Overview
Chev, Mal and Gabbie are in partnership agreement sharing profits and losses in the ratio 5:3:2. Their financial year ended December 31, 2020 and the following balances remained in the books of account after the preparation of the Statement of Comprehensive Income.
| Details | Chev | Mal | Gabbie |
| Capital Accounts | 100,000 | $60,000 | $40,000 |
| Interest on Capital | 8 % | 8 % | 8 % |
| Current Accounts | $7,500 | $18,000 | $4,100 |
| Drawings | $19,000 | $17,000 | $12,000 |
| Interest on drawings | 10 % | 10 % | 10 % |
Additional information:
1.Closing stock $33,700.
2.Assets: Premises and Furniture valued at $346,000 and $78,000 respectively.
3.Cash $44,000.
4.Debtors $38,000
5.Creditors $ 26,00
6.A monthly salary of 13,500 is payable to Chev and Mal
7.The net profit as of 31 December is 480,000
8.Mal drew cash on August 31, 2020, and Gabbie drew cash on December 31, 2019.
REQUIRED
- Prepare the Profit and Loss Appropriation Account of partners for the year ended December 31, 2020.[11 marks]
- Draw up the partners’ current account. [9 ½marks]
- Prepare the fluctuating Capital Accounts for the partners[9 ½marks]
- Prepare the Balance Sheet (Extract) as of November 30, 2023, showing the Equity Section[11 marks]