Xen, Sam, and Tim are partners in a firm. For the year ended 31st March 2024, the profit of the firm ₹ 12,00,000 was distributed equally among them, without giving effect to the following terms of the partnership deed:
- 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.
- 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.
Solution:
