John, Lee and Tony are in partnership, preparing accounts to 31 October each year. Their partnership agreement states that: i. The partners are entitled to 5% per annum interest on their opening capital accounts. No interest is allowed (or charged) on current account balances. ii. Interest is charged on the partners' drawings at 7% per annum. Their drawings during the year to 31 October 2020 were as follows:
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.
Question 4
John, Lee and Tony are in
i. The partners are entitled to 5% per annum interest on their opening capital accounts. No interest is allowed (or charged) on current account balances.
ii. Interest is charged on the partners' drawings at 7% per annum. Their drawings during the year to 31 October 2020 were as follows:
|
John |
RM30,000 |
|
Lee |
RM20,000 |
|
Tony |
RM3,000 |
iii. Partners' annual salaries are RM6,000 and RM 12,000 for Lee and Tony respectively.
iv. Remaining
v. The partners' capital and current account balances as at 1 November 2019 are as follows:
|
|
Capital a/c |
Current a/c |
|
John |
50,000 |
16,320 Cr |
|
Lee |
30,000 |
1,110 Cr |
|
Tony |
10,000 |
(590) Dr |
The capital account balances remained unchanged during the year to 31 October 2020.
vi. The partnership's net profit for the year to 31 October 2020 is RM81,961.
Required:
b. Prepare the partners' current accounts (in columnar form) for the year to 31 October 2020.Prepare the partners' current accounts (in columnar form) for the year to 31 October 2020.
Note:
All the figures must be rounded up to the nearest RM
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