Question

Abhay, Boris and Chetan were partners in a firm sharing profits in the ratio of 5:3:2. Boris was guaranteed a profit of Rs. 95,000. Any deficiency on account of this was to be borne by Abhay and Chetan equally. The firm earned a profit of Rs. 2,00,000 for the year ended 31 March, 2023. The amount given by Abhay to Boris as guaranteed amount will be:

• A. Rs. 17,500
• B. Rs. 35,000
• C. Rs. 25,000
• D. Rs. 10,000

Hint:

When a partner's profit is guaranteed, first calculate the actual profit share. If it is less than the guaranteed amount, the deficiency is borne by the partners specified in the agreement.

Answer 1

The Correct Option is C

Step 1: Calculate profit distribution in the existing ratio.
Profit sharing ratio of Abhay : Boris : Chetan = \(5:3:2\)
Total profit = Rs. 2,00,000
Abhay's share \(= \frac{5}{10} \times 2,00,000 = 1,00,000\)
Boris's share \(= \frac{3}{10} \times 2,00,000 = 60,000\)
Chetan's share \(= \frac{2}{10} \times 2,00,000 = 40,000\)

Step 2: Calculate deficiency in Boris's guaranteed profit.
Guaranteed profit to Boris = Rs. 95,000
Actual share received by Boris = Rs. 60,000
\[ \text{Deficiency} = 95,000 - 60,000 = 35,000 \]
Step 3: Distribution of deficiency.
The deficiency is to be borne equally by Abhay and Chetan. \[ \text{Each partner's share of deficiency} = \frac{35,000}{2} = 17,500 \]
Step 4: Amount given by Abhay to Boris.
Abhay bears Rs. 17,500 and Chetan bears Rs. 17,500. Thus, the guaranteed amount given by Abhay to Boris is Rs. 17,500.
Final Answer: Rs. 17,500.