Question 3: Partnership Accounts

Paul and Carl are partners in a business. The partnership agreement included the following:

Interest on drawings is to be charged at 15%

Interest on capital is to be charged 10%

Paul is to be paid a salary of $6,500

Profit or loss is to be shared in the same ratio as their capital

The following trial balance was extracted after the calculation of the net income for the year ended December 31,2021

	Debit	Credit
	$	$
Net profit for the year		42,000
cash	8,700
bank		58,000
creditors		14,000
debtors	34,000
fixtures	100,000
Provision for depreciation on fixtures		10,000
building	250,000
Provision for depreciation on building		50,000
Loan		220,000
Capital
Paul		200,000
Carl		50,000
Drawings
Paul	15,000
Carl	10,000
Current Account
Paul		8,400
Carl	2,800
Motor vehicle	160,000
Provision for depreciation on motor vehicle		20,000
Commission owing	4,000
Rent expense owing		6,800
Closing stock	94,700
	679,200	679,200

Required:

Write up the appropriation account and the current account for the year, and the statement of financial position extract showing equity only at the year-end

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