Question1:

On 1 January 2018, LAITH and MAJED entered into a partnership contributing $250,000 and $150,000 respectively and sharing profits in the ratio of 2:1. MAJED is allowed a salary of $16,750 per year. Interest on capital is allowed at 10% per annum. LAITH is entitled to receive a commission of $110,000. During the year, MAJED withdrew $20,000 and LAITH $8,800; interest on the same being 12% per annum. Profit in 2018 before the above-mentioned adjustments was $81,000.

Instructions

You are required to prepare

1. Draw up the key chart to show every partners share (1 mark)
2. The Profit and Loss Appropriation Account (2marks)
3. the partners Capital Accounts of LAITH and MAJED. (2marks)