Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Puole w Able and Carter are partners in a business providing security products. The following information relates to their partnership. Trial Balance (extract) as at

image text in transcribed

image text in transcribed

image text in transcribed

Puole w Able and Carter are partners in a business providing security products. The following information relates to their partnership. Trial Balance (extract) as at June 30, 2021 - prior to appropriation of profits Debit Credit $ $ Capital - Able 40,000 Capital - Carter 60,000 Current - Able 7,000 Current - Carter 5,000 Salary - Able 15,000 Salary - Carter 15,000 Advance to Able 12,000 Loan from Carter 10,000 Profit and Loss 114,000 Required: . . a) Prepare the journal entries to record additional income and expense items at 30 June, close additional income and expense items to the profit and loss account and to complete the appropriation of profit to the partners b) Prepare the following general ledger accounts for the year (after posting all the above journal entries): Profit and Loss Account Profit & Loss appropriation Current - Able Current Carter Additional Information: Carter contributed additional capital of $10,000 into the partnership on March 314 2021 which has been credited to his capital account. Carter withdrew $4,000 cash on 1 July 2020 which has been debited to his Current account. Capital accounts are only used to record the permanent or fixed capital of each partner. Current accounts are used to record all other transactions affecting the equity of partners. . . Extract of partners' agreement. Interest on advance to partners is charged (in lieu of cash receipt) at 10% / annum. There has been no change to balance of the 'Advance to Able account during the year. Interest on loans from partners will be credited (in lieu of payment) at 7% / annum. There has been no change to balance of the Loan from Carter' account during the year. Both Able and Carter are entitled to a annual salary of $20,000 each. Partner's salaries are to be treated as a business expense. a Partners shall be entitled to interest on Capital at the rate of 5% based on balances at the beginning of the year. Partners will be charged interest on drawings at 10% / annum. Puole w Able and Carter are partners in a business providing security products. The following information relates to their partnership. Trial Balance (extract) as at June 30, 2021 - prior to appropriation of profits Debit Credit $ $ Capital - Able 40,000 Capital - Carter 60,000 Current - Able 7,000 Current - Carter 5,000 Salary - Able 15,000 Salary - Carter 15,000 Advance to Able 12,000 Loan from Carter 10,000 Profit and Loss 114,000 Required: . . a) Prepare the journal entries to record additional income and expense items at 30 June, close additional income and expense items to the profit and loss account and to complete the appropriation of profit to the partners b) Prepare the following general ledger accounts for the year (after posting all the above journal entries): Profit and Loss Account Profit & Loss appropriation Current - Able Current Carter Additional Information: Carter contributed additional capital of $10,000 into the partnership on March 314 2021 which has been credited to his capital account. Carter withdrew $4,000 cash on 1 July 2020 which has been debited to his Current account. Capital accounts are only used to record the permanent or fixed capital of each partner. Current accounts are used to record all other transactions affecting the equity of partners. . . Extract of partners' agreement. Interest on advance to partners is charged (in lieu of cash receipt) at 10% / annum. There has been no change to balance of the 'Advance to Able account during the year. Interest on loans from partners will be credited (in lieu of payment) at 7% / annum. There has been no change to balance of the Loan from Carter' account during the year. Both Able and Carter are entitled to a annual salary of $20,000 each. Partner's salaries are to be treated as a business expense. a Partners shall be entitled to interest on Capital at the rate of 5% based on balances at the beginning of the year. Partners will be charged interest on drawings at 10% / annum

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_step_2

Step: 3

blur-text-image_step3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing The Art and Science of Assurance Engagements

Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Ingrid B. Splettstoesser

12th Canadian edition

ISBN: 133098230, 978-0132791564, 132791560, 978-0133098235

More Books

Students also viewed these Accounting questions

Question

Find the derivative of y= cos cos (x + 2x)

Answered: 1 week ago

Question

Focuses strongly on achievement and success in self and others.

Answered: 1 week ago