In a partnership, how to deal with Guaranteed share of profit
| When the amount of a partner’s share of profit is guaranteed by the other partners and when his or her actual share of profit amounts to LESS than the amount guaranteed, we should:
Step 1: Debit: Appropriation account with the guaranteed amount Credit: Partner’s Current Account Step 2: Any remaining profits will then be shared among the other partners in the ratios in which they share profits and losses as among themselves. |
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