# Pls explain guarantee of profit to partner in case of loss.

Dear Student,

In such a case, where the firm has incurred losses, the guaranteed partner gives the guaranteed amount of profit from his/her capital balance.

For example, A partnership firm of A, B and C sharing profits equally have incurred a loss of Rs 9,000 during the year. A guaranteed B a minimum amount of profit of Rs 2,000.

Share of Loss by each partner will be: 9,000 ​× 1/3 = Rs 3,000
Now, we know A has guaranteed Rs 2,000 as profit to B

Therefore, A's Loss = 3,000 (Share in Firm's Loss) + 3,000 (B's Loss will be borne by A) + 2,000 (Guaranteed Profit) = 8,000 Loss
B's Profit = 2,000 (Received from A)
C's Loss = 3,000 (Share in Firm's Loss)

Similarly, treatment of other cases can be done on similar lines.

Keep posting and keep studying!!

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FIRST  DISTRIBUTE THE LOSS TO  ALL PARTNERS IN PSR IN CREDIT SIDE OF P / L APP. A/C THEN GIVE THE GUARANTEED PARTNER HIS GUARANTEED SHARE PLUS SHARE OF LOSS IN DEBIT SIDE OF OF P / L APP. A/C   AND THIS ENTIRE AMOUNT WILL BE BORNE BY OTHER PARTNERS  IN AGREED RATIO OF P /L APP. A/C  DEBIT SIDE
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