Bridget, Carlene and Desmond, attorneys-at-law, decided to form a partnership. They reached agreement on all major operational matters including their respective roles, positions and financial contributions as set out below. Bridget would contribute $1,700,000 as capital and extend to the partnership a loan of $700,000 to be repaid over 24 months. She had extensive business experience and would take on the role of managing partner. LAW OFFICE MANAGEMENT ACCOUNTING AND TECHNOLOGY Assignment No. 2 Page 1 of 7 Tuesday, December 13, 2022 Carlene would contribute $1,400,000 as capital and would also extend to the partnership a loan of $500,000 to be repaid over a 12-month period. Carlene would assume the senior attorney role and would be responsible for the legal team. Desmond, recently called to the Bar, would contribute $500,000, as capital, at the start of the partnership, and a further $300,000, on July 1, 20X2, on receipt of maturity proceeds from an existing investment. They agreed on the following financial arrangements: 1. Interest on capital was to be paid at 5% per annum. 2. No interest was to be charged on current account balances. 3. Interest on drawings was to be paid at 8% per annum. 4. Partnership salaries were agreed at: Bridget $400,000 per annum Carlene $260,000 per annum Desmond $180,000 per annum 5. Interest on loans, extended to the partnership, was to be paid at market interest rates of 7% per annum on loans with a duration of 24 months, and 6% per annum on loans with a duration of 12 months or less. 6. They were to contribute such amounts to be credited to their respective current accounts as opening balances. 7. Profit and losses were to be shared in the ratio: Bridget 50% Carlene 40% Desmond 10% LAW OFFICE MANAGEMENT ACCOUNTING AND TECHNOLOGY Assignment No. 2 Page 2 of 7 Tuesday, December 13, 2022 8. The financial year of the partnership would run from January 1 to December 31. The partnership was formed and operations commenced. 1. The following persons were employed as detailed below: Position Annual Salary ($) Date employed Accountant 400,000 January 1, 20X2 Senior Accounting Clerk 260,000 March 1, 20X2 Junior Accounting Clerk 130,000 July 1, 20X2 Paralegal 190,000 July 1, 20X2 Ancillary staff member 80,000 January 1, 20X2 Office Clerk 120,000 January 1, 20X2 Driver/Bearer 90,000 May 1, 20X2 2. All capital contributions due on January 1, 20X2 were made by all partners.