A and B share profits in the ratio of 3:2. C is entitled to one-fifth of the profit, with a guaranteed minimum of Rs. 30,000. If the firm's profit is Rs. 100,000, and A gives the guarantee, how much does A bear as deficiency?
Correct answer: B. Rs. 10,000
- A. Rs. 6,000
- B. Rs. 10,000
- C. Rs. 12,000
- D. Rs. 20,000
Explanation
C's normal share is one-fifth of Rs. 100,000, or Rs. 20,000. The guarantee creates a deficiency of Rs. 10,000, which A must bear.
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About Partnership Accounts
Partnership accounts cover the partnership agreement, capital and current accounts, profit and loss appropriation, salaries, interest on capital, interest on drawings and profit-sharing ratios. They also address changes in partnership, including admission, retirement, goodwill, revaluation, dissolution and the settlement of partners’ balances.
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