James and John are in partnership sharing profits and losses in the ratio of 6:4 respectively. The following information has been taken from the partnership records for the financial year ended May 31, 2010. Partners’ capital accounts balances: James $300,000 John $240,000 Partners’ current accounts balance at June 1 2009: James $30,000 Cr John $26,000 Cr During the year James and John withdrew $40,000 and $28,000 respectively from the partnership bank account: Interest is to be charged on drawings at a rate of 10% per annum while interest is allowed on capital accounts at the rate of 5% per annum. John is allowed a salary of $20,000 per annum. The net profit for the year ended May 31, 2010 is $152,940. However, interest on loan in the amount of $2,950 due to James was not paid. Required: Prepare the partnership appropriation account for the year ended May 31, 2010. Prepare the partners’ current accounts for the year ended May 31, 2010. Prepare the partners’ capital accounts for the year ended May 31, 2010.
James and John are in partnership sharing profits and losses in the ratio of 6:4 respectively. The following information has been taken from the partnership records for the financial year ended May 31, 2010. Partners’ capital accounts balances: James $300,000 John $240,000 Partners’ current accounts balance at June 1 2009: James $30,000 Cr John $26,000 Cr During the year James and John withdrew $40,000 and $28,000 respectively from the partnership bank account: Interest is to be charged on drawings at a rate of 10% per annum while interest is allowed on capital accounts at the rate of 5% per annum. John is allowed a salary of $20,000 per annum. The net profit for the year ended May 31, 2010 is $152,940. However, interest on loan in the amount of $2,950 due to James was not paid. Required: Prepare the partnership appropriation account for the year ended May 31, 2010. Prepare the partners’ current accounts for the year ended May 31, 2010. Prepare the partners’ capital accounts for the year ended May 31, 2010.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
James and John are in partnership sharing
- Partners’ capital accounts balances:
James $300,000
John $240,000
- Partners’ current accounts balance at June 1 2009:
James $30,000 Cr
John $26,000 Cr
- During the year James and John withdrew $40,000 and $28,000 respectively from the partnership bank account:
- Interest is to be charged on drawings at a rate of 10% per annum while interest is allowed on capital accounts at the rate of 5% per annum.
- John is allowed a salary of $20,000 per annum.
- The net profit for the year ended May 31, 2010 is $152,940. However, interest on loan in the amount of $2,950 due to James was not paid.
Required:
- Prepare the partnership appropriation account for the year ended May 31, 2010.
- Prepare the partners’ current accounts for the year ended May 31, 2010.
- Prepare the partners’ capital accounts for the year ended May 31, 2010.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education