Reference no: EM132999740
Question - Partnership - Partnership Bob, Ted and Alice are in partnership with profit being shared in the ratio of their fixed capitals.
The partnership agreement provides that interest on capital is to be credited at 15% p.a. and interest on drawing is to be charged at 10% p.a.
It also provides that Alice is to receive a salary in addition to any profit share and that loans to the business from any of the partners are at an interest rate of 5% per annum.
Capital -Bob $100,000
Capital -Ted $90,000
Capital -Alice $80,000
Current -Bob $70,000
Credit Current -Ted $60,000
Credit Current -Alice $65,000
Credit Gross Profit $650,000
Operating Expenses $280,000
Salary due to Alice to be credited to her current account $60,000
Drawings -Bob $45,000
Drawings -Ted $35,000
Drawings -Alice $30,000
Bob made a short-term loan to the business of $40,000 on 1 January that year.
Interest, unpaid for the half-year, of $1000 is to be credited to his current account.
Required -
(a) Prepare the Profit and Loss account.
(b) Prepare the Profit and Loss Appropriation account.
(c) Prepare the partners' current accounts.