Archive about 'Partnership Accounts'

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

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% [...]

Accounting Test Question No. P1 On Partnership

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:

[...]

Profit & Loss Appropriation Account in Partnership Accounts

Like a limited company, the profit & loss appropriation of a partnership is prepared immediately after the Profit & Loss Account.
[ Refer to Question To Accounting Test No P 1on preparation of partnership's profit & loss appropriation account]

Format Of Profit & Loss Appropriation of a partnership:

$

$

Salaries:
A: x
B: x

[...]

Circumstances Partnerships Are Formed

A partnership comes into existence in the following circumstances:

In What Circumstances Partnership Are Formed:

Two or more persons decide to create a business ie none of them possesses an existing business
Where one person who is already [...]

Answer To Questions On Financial Mathematics Of Partnerships

Append below the answers to the questions on Financial Mathematics on Partnerships:

ANSWERS TO QUESTION ON FINANCIAL MATHEMATICS
ON PARTNERSHIPS

1.

(a) Mr. A=$12,389 Mr. B=$6,111
(b) $11,100
© $63,624.00

2.

Mr. A=$14,400 Mr. B=$10,800 Mr. C=$4,800

3.

Profit: Mr. A=$12,000 Mr. B=$13,000
% : Mr. A=25% Mr. B=25%

4.

Mr. A =$600 Mr. B =$450

5.

Mr. A =$3,080 Mr. B [...]

Questions On Financial Mathematics On Partnership Accounting

Some questions on Partnerships for readers to practise to enhance their knowledge on computational questions of Partnerships Accounts:

FINANCIAL MATHEMATICS
QUESTIONS ON PARTNERSHIPS

1

Two men, Mr A and Mr B are in partnership, Mr A having provided $80,000 capital and Mr B $100,000. They agree that in any one year Mr A shall first be paid $7,500 as [...]

Understand The Garner Versus Murray Rule

When a partner’s capital account shows a debit balance on dissolution of the firm, he has to pay the debit balance to the firm to settle his account. If the partner becomes insolvent, he is unable to pay back the amount owed by him to the firm in full. The amount not paid is a [...]

Valuation/Computation Of Goodwill

Refer to the Category on Goodwill Valuation, you will see many methods of computing goodwill.
This article deals with one of the normal way of computing or valuing goodwill particularly in a partnership whether at the time of a new partner, or the retiring or death of an old partner.

Goodwill Valuation:

Average annual net profit x [...]

Accounting For Partnership-“Partner’s Current Account”

The capital account of the partners are normally fixed throughout the partnership.
However, each partner’s profit, loss, drawing, interest on drawing, interest on capital and salary are taken up into a separate Current Account.
Let’s look at a typical Partner’s Current Account:
CURRENT ACCOUNT

DEBIT SIDE

CREDIT SIDE

Drawings- cash, goods ,etc

Interest on Capital

Interest on [...]

Accounting For Partnership-“ Formation Of Partnership And Capital Account

When a newly partnership is formed, a capital account is opened for individual partner. It’s usual for the amounts of the partners capital to be fixed by the partnership deed and the amount fixed throughout the partnership ( unless there is a call up for additional investment).
The contribution/ investment by the partners can be in [...]