Maxine and Paula are partners who share profits and losses in the ratio 3:1. Their trial balance as at 2018 December 31 was as follows: Sales Office salaries Office expenses Mortgage interest Purchases Stock at 2018 January 01 Bank Creditors Debtors Fixtures Provision for depreciation on fixtures 25 000 12 630 8.000 245 500 70 000 24 000 22 000 295 500 42 180 22 350 6600
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 1
Maxine and Paula are partners who share profits and losses in the ratio 3:1. Their trial balance as
at 2018 December 31 was as follows:
A.
B.
i.
11.
iii.
iv.
V.
Sales
Office salaries
Office expenses
Mortgage interest
Purchases
vi.
Stock at 2018 January 01
Bank
Batik
Additional information:
Creditors
Debtors
Fixtures
Provision for depreciation on fixtures
Building
Mortgage 10%
Capital - Maxine
- Paula
Current account - Maxine
- Paula
Drawings - Maxine
- Paula
Motor vehicle
Commission received
$
25 000
12 630
8.000
245 500
70 000
24 000
22 000
100 000
7 500
3 500
8 500
10 500
50 000
587 130
Stock at 2018 December 31 is $120 000.
Interest on capital is to be paid at 5%.
Interest on drawings is to be charged at 5%.
$
295 500
42 180
22 350
6 600
80 000
60 000
60 000
20 500
587 130
Commission received is prepaid by $2 500.
Provide for depreciation of fixtures 10% using the reducing balance meth d and motor
vehicle at 10% using the straight-line method.
Paula is to be paid a salary of $10 000.
Prepare a partnership Income Statement and Appropriations Account for period ending
2018 December 31.
Prepare the current account of each partner.
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