PBS 251: Advanced Financial Accounting

PARTNERSHIP
Work Sheet

1. Stephens, Owen and Jones are partners. They share profits and losses in the ratio of
2
/5, 2/5 and 1/5 respectively.
For the year ended 31 December 2018, their capital accounts remained fixed at the
following amounts:
$
Stephens 6,000
Owen 4,000
Jones 2,000
They have agreed to give each other 10% interest per annum on their capital
accounts.
In addition to the above, partnership salaries of $3,000 for Owen and $1,000 for
Jones are to be charged.
The net profit of the partnership, before taking any of the above into account, was
$25,200.
You are required to draw up the appropriation account of the partnership for the
year ended 31 December 2018.

2. Warren, Brown and Cave owns a garage, and the partners share profits and losses in
the ratio of Warren 50%, Brown 30% and Cave 20%. Their financial year end is 31
March 2018 and the following details were extracted from their books on that date:
Warren Brown Cave
$ $ $
Capital account balances 30,000 50,000 70,000
Current account balances 2,400 Cr 3,100 Cr 5,700 Cr
Partnership salaries 10,000 8,000 -
Drawings 12,000 15,050 14,980

The net profit for the year ended 31 March 2018 amounted to $60,000 before taking
any of the above into account.
You are required to:
a) prepare an appropriation account for the year ended 31 March 2018
b) draw up the partners’ capital and current account for the year ended 31 March
2018.
3. Altya, Alex and Anita are in partnership. They share profits and losses in the ratio
3:2:1 respectively. Interest is charged on drawings at the rate of 10% per annum and
credited at the same rate in respect of the balances on the partners’ capital
accounts.
Alex is to be credited with a salary of $2,000 per annum.
In the year to 31 December 2018 the net profit of the firm was $50,400. The
partners’ drawings of Altya $8,000, Alex $7,200 and Anita $4,800 were taken in two
equal instalments by the partners on 1April 2018 and 1 October 2018.
The balances of the partners’ accounts 31 December 2017 were as follows (all credit
balances):

Capital accounts Current accounts

$ $
Altya 30000 750
Alex 28000 1340
Anita 16000 220
You are required to:
(a) prepare the firm’s profit and loss appropriation account for the year ended
31 December 2018
(b) show how the partners’ capital and current account are recorded in the
balance sheet as at 31 December 2018.