1.5. Preparation of financial statements
A subsection of Accounting, 9706, through 1. Financial accounting (AS Level)
Listing 10 of 637 questions
L and M are in partnership, sharing profits and losses in the ratio of 3 : 2. They have the following current account balances. L $ M $ 31 March 2019 3 000 credit 4500 debit 31 March 2020 14 200 credit 6200 debit The balances at 31 March 2020 are after taking into account the following. L $ M $ interest on drawings 1 000 1 500 interest on capital 3 000 2 000 drawings 10 000 15 000 What was the residual profit to be shared between L and M for the year ended 31 March 2020?
9706_s20_qp_12
MCQ
2020
Paper 1, Variant 2
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Karis and Lara are in partnership. State two reasons why partners may each have a separate capital account and current account. Additional information Karis and Lara share profits and losses in the ratio 3:2 respectively. They decided to admit Megan as a partner on 1 February 2021. On that date the statement of financial position was as follows. Assets $ $ Non-current assets at net book value Motor vehicles 43 500 Furniture and equipment 16 200 59 700 Current assets Trade receivables 18 410 Total assets 78 110 Capital and liabilities Capital accounts Karis 35 700 Lara 24 500 60 200 Current accounts Karis 3 110 Lara (540) 2 570 Current liabilities Trade payables 11 230 Bank overdraft 4 110 15 340 Total capital and liabilities 78 110 The partners agreed the following on Megan’s admission. Current accounts would no longer be used. Karis took over a motor vehicle for private use with a net book value of $18 400 at an agreed value of $15 000. Goodwill was valued at $48 000. No goodwill account was to be maintained in the partnership’s books of account. Profits and losses are to be shared in the ratio Karis : Lara : Megan 7 : 5 : 3 respectively. Megan introduced a motor vehicle valued at $23 000 as part of her capital contribution. After making the adjustments, it was agreed that Megan should pay sufficient cash into the business bank account to make her total capital equal to that of Lara. REQUIRED Prepare, on the next page, the capital accounts of the partners to record the admission of Megan as a partner. Additional information In the new partnership agreement Lara is to receive a salary of $12 000 per annum. Megan is hoping to achieve a 25% return on her capital employed (ROCE). REQUIRED Calculate the minimum profit the partnership must make in order for Megan to achieve this ROCE. State two possible disadvantages to existing partners of admitting a new partner.
9706_s21_qp_21
THEORY
2021
Paper 2, Variant 1
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X, Y and Z are in partnership sharing profits and losses in the ratio 5 : 2 : 3. Y is entitled to a salary of $18 000 per annum. Partners receive interest at 6% per annum on their capital account balances at the beginning of the year. At the beginning of the year, capital account balances were as follows. $ X 30 000 Y 22 000 Z 20 000 The profit for the year before Y’s salary and partners’ interest on capital is $140 000. What is Y’s share of the total profits?
9706_s22_qp_13
MCQ
2022
Paper 1, Variant 3
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Victor and Wasim are in partnership. At the start of the financial year, the balances on the partners’ current accounts were Victor, $22 500 credit, and Wasim, $3700 debit. The following information is available for the financial year. Victor $ Wasim $ interest on capital 1 500 1 700 share of profits 65 000 97 500 drawings 22 000 17 500 interest on drawings capital introduced – 5 000 What was the balance on Wasim’s current account at the end of the financial year?
9706_s23_qp_13
MCQ
2023
Paper 1, Variant 3
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Vikram is a partner in a business. Partners do not receive salaries or interest on capital, but they are charged 5% interest on the balance of their drawings account. Vikram made drawings of $40 000 during the year and his share of profits was $47 500. His current account showed a credit balance of $4500 after the relevant entries were made at the end of the financial year. What was the debit balance on Vikram’s current account at the beginning of the financial year?
9706_s24_qp_11
MCQ
2024
Paper 1, Variant 1
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Questions Discovered
637