Question 3
A and B are in a partnership in which profits and losses are shared equally.
The partners’ balances on the capital and current accounts at the year ended December 31, 2020 were as followed:
Partners
|
Capital Account
|
Current Account
|
|
$
|
$
|
A
|
500,000
|
50,000 CR
|
B
|
450,000
|
75,000 CR
|
Notes:
I. During the year, A had drawings amounting to $250,000 and B $220,000.
II. B receives a partnership salary of $60,000 for extra duties in the company.
III. The net profit of the partnership, before taking any of the above into account was $600,000.
IV. Interest allowed on the capital account at the rate of 10% per annum, and interest to be charged on drawing at 10%.
Required:
a)
The Appropriation Account for A and B partnership business for the year ended December 31, 2020.
b) The partners’ capital account as at December 31, 2020
c) The partners’ current account as at December 31, 2020