Reference no: EM132995906
The following information relates to the first year operations of Candy and Dal partners.
Candy and Dal have been trading successfully in their first year and have recorded a Net Profit of $400,000, for the year ended 30thSeptember 2020. Their Partnership Agreement specifies that each partner is to receive 10% interest on their initial capital investment of $500,000, and salary allowances of $100,000 and $60,000 respectively. The partners' salaries are to be treated as an allocation of profit.
At the end of the first year - 30th September 2020, the trial balance of the business include the following balances
Accounts
Profit and Loss Account 400,000 Cr.
Retained Earnings Account - Candy 30,000 Dr.
Retained Earnings Account - Dal 58,000 Cr.
Capital Account - Candy 500,000 Cr.
Capital Account - Dal 500,000 Cr.
Drawings - Candy 4,000 Dr.
Drawings - Dal 6,000 Dr.
Required:
Problem 1: Prepare the Profit and Loss Appropriation Statement for the year ended 30th September 2020.
Problem 2: An extract of the Balance Sheet as at 30th September 2020, showing Partners' Equity.
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