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ANKUR AND BOBBY WERE INTO THE BUSINESS OF PROVIDING SOFTWARE SOLUTIONS IN INDIA. THEY WERE SHARING PROFITS AND LOSSES IN THE RATIO OF 3:2.THEY ADMITTED ROHIT FOR A 1/5 SHARE IN THE FIRM.ROHIT AN ALUMNI OF IIT,CHENNAI WOULD HELP THEM TO EXPAND THEIR BUSINESS TO VARIOUS SOUTH AFRICAN COUNTIES WHERE HE HAD BEEN WOKING EARLIE.OHIT IS GUAANTEED A MINIMUM POFIT OF 200000FOR THE YEAR.ANY DEFICIENCY  IS TO BE BORN BY ANKU AND BOBBY IN RATIO OF 4:1.LOSS FO THE YEA WAS 1000000.
 
I DONT KNOW HOW TO DO THIS SUM. PLZ EXPLAIN IT POPERLY THAT HOW SHOULD I GIVE HIM PROFIT AS THERE IS LOSS.

Asked by preetbaidwan139 30th June 2017, 12:40 PM
Answered by Expert
Answer:
The above question is basically a simple case of Guarantee of profits. The admitted partner has been promised a minimum of Rs 2,00,000 of profits when the firm has incurred a loss of Rs 10,00,000. The first and foremost thing required to be calculate is the new profit sharing ratio so as to no actual share of Rohit in the losses of firm. Here, 1/5 of firms losses means Rs 2,00,000 is share of loss to be borne by Rohit. However, as he has been guaranteed a minimum of Rs 2,00,000 profits, so, his loss plus extra profit to be given will be borne by Ankur and Bobby along with their own share of losses in 4 : 1, i.e. extra Rs 3,20,000 for Ankur and Rs 80,000 for Bobby.
 
Total Profits and Losses to be distributed between Ankur, Bobby and Rohit comes to:
Losses to Ankur: Rs 4,80,000 + 3,20,000 = Rs 8,00,000
Losses to Bobby: Rs 3,20,000 + 80,000 = Rs 4,00,000
Profits to Rohit: Rs 2,00,000
 
The computation of 4,80,000 and 3,20,000 is simple division of Rs 10,00,000 of losses in new ration of 12:8:5.
Answered by Expert 30th June 2017, 4:16 PM
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