Q. Mahesh and Dinesh share profits and losses in the ratio 2:1. From January 01, 2014 they admit Rakesh into their firm whoc is to be given a share of 1/10 of the profit with a guranteed minimum of Rs. 25,000. Mahesh and Dinesh continue to share profits as before but agree to bear as deficiency on account of gurantee to Rakesh in the ratio 3:2 respectively. The profits of the firm for the year ending December 31, 2015 amounted to Rs. 1,20,000. Prepare Profit and Loss Appropriation Account.
|Profit and Loss Appropriation Account |
for the year ended …
|Profit transferred to:||Profit and Loss A/c||1,20,000|
|Mahesh’s Capital A/c (72,000-7,800)||64,200|
|Dinesh’s Capital A/c (36,000-5,200)||30,800|
|Rakesh’s Capital A/c (12,000+13,000)||25,000||1,20,000|