am, Tim, Tom, and Sam are in partnership sharing profits in the ratio 6:4:3:2. Their partnership agreement includes: i. Interest on capital is at 13% per annum. ii. Salary to Tom $ 5,000 and Sam $ 8,500 per annum. iii. Interest on drawings is at 5% per annum. iv. The interest rate on the loan by Tam is 6% per annum. Net profit for the year ended 31 December 2019 was $50,000. Assume interest on loan by Tom has been deducted from this amount. Capital balances as of 31 December 2020 were Tam $ 45,000, Tim $30,000, Tom $ 25,000, and Sam $ 15,000. For current accounts balances allocation for Tam$ 12,000, Tim $5,000, Tom$ (4,000) and Sam($2,000). Loan from Tam$ 10,000. Drawings by the partners during the year were: i. Tam $ 10,000 ii. Tim $ 9,000 iii. Tom $ 8,500 iv. Sam $ 7,000 Required: . 1) Prepare a net asset calculation. 2) Prepare balance sheet as of 31 December 2020. 3) Show all the interest rate calculations on the answer sheet.
am, Tim, Tom, and Sam are in partnership sharing profits in the ratio 6:4:3:2. Their partnership agreement includes: i. Interest on capital is at 13% per annum. ii. Salary to Tom $ 5,000 and Sam $ 8,500 per annum. iii. Interest on drawings is at 5% per annum. iv. The interest rate on the loan by Tam is 6% per annum. Net profit for the year ended 31 December 2019 was $50,000. Assume interest on loan by Tom has been deducted from this amount. Capital balances as of 31 December 2020 were Tam $ 45,000, Tim $30,000, Tom $ 25,000, and Sam $ 15,000. For current accounts balances allocation for Tam$ 12,000, Tim $5,000, Tom$ (4,000) and Sam($2,000). Loan from Tam$ 10,000. Drawings by the partners during the year were: i. Tam $ 10,000 ii. Tim $ 9,000 iii. Tom $ 8,500 iv. Sam $ 7,000 Required: . 1) Prepare a net asset calculation. 2) Prepare balance sheet as of 31 December 2020. 3) Show all the interest rate calculations on the answer sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
am, Tim, Tom, and Sam are in partnership sharing profits in the ratio 6:4:3:2. Their
partnership agreement includes:
i. Interest on capital is at 13% per annum.
ii. Salary to Tom $ 5,000 and Sam $ 8,500 per annum.
iii. Interest on drawings is at 5% per annum.
iv. The interest rate on the loan by Tam is 6% per annum.
Net profit for the year ended 31 December 2019 was $50,000. Assume interest on loan by
Tom has been deducted from this amount. Capital balances as of 31 December 2020 were Tam
$ 45,000, Tim $30,000, Tom $ 25,000, and Sam $ 15,000. For current accounts
balances allocation for Tam$ 12,000, Tim $5,000, Tom$ (4,000) and Sam($2,000).
Loan from Tam$ 10,000. Drawings by the partners during the year were:
i. Tam $ 10,000
ii. Tim $ 9,000
iii. Tom $ 8,500
iv. Sam $ 7,000
Required:
.
1) Prepare a net asset calculation.
2) Prepare balance sheet as of 31 December 2020.
3) Show all the interest rate calculations on the answer sheet.
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