Pls explain guarantee of profit to partner in case of loss.
Dear Student,
In such a case, where the firm has incurred losses, the guaranteed partner gives the guaranteed amount of profit from his/her capital balance.
For example, A partnership firm of A, B and C sharing profits equally have incurred a loss of Rs 9,000 during the year. A guaranteed B a minimum amount of profit of Rs 2,000.
Share of Loss by each partner will be: 9,000 × 1/3 = Rs 3,000
Now, we know A has guaranteed Rs 2,000 as profit to B
Therefore, A's Loss = 3,000 (Share in Firm's Loss) + 3,000 (B's Loss will be borne by A) + 2,000 (Guaranteed Profit) = 8,000 Loss
B's Profit = 2,000 (Received from A)
C's Loss = 3,000 (Share in Firm's Loss)
Similarly, treatment of other cases can be done on similar lines.
Hope this clarifies your doubt.
Keep posting and keep studying!!
In such a case, where the firm has incurred losses, the guaranteed partner gives the guaranteed amount of profit from his/her capital balance.
For example, A partnership firm of A, B and C sharing profits equally have incurred a loss of Rs 9,000 during the year. A guaranteed B a minimum amount of profit of Rs 2,000.
Share of Loss by each partner will be: 9,000 × 1/3 = Rs 3,000
Now, we know A has guaranteed Rs 2,000 as profit to B
Therefore, A's Loss = 3,000 (Share in Firm's Loss) + 3,000 (B's Loss will be borne by A) + 2,000 (Guaranteed Profit) = 8,000 Loss
B's Profit = 2,000 (Received from A)
C's Loss = 3,000 (Share in Firm's Loss)
Similarly, treatment of other cases can be done on similar lines.
Hope this clarifies your doubt.
Keep posting and keep studying!!