Question one Black, Brown and Cook are partners. They share profits and losses in the ratios of 2/9, 1/3 and 4/9 respectively. For the year ended 31 July 20X2, their capital accounts remained fixed at the following amounts: £ 60,000 40,000 20,000 Black Brown Cook They have agreed to give each other 6 per cent interest per annum on their capital accounts. In addition to the above, partnership salaries of £30,000 for Brown and £18,000 for Cook are to be charged. The net profit of the partnership, before taking any of the above into account was £111,000. Black and Brown withdrew £4,000 and £5,000 worth of goods respectively during the period. The firm charges 10% interest on drawings. You are required to Draw up the appropriation account of the partnership for the year ended 31 July 20X2. Prepare the partners current account Prepare the fluctuating capital account.
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.
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
