Earlier article regarding partnership’s format of a profit & loss appropriation account. The below question illustrates a simple profit & loss appropriation:-
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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:
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 ] |