Beth and Kate are in partnership. Their financial year ends on 31 December. On 1 January 20–5 their capitals were: Beth $90,000 and Kate $70,000. The uncompleted current accounts for the year ended 31 December 20–5 were as follows.

a. Explain the entry on 1 January ‘Capital $10,000’.
b. Calculate the profit or loss for the year before appropriations.
c. Calculate the percentage rate of interest on capital the partners received.
d. Calculate the ratio in which the partners shared the loss.
e. State the balance on each partner’s current account on 1 January 20–6, indicating whether each balance is debit or credit.
f. Explain what a credit balance on a partner’s current account means.
g. Explain how a debit balance on a partner’s current account may arise.
h. Suggest one reason why Beth made a loan to the business instead of investing additional capital.

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Beth Kate Beth Kate $ $ 20-5 20-5 Jan 1 Balance b/d 9000 Jan 1 Balance b/d 5000 Dec 31 Drawings 16000 8000 Capital 10000 Interest on 160 Dec 31 Salary 9000 drawings 320 Share of loss 6300 4200 Interest on capital 4500 3000 Interest on loan 200