GUYANA

MINISTRY OF EDUCATION
CYRIL POTTER COLLEGE OF EDUCATION
ASSOCIATE DEGREE IN EDUCATION
PRE-SERVICE PRE-VOCATIONAL PROGRAMME
COURSE NUMBER: PBS 251
COURSE TITLE: Advance Financial Accounting
TARGET GROUP: BUSINESS MAJORS
CREDIT HOURS: 60
ASSESSMENT 1: In class quiz
WEIGHTING: 30 %
DATE: WEEK Three (3)
TOPIC: Partnership Accounting

INSTRUCTIONS: Study the information presented then answer the questions that follows
1. a) Define the term Partnership (2marks)

b) In the case of no Partnership Agreement the, what will govern how the appropriation account of the
partnership will be prepared? (1 mark)

Timmy and Tommy are two sold traders who have similar businesses, they are considering joining
together to form a partnership

C)i) Identify and explain to the possible partnership, the advantages and disadvantages of forming the
partnership. (4 marks)

ii) Should they go ahead and venture into the partnership, highlight some of the items that must be part
of their agreement. (3 marks)

d) Ryan, Sonya and Tara are in partnership. The partners provided you with the following information
that was made:

 Interest should be charged on drawings at 12% per annum

 Interest should be allowed on capital at 8% per annum
 Ryan should receive a salary of $33,000 per annum for managing the business.
 Tara should receive a salary of $15,000 per annum for being responsible for promoting the
business.
 Remaining profits or losses should be shared in the ratio Ryan, Sonya, Tara 2:2:1

Partners’ drawings during the year ended 31 July 2018 were:

 Ryan: $24,000 on 30th November 2017 and $39,000 0n 31st March 2018
 Sonya: $51,000 on 31st December 2017 and $36,000 on 31st May 2018
 Tara: $39,000 on 31st January 2018 and $39,000 on 30th June 2018.

The profit for the year ended 31st July 2018 was far lower that the partners expected and amounted to
$87,390.

The following information is also available.

Fixed Capital Current account balances 1 Aug 2017

$ $
Ryan 660,000 5,300 Dr
Sonya 540,000 8,100 Cr
Tara 300,000 2,700 Dr
Prepare the following:

i) partners’ interest on drawings (6 marks)

ii) partners’ capital account (3 marks)

iii) partners’ current account (6 marks)

iv) the appropriation account for the year ended 31st July,2018 (5 marks)