Partners Kim, Shirin and Clinton and have been in partnership since 2010. The partnership profit for the year ended 30 June 2017 was $200000 and the partners' capital balances were as follows:

Partner

$

Kim

50 000

Shirin

75 000

Clinton

125 000

The partners share profits and losses as follows:

The first $100000 is divided based on the partners' capital balances.

The next $40000 is based on service, shared equally by Kim and Shirin.

The remainder is divided equally.

Required:

a)Calculate each partner's share of the profit for current year. (5 marks). Marks will be deducted if no workings are shown.

[Answer here]

Kim

Shirin

Clinton

Total

Total profit

Sharing of first $100 000 of profit based on capital balances

Total

Profit left for allocation

Sharing of the next $40 000 based on serviced

Total

Profit left for allocation

Remainder shared equally

Total

Profit left for allocation

Profit allocation to the partners

[Show workings here]

b)Prepare journal entries to record the allocation of profit using the Variable and Fixed method. (5 marks)

[Answer here]

Variable Capital BalancesFixed Capital Balances

Debit

Credit

Debit

Credit