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Answer To Accounting Test Question No. P1 On Partnership’s Profit & Loss Appropriation

October 14th, 2008 / No comments yet

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

	$		$
		Net Profit b/d	90,000
Interest on capital: Jim: 6% x $40,000=$2,400 John:6% x $30,000=$1,800	4,200	Interest on drawings: Jim: 6% x $30,000=$1,800 John:6% x $20,000=$1,200	3,000
Jim’s Salary	40,000
Profit Sharing: Jim: 1/2 x $48,800=$24,400 John:1/2 x $48,800=$24,400	48,800
	93,000		93,000

Current Account

	Jim	John		Jim	John
	$	$		$	$
Dec 31 2007			Jan1 2007 Balance b/f	60,000	50,000
Drawings	30,000	20,000	Dec 31 Interest on Capital:	2,400	1,800
Interest on drawing	1,800	1,200	Salary	40,000
Balance c/d	95,000	55,000	Profit	24,400	24,400
	126,800	76,200		126,800	76,200

Capital Account

	Jim	John		Jim	John
	$	$		$	$
Dec 31 2007 Balance c/d	40,000	30,000	Jan1 2007 Balance b/f	40,000	30,000

	40,000	30,000		40,000	30,000

Balance Sheet As At 31 December 2007

		$
Capital:
Jim	40,000
John	30,000	70,000

Current:
Jim	95,000
John	55,000	150,000

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