SECTION I Answer the THREE questions in this section. The following information has been extracted from the books of Allert and Wildman who have been in partnership as manufacturers for several years. Partners' Capital Account at January 1, 2008: Allert Wildman 120 000 8O 000 Partners' Curent Account at January 1, 2008: Allert Wildman 5 000 (300) Partners' Drawings for the year ended December 31, 2008: Allert 7 000 Wildman 4 800 Net profit for the year ended December 31, 2008: $72 500 The partnership agreement between Allert and Wildman provides for the following: Partners are to receive interest at the rate of 10 % per annum on their opening capital account balances. 1. 2. Interest at a rate of 5 % per annum is to be paid on partners' drawings during the year. 3. Wildman is to receive a partnership salary of S1 000 per month. The balance of the net profit or loss is to be shared between partners in propor- tion to their capital accounts' balances. 4. Required: Prepare the partnership Profit and Loss Appropriation Account for the year ended December 31, 2008. (a) (b) Prepare the Current Accounts for the partnership as at December 31, 2008. (c) State ONE disadvantage of being a general partner in a partnership. Calculate the amount of the net profit due to EACH partner based on the principles of the Partnership Act of 1890. (d)
SECTION I Answer the THREE questions in this section. The following information has been extracted from the books of Allert and Wildman who have been in partnership as manufacturers for several years. Partners' Capital Account at January 1, 2008: Allert Wildman 120 000 8O 000 Partners' Curent Account at January 1, 2008: Allert Wildman 5 000 (300) Partners' Drawings for the year ended December 31, 2008: Allert 7 000 Wildman 4 800 Net profit for the year ended December 31, 2008: $72 500 The partnership agreement between Allert and Wildman provides for the following: Partners are to receive interest at the rate of 10 % per annum on their opening capital account balances. 1. 2. Interest at a rate of 5 % per annum is to be paid on partners' drawings during the year. 3. Wildman is to receive a partnership salary of S1 000 per month. The balance of the net profit or loss is to be shared between partners in propor- tion to their capital accounts' balances. 4. Required: Prepare the partnership Profit and Loss Appropriation Account for the year ended December 31, 2008. (a) (b) Prepare the Current Accounts for the partnership as at December 31, 2008. (c) State ONE disadvantage of being a general partner in a partnership. Calculate the amount of the net profit due to EACH partner based on the principles of the Partnership Act of 1890. (d)
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter12: Accounting For Partnerships And Limited Liability Companies
Section: Chapter Questions
Problem 3PA
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Concept explainers
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.
Question
Transcribed Image Text:SECTION I
Answer the THREE questions in this seetion.
1.
The following information has been extracted from the books of Allert and Wildman who have
been in partnership as manufacturors for several years.
Partners' Capital Account at January 1, 2008:
120 000
Allert
Wildman
80 000
Partners' Current Account at January 1, 2008
Allert
Wildman
5 000
(300)
Partners' Drawings for the year ended December 31, 2008:
7 000
Allert
Wildman
4 800
Net profit for the year ended December 31, 2008:
$72 500
The partnership agreement between Allert and Wildman provides for the following:
Partners are to receive interest at the rate of 10 % per annum on their opening
capital account balances.
Interest at a rate of 5 % per annum is to be paid on partners' drawings during the
уear.
3.
Wildman is to receive a partnership salary of S1 000 per month.
4.
The balance of the net profit or loss is to be shared between partners in propor-
tion to their capital accounts' balances.
Required:
Prepare the partnership Profit and Loss Appropriation Account for the year ended
December 31, 2008.
(a)
(b)
Prepare the Current Accounts for the partnership as at December 31, 2008.
(c)
State ONE disadvantage of being a general partner in a partnership.
Calculate the amount of the net profit due to EACH partner based on the principles of
the Partnership Act of 1890.
(d)
GO ON TO THE NEXT PAGE
01239020/JANUARY/F 2009
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