Able and Carter are partners in a business providing security products. The following informationrelates to their partnership.Trial Balance (extract) as at June 30, 2021prior to appropriation of profitsDebitCreditCapital - Able40,000Capital - Carter60,000Current - Able7,000Current - Carter5,000Salary - AbleSalary-CarterAdvance to Able15,00015,00012,000Loan from Carter10,000Profit and Loss114,000Required:a) Prepare the journal entries to record additional income and expense items at 30 June, closeadditional income and expense items to the profit and loss account and to complete theappropriation of profit to the partnersb) Prepare the following general ledger accounts for the year (after posting all the above journalentries):Profit and Loss AccountProfit & Loss appropriationCurrent- AbleCurrent -CarterAdditional Information:Carter contributed additional capital of $10,000 into the partnership on March 31" 2021 - whichhas been credited to his capital account.Carter withdrew $4,000 cash on 1 July 2020 which has been debited to his Current account.Capital accounts are only used to record the permanent or fixed capital of each partner. Currentaccounts are used to record all other transactions affecting the equity of partners.Extract of partners' agreement.Interest on advance to partners is charged (in lieu of cash receipt) at 10% / annum. There hasbeen no change to balance of the 'Advance to Able' account during the year.Interest on loans from partners will be credited (in lieu of payment) at 7% / annum. There hasbeen no change to balance of the 'Loan from Carter' account during the year.Both Able and Carter are entitled to a annual salary of $20,000 each. Partner's salaries are to betreated as a business expense.Partners shall be entitled to interest on Capital at the rate of 5% based on balances at thebeginning of the year.Partners will be charged interest on drawings at 10% / annum.

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Able and Carter are partners in a business providing security products. The following information relates to their partnership. Trial Balance (extract) as at June 30, 2021 prior to appropriation of profits Debit Credit Capital - Able 40,000 Capital - Carter Current - Able 60,000 7,000 Current- Carter 5,000 Salary - Able Salary-Carter Advance to Able 15,000 15,000 12,000 Loan from Carter

Able and Carter are partners in a business providing security products. The following information relates to their partnership. Trial Balance (extract) as at June 30, 2021 prior to appropriation of profits Debit Credit Capital - Able 40,000 Capital - Carter Current - Able 60,000 7,000 Current- Carter 5,000 Salary - Able Salary-Carter Advance to Able 15,000 15,000 12,000 Loan from Carter

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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