A, B, and C are partners sharing profits in the ratio of 5:4:1. C is given a guarantee that his share in a year will not be less than ₹ 5,000. Profit for the year ended 31st March 2021 is ₹ 40000. Deficiency in the guaranteed profit of C is to be borne by B. How much deficiency is borne by B?

Deficiency of C ₹1,000 met by B

The correct answer is option 2- Deficiency of C ₹1,000 met by B.

Profit for the year = ₹40,000
Profit sharing ratio = 5 : 4 : 1

C's share in profit = 40,000 x 1/10
                             = ₹4,000

C is given a guarantee of minimum profit of ₹5,000

Deficiency in C’s share = 5,000 − 4,000
                                    = ₹1,000

This deficiency of C is borne by B.