Reference no: EM132911606
Ben and Ten are in partnership for several years. The agreed terms of the partnership are as follows.
i. Profits and losses will be shared at a ratio of 5:2 between Ben and Ten.
ii. Partners should receive interest on capital at a rate of 9% per annum.
iii. Interest will be charged on drawings at a rate of 8% per annum.
iv. Partners will be paid a salary of $4,000 for Ben and $13,000 for Ten.
v. Interest rate on any loan given by partners will be at a rate of 5% per annum.
The following balances are drawn from the accounts of partners at 1st July 2020.
Capital account balance
Ben $27,000
Ten $52,000
Current account balance
Ben $25,000
Ten $6,000
Partners have made the following drawings during the year.
Ben $8,000 on 1st September 2020
Ten $7,000 on 30th November 2020
Ten $4,000 on 1st March 2021
Ben $11,000 on 31st March 2021
Ben has given a loan of $20,000 to the partnership on 1st July 2020.
Partnership profit for the year ended 30th June 2021 before deducting any loan interest is $122,000.
Required:
Problem (a) Prepare partnership profit and loss appropriation account for the year ended 30th June 2021
Problem (b) Produce the partners' current account showing all necessary items.
Problem (c) State four advantages of partnership over sole proprietorship