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Topic 6 Partnership: 6.1 Formation
Topic 6 Partnership: 6.1 Formation
PARTNERSHIP
6.1 FORMATION
Content of Agreement:
-name of partners and partnership
business.
-date of p/ship agreement is signed.
-date of p/ship business is commence.
-nature of business.
CAPITAL ACCOUNT AND CURRENT ACCOUNT
xx x xx xx
x
A B A B
Decrease X X Bal b/d x x
in capital Increase x x
Drawing X X in capital X X
IOD X X IOL X X
LSR X X IOC X X
Bal c/d x x Salaries X X
Bonus X X
PSR x x
x x x x
FINANCIAL STATEMENT OF A PARTNERSHIP
STATEMENT OF PROFIT OR
LOSS APPROPRIATION a/c
Net profit b/d xx
Add: Interest on Drawing
Sales xx -Partner A xx
Less: return Inwards
xx
(xx) -Partner B xx
Example 2:
Partners A B C
PSR 5 3 2
Total net profit RM3,000 and C is entitled to
GUARANTEED PROFIT get minimum guaranteed profit of RM550.
Before allocating divisible profit @
distributable profit according to the Partners Before After
minimum guaranteed profit provision, you A 5/10 x 3,000 5/10x3,000
have to compare it with the allocation of =1,500 =1,500
profit using the actual PSR and take the
highest amount. B 3/10 x 3,000 3/10x3,000
=900 =900
APPROPRIATION a/c
Pre Post
Net profit b/d (from Income statement)-pre xx xx
Post-
Add: Interest on Drawing
-Partner A -pre
-post
-Partner B-pre
-post Xx Xx
Less: Interest on capital
-Partner A-pre
-post
-Partner B pre
-post (Xx) (Xx)
Less: Interest on loans/Advances
- Partner A -pre
-post
- Partner B pre (Xx) (Xx)
-post
PSR/LSR: xx xx
-Partner A pre
- -post
-Partner B pre
- post