1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
Bill and Charles are in partnership sharing profits and losses in the ratio of 2:1. Each partner draws $2000 cash from the business each month. On 1 October 2013 Bill paid $24 000 into the business bank account. They provided the following information. Capital accounts 1 January 2013 $ Bill 120 000 Charles 60 000 Current accounts 1 January 2013 31 December 2013 $ $ Bill 17 000 Cr 2 160 Cr Charles 18 000 Cr 2 800 Dr REQUIRED Calculate the partnership profit for the year ended 31 December 2013 before appropriation. Additional information On 1 January 2014 a new partnership agreement came into force which stated that Bill and Charles will share profits and losses in the ratio of 3:2. Bill will receive $6000 salary per annum, and Charles $5200 salary per annum. The rate of interest on capital is to be 8% per annum and interest on drawings is to be charged at 11% per annum. Bill and Charles will continue to withdraw $2000 each per month. Goodwill was valued at $48 000 but is not to be retained in the books of account. The net profit for the 6 months ended 30 June 2014 was $12 000. REQUIRED Prepare the capital accounts of Bill and Charles for the six months ended 30 June 2014. Prepare the partnership appropriation account for the six months ended 30 June 2014. Prepare the current account of Bill for the 6 months ended 30 June 2014. State two reasons why the partners are charged interest on drawings. State two reasons why the partners receive interest on capital.
9706_w14_qp_22
THEORY
2014
Paper 2, Variant 2
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Questions Discovered
1775