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On 1 January 2018, GEHAN and RAED entered into a partnership contributing $180,000 and $90,000 respectively and sharing profits in the ratio of 2:1. RAED
On 1 January 2018, GEHAN and RAED entered into a partnership contributing $180,000 and $90,000 respectively and sharing profits in the ratio of 2:1. RAED is allowed a salary of $15,750 per year. Interest on capital is allowed at 10% per annum. GEHAN is entitled to receive a commission of $105,000. During the year, RAED withdrew $18,000 and GEHAN $7,800; interest on the same being 12% per annum. Profit in 2018 before the above-mentioned adjustments was $75,000.
Instructions
You are required to prepare
- Draw up the key chart to show every partners share (1 mark)
- The Profit and Loss Appropriation Account (2marks)
- the partners Capital Accounts of GEHAN and RAED. (2marks)
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