QUESTION 3 (15 MARKS)

Mustaqeem and Musfirah formed a partnership business named MUM Enterprise to provide catering services in Kubang Pasu area. The following information was extracted from the partnership books of account as at 30 June 2019. Capital Mustaqeem RM 80,000 Musfirah RM 40,000

Withdrawal Mustaqeem RM 10,000 Musfirah RM 3,000 Salary allowance per month Mustaqeem - Musfirah RM 3,500

Annual bonus Mustaqeem - Musfirah RM 5,000

Based on the partnership agreement, both partners agreed on the following percentage:

i. Interest on capital of 10% per annum. ii. Interest on drawings of 5% per annum. iii. Share profits or losses of the business based on the amounts of capital contributed.

Additional information:

1. Profit of the business for the year is RM75,000. 2. The partnership was established on 1 July 2018.

REQUIRED:

(a) Prepare the profit and loss appropriation for MUM Enterprise for the year ended 30 June 2019. (5 Marks)

(b) Prepare the partners current accounts for the year ended 30 June 2019. (3 Marks)

(C) Assume that MUM Enterprise partnership agreement does not specify the sharing ratio for profit or loss, what will be the amount of share of profit or loss obtained by Mustaqeem and Musfirah for the year ended 30 June 2019? Justify your answer.

(d) Mustaqeem also has a sole proprietorship business and he is planning to convert it to a private limited company. He seeks for advice on the characteristics of a private limited company which is different from a sole proprietorship business. Also, he needs some insight on the rights of ordinary shareholders in a private limited company. As a consultant, please give your advice on these two issues.