Reference no: EM132551675

i) Shem and Mulenga are in partnership sharing profits in the ratio 3:2. The partnership's profit for the year was K65,460.00 The partnership agreement provides for:

Interest to be paid on the partners' opening capital balances at a rate of 5% per annum. Interest on drawings at a rate of 8% per annum on all drawings during the year partners' salaries of Shem, K9,000.00; Mulenga, K5,000.00

At the beginning of the year, the partners' capital and current account balances were:

                                      Capital                          Current

Shem                      K120,000 Cr                K15,655 Cr

Mulenga                   K80,000 Cr                  K4,137 Dr

During the year, Shem's drawings were K18,000.00 and Mulenga's drawings were K31,000.00

ii) Shem and Binta have been in partnership, sharing profits and losses in the ratio 4:3. They agreed to admit Musa to the partnership, with profits and losses being shared between Shem, Binta and Musa in the ratio 3:2:1. On the date of the change in partnership, the partners' capital and current account balances were:

                          Capital               Current

Shem            K60,000 Cr         K12,800 Cr

Binta              K40,000 Cr        K9,500 Cr

It was agreed that, at the date of Musa's admission, the partnership was to be valued at K164,300.00

Based on the above information:

Question 1: Prepare the Partnership Appropriation Account

Question 2: Calculate each partner's share of the residual profit and total profit share

Question 3: Prepare the partners' current accounts