87 :- The Partners of a firm, Alia, Bhanu, and Chand distributed the profits for the year ended 31st March, 2017. Rs 8,000 in the ratio of 3:3:2 without providing for the following adjustments:
a)Alia and Chand were entitled to a salary of Rs 1,500 each per month.
b) Bhanu was entitled for a commission of Rs 4,000
c) Bhanu and Chand had guaranteed a minimum profit of Rs 35,000 p.a. to Alia, any deficiency to be borne equally by Bhanu and Chand.
Pass the necessary Journal entry for the above adjustments in the books of the firm. Show workings clearly.
Solution:-
WORKING NOTES :-
Salary to Alia = 1,500 x 12 = Rs 18,000
Salary to Chand = 1,500 x 12 = Rs 18,000
Commission to Bhanu = Rs 4,000
Distributable profit = 80,000 – 40,000 = Rs 40,000
Alia’s share in profit = 40,000 x 3/8 = Rs 15,000
Deficiency to Alia = 35,000 – 15000 = Rs 20,000
Deficiency to be borne by Bhanu and Chand in 1:1
Bhanu = 20,000 x 1/2 = Rs 10,000
Chand = 20,000 x 1/2 = Rs 10,000