corrected net profit figure and capital a/c
I've attempted the appropriation account and current account for this question but can't seem to work out on the corrected net profit figure and the capital account. If somebody can help me here I would be very grateful.
Franklin, Michael and Longman are trading in partnership. The following information has been extracted from the partnership agreement and books of account for the year ended 31 October 2008.
1. Partners are to be credited with interest on capital account balances at the rate of 9% per annum. Interest is to be charged on cash drawings only, at the rate of 10% per annum.
2. The partnership net trading profit for the year amounted to $72 190 and the profit is to be appropriated in the ratio of 1:2:2.
3. Cash drawing during the year amounted to:
Franklin $5600
Michael $6200
Longman $4900
It should be assumed that all cash drawings took place on 30 April 2008
.
4. The balances on the partners capital and current accounts at 1 November 2007 were:
Capital A/C Current A/C
Franklin 18000 9310 Cr
Michael 40000 4650 Cr
Longman 33000 2170 Cr
5. Each partner had taken goods for his own use during the year at cost as follows:
Franklin $3200
Michael $1900
Longman $2500
No entries had been made in the books of account to record these transactions.
6. The partnership disposes of a motor vehicle on 25 October 2008 for $4200 and the proceeds of sale were recorded as income in arriving at the profit of year. The vehicle had a book value of $6100 at the time of sale.
7. An insurance premium of $230 relating to Michael's home was paid by the partnership and charged to the profit and loss account.
Required:
a. A statement of the corrected net trading profit for the partnership for the year ended 31 October 2008.
b. The profit and loss appropriation account for the year ended 31 October 2008.
c. The capital and current accounts of Franklin, Michael and Longman as they would appear in the balance sheet at 31 October 2008.
