Accounting Test Question No. P1 On Partnership

October 14th, 2008 Comments off
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Earlier article regarding partnership’s format of a profit & loss appropriation account. The below question illustrates a simple profit & loss appropriation:-

Jim and John are partners sharing profits or loss in the ratio 1/2 and 1/2 respectively.

On 1 January 2007, their Capital and Current Accounts are as follows:

$

Capital Accounts

Jim

40,000

John

30,000

Current Accounts

Jim

60,000

John

50,000

It was agreed that interest on capital and drawing is to be calculated at 6% per annum and Jim is to receive salary of $40,000 per annum. During the year ended 31 December 2007, the net profit before appropriation were $90,000. Drawings for the year were:

Jim -$30,000 (withdrew on 1 June 2007)

John-$20,000(withdrew on 1 Sept 2007)

Required:

Prepare Profit & Loss Appropriation Account and Partners’ Current and Capital Accounts for the year ended 31 December 2007

[ REFER ANSWER ]

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Financial Accounting

 
 

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