On 1 January Year 4, Door and Porto were in partnership sharing profits in the proportions: Door 2/3, Porto 1/3. The credit balances on their capital accounts on that date were Door £40 000 and Porto £25 000.

On 1 April Year 4, Window was admitted as a partner and paid in £9 000.

The profit sharing proportions then became: Door 2/5, Porto 2/5, Window le Se On 1 September Year 4, Ventura was admitted as a partner and paid-in

£6 000. The profit sharing proportions then became: Door 3/10, Porto 3/10, Window 2/10, Ventura 2/10. x Goodwill was valued throughout Year 4 at £30 000, it remained unrecorded and adjustments with respect thereto were to be made through the partners’

capital accounts.

Simple interest at 1% per month is allowed on the balances on partners’

capital accounts after making adjustments for goodwill but before either debiting drawings or crediting profit shares.

The net profit for the year ended 31 December Year 4 was £110 000 (before charging interest on partners’ capitals). Because of the seasonal nature of .

the business, it was agreed that the net profit per month in August and September was three times the net profit per month in January, February, March and April, and that the net profit per month in May, June, July, October, November, and December was twice the net profit per month in January, February, March and April.

Required:

(a) Calculate the balances on partners’ Capital Accounts after the admission of Ventura but before crediting either interest or profit shares. (7 marks)

(b) Show the division of the net profit for Year 4 between the periods

(i) January to March; (ii) April to August; (iii) September to December.

Ons (7 marks)

(c) Show the allocation of your profit figures from

(b) above between the partners.