Jack and Rose are partners sharing profits and losses equally. The terms of their agreement are: (i) Partners are to be credited with interest on capital at 5% per anum (i) Drawings are charged with interest at 5% per annum calculated from the date when the drawings are made (iii) Loan from partners are allowed at 7% interest per annum The following Trial Balance was extracted from the books on 31 Dec 2005 after the preparation of the Trading and Profit and Loss Account but before any adjustments were made; Trial Balance as at 31 December 2005 Capital Accounts as at 1 January 2005 Jack Rose Loan From Jack Buildings Furniture and Fixtures Stock as at 31 December 2005 Debtors and Creditors Bank Balance Drawings by Rose on 1 July 2005 Profit and Loss Account: Net Profit for the year Mortgage on Buildings Debit $ 47,000 13,878 8,643 3,482 11,431 600 (ii) Interest due on mortgage was $155; (iv) Interest on loan was due to Jack 85,034 The following adjustments were to be considered: (i) A debt of $200 owed by Priya, included in debtors, was worth only $0.40 in every dollar; (i) Jack had paid at his own expense a sum of $150 for the entertainment of customer. The sum had to be reimbursed to him; You are required to: (a) complete the Profit and Loss Account for the year ended 31 December 2005 (b) show the Profit and Loss and Appropriation Account for the year ended 31 December 2005 (c) draw up a Balance Sheet as at 31 December 2005 Credit $ 35,000 25,000 3,000 892 17,642 3,500 85,034
Jack and Rose are partners sharing profits and losses equally. The terms of their agreement are: (i) Partners are to be credited with interest on capital at 5% per anum (i) Drawings are charged with interest at 5% per annum calculated from the date when the drawings are made (iii) Loan from partners are allowed at 7% interest per annum The following Trial Balance was extracted from the books on 31 Dec 2005 after the preparation of the Trading and Profit and Loss Account but before any adjustments were made; Trial Balance as at 31 December 2005 Capital Accounts as at 1 January 2005 Jack Rose Loan From Jack Buildings Furniture and Fixtures Stock as at 31 December 2005 Debtors and Creditors Bank Balance Drawings by Rose on 1 July 2005 Profit and Loss Account: Net Profit for the year Mortgage on Buildings Debit $ 47,000 13,878 8,643 3,482 11,431 600 (ii) Interest due on mortgage was $155; (iv) Interest on loan was due to Jack 85,034 The following adjustments were to be considered: (i) A debt of $200 owed by Priya, included in debtors, was worth only $0.40 in every dollar; (i) Jack had paid at his own expense a sum of $150 for the entertainment of customer. The sum had to be reimbursed to him; You are required to: (a) complete the Profit and Loss Account for the year ended 31 December 2005 (b) show the Profit and Loss and Appropriation Account for the year ended 31 December 2005 (c) draw up a Balance Sheet as at 31 December 2005 Credit $ 35,000 25,000 3,000 892 17,642 3,500 85,034
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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Transcribed Image Text:Jack and Rose are partners sharing profits and losses equally. The terms of their agreement are:
(i) Partners are to be credited with interest on capital at 5% per anum
(ii) Drawings are charged with interest at 5% per annum calculated from the date when
the drawings are made
(ili) Loan from partners are allowed at 7% interest per annum
The following Trial Balance was extracted from the books on 31 Dec 2005 after the preparation of the
Trading and Profit and Loss Account but before any adjustments were made;
Trial Balance as at 31 December 2005
Capital Accounts as at 1 January 2005
Jack
Rose
Loan From Jack
Buildings
Furniture and Fixtures
Stock as at 31 December 2005
Debtors and Creditors
Bank Balance
Drawings by Rose on 1 July 2005
Profit and Loss Account: Net Profit for the year
Mortgage on Buildings
Debit
47,000
13,878
8,643
3,482
11,431
600
85,034
The following adjustments were to be considered:
(i) A debt of $200 owed by Priya, included in debtors, was worth only $0.40 in every dollar;
(ii) Jack had paid at his own expense a sum of $150 for the entertainment of customer. The sum had
to be reimbursed to him;
(ii) Interest due on mortgage was $155;
(iv) Interest on loan was due to Jack
You are required to:
(a) complete the Profit and Loss Account for the year ended 31 December 2005
(b) show the Profit and Loss and Appropriation Account for the year ended 31 December 2005
(c) draw up a Balance Sheet as at 31 December 2005
Credit
35,000
25,000
3,000
892
17,642
3,500
85,034
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