Question 1

Geoff, Henry and Ian are partnerships sharing profits and losses in the ratio 4:2:2. The partners receive a salary of N$5,000, N$6,000 and N$7,000 each and are entitled to interest on the balance on their capital accounts at 5% per annum. Ian is entitled to a guaranteed share of profits, in addition to his salary and interest on capital, of N$6,000 any deficiency to be borne by Geoff amd Henry equally.

the following is the draft statement of financial position of the partnership as at 31 October 2015 (before the profit for the year has been divided between the partners).