Xen, Sam, and Tim are partners in a firm. For the year ended 31st March 2022, the profit of the firm ₹ 12,00,000 was distributed equally among them, without giving effect to the following terms of the partnership deed:

i) Sam’s guarantee to the firm that the firm would earn a profit of at least ₹ 1,35,000. Any shortfall in these profits would be met by him.

ii) Profits to be shared in the ratio of 2:2:1.

You are required to pass the necessary Journal entries to rectify the error in accounting.

Anurag Pathak Changed status to publish April 11, 2024
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