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Answer Paper to Accounting Test Question No.P 1 on Partnership’s Profit & Loss Appropriation
Jim & John
Profit & Loss Appropriation for the year ended 31 December Year 2007
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$
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$
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Net Profit b/d
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90,000
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Interest on capital:
Jim: 6% x $40,000=$2,400
John:6% x $30,000=$1,800
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4,200
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Interest on drawings:
Jim: 6% x $30,000=$1,800
John:6% x $20,000=$1,200
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3,000
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Jim’s Salary
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40,000
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Profit Sharing:
Jim: 1/2 x $48,800=$24,400
John:1/2 x $48,800=$24,400
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48,800
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93,000
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93,000
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Current Account
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Jim
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John
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Jim
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John
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$
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$
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$
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$
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Dec 31 2007
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Jan1 2007
Balance b/f
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60,000
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50,000
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Drawings
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30,000
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20,000
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Dec 31 Interest on Capital:
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2,400
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1,800
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Interest on drawing
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1,800
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1,200
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Salary
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40,000
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Balance c/d
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95,000
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55,000
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Profit
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24,400
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24,400
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126,800
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76,200
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126,800
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76,200
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Capital Account
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Jim
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John
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Jim
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John
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$
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$
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$
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$
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Dec 31 2007
Balance c/d
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40,000
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30,000
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Jan1 2007
Balance b/f
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40,000
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30,000
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40,000
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30,000
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40,000
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30,000
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Balance Sheet As At 31 December 2007
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$
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Capital:
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Jim
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40,000
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John
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30,000
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70,000
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Current:
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Jim
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95,000
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John
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55,000
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150,000
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