Amit, Babu and Charu set up a partnership firm on April 1, 2019. They contributed Rs. 50,000, Rs. 40,000 and Rs. 30,000, respectively as their capitals and agreed to share profits and losses in the ratio of 3: 2 :1. Charu is guaranteed profit of ₹15,000 per year. If any deficiency is there, it will be borne by both partners in 5:4. Firm earned a profit of ₹1,20,000. How much deficiency is borne by each partner?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- No deficiency is borne by partners.
The minimum guaranteed amount shall be paid to such partner when his share of profit as per the profit-sharing ratio is less than the guaranteed amount.
Profit of the firm is ₹1,20,000. It is distributed between partners in ratio 3:2:1.
Amit share = 1,20,000 x 3/6
= ₹60,000
Babu share = 1,20,000 x 2/6
= ₹40,000
Charu share = 1,20,000 x 1/6
= ₹20,000
As Charu is getting more than guaranteed profit, so there will be no deficiency.