage amount of Rs.10,000 will be borne by Y

6. Share of Profit for X
X’s share of profit = 1,00,000 x 4 / 10 = 40,000
Share of Profit for Y
= 1,00,000 x 4 / 10 = 40,000
= Y’s Share profit – Z’s shortage amount ( Guaranteed )
= 40,000 – 10,000
= 30,000
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008 To Profit share :
X’s Capital A/c
Y’s Capital A/c 40,000
Less: Z’s shortage amt. 10,000
----------
Z’s Capital A/c 20,000
Add: share received
from Y 10,000
----------
40,000
30,000
30,000
31.12.2008 By P & L A/c
Net Profit b/d 1,00,000
1,00,000 1,00,000

7. Sum No. 36
(Answer for Sum No.36)
A : B
3 : 2
Admit C = 1/5th share with a guarantee of Rs.1,20,000 minimum.
Workings
Calculationof Profit share :
Profit for the year 2008 = Rs.4,80,000
(Note : First Calculate the Guarnteed partner’s Share of Profit)
(i) C’s share of profit
= 4,80,000 x 1/5 = 96,000
Guaranteed amount for C is = Rs.1,20,000

8. Remaining profit amount = Net Profit – C’s Profit share
= Rs.4,80,000 – Rs.1,20,000
= Rs. 3,60,000
( Note : A and B divided their profit in their ratio of 3 : 2 )
(ii) A’s share of profit
= 3,60,000 x 3/5 = 2,16,000
(iii) B’s share of profit
= 3,60,000 x 2/5 = 1,44,000
Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008 To Profit share :
A’s Capital A/c
B’s Capital A/c
C’s Capital A/c
2,16,000
1,44,000
1,20,000
31.12.2008 By P & L A/c
Net Profit b/d 4,80,000
4,80,000 4,80,000

9. Sum No. 37
(Answer for Sum No.37)
Given
M, N and O
2,00,000 : 1,00,000 : 40,000
Interest on Capital 6%
1/2 : 1/3 : 1/6
Guaranteed amount for O is = Rs.10,000
Net Profit for the year 48,000

10. Workings:
(i) Calculationof Intereston Capital:
M = 2,00,000 x 6 / 100 = 12,000
N = 1,00,000 x 6 / 100 = 6,000
O = 40,000 x 6 / 100 = 2,400
(ii) Calculation of Profit sharing Ratio :
= 1/2 : 1/3 : 1/6
(Denominators are different. Hence take LCM)
= 3 : 2 : 1
6
Hence Ratio = 3 : 2 : 1

11. Profit & Loss Appropriation A/c
Date Particulars
Amount
Rs.
Date Particulars
Amount
Rs.
31.12.2008 To Interest on Capital :
M’s Capital A/c
N’s Capital A/c
O’s Capital A/c
,, Profit share :
M’s Capital A/c 10,560
N’s Capital A/c 7,040
O’s Capital A/c 10,000
----------
12,000
6,000
2,400
27,600
31.12.2008 By P & L A/c
Net Profit b/d 48,000
48,000 48,000
(iii) Calculationof Profit share :
(Note : First Calculate the Guarnteed partner’s Share of Profit)
O’s share of profit
= 27,600 x 1/6 = 4,600
Guaranteed amount for O is = Rs.10,000
(Hence balance profit amount will be shared by M and N in the ratio of 3 : 2)
= 27,600 – 10,000

12. = 17,600
M’s share of profit
= 17,600 x 3/5 = 10,560
N’s share of profit
= 17,600 x 2/5 = 7,040
Partner’s Current Account
Date Particulars
M’s
Capital
Rs.
N’s
Capital
Rs.
O’s
Capital
Rs.
Date Particulars
M’s
Capital
Rs.
N’s
Capital
Rs.
O’s
Capital
Rs.
31.12.2008
31.12.2008
To Drawings
,, Balance c/d
20,000
2,560
20,000
-
10,000
2,400
31.12.2008
31.12.2008
31.12.2008
By Interest on Capital
,, Profit share
,, Balance c/d
12,000
10,560
-
6,000
7,040
6,960
2,400
10,000
-
22,560 20,000 12,400 22,560 20,000 12,400
01.01.2009 To Balance b/d 6960 01.01.2009 By Balance b/d 2,560 - 2,400