Text: Kindly provide me with the working solutions.
Question 16.2: Ken, Connor, and Edward have been in partnership for a number of years, sharing profits equally. Interest on capital is paid at 10%, and Ken gets a salary of $5,000 per annum.
TRIAL BALANCE as at 31 December 2019
Debit Credit
Capital accounts
Ken 110,000
Connor 80,000
Edward 110,000
Current accounts
Ken 3,650
Connor 1,360
Edward 3,360
Drawings
Ken 8,460
Connor 6,850
Edward 4,690
Profit 80,960
Continued overleaf
An Introduction to Financial Accounting Chartered Accountants Ireland, 205. ProQuest Ebook Central bookcentral.proquest.com/lib/uccie-ebooks/detail action?docID=5973837 uccie-ebooks on 2020-07-28 01:05:35
I6. PARTNERSHIPS: CHANGES IN PROFIT-SHARING RATIOS 357
Premises at cost
Accumulated depreciation - premises
Plant and equipment at cost
Accumulated depreciation - plant and equipment
Bank
Trade receivables
Inventory
Trade payables
280,000
20,000
35,000
9,660
26,460
28,800
62,000
35,990
453,620
453,620
NOTES
1. Edward is to retire on 31 December 2019.
2. The following has been agreed:
a) Ken and Connor will continue in partnership sharing profits 2:1.
b) Goodwill, which is valued at $60,000, is not to be shown in the accounts.
c) The valuations relating to the assets of the partnership are as follows:
i) Premises $250,000
ii) Plant and equipment $27,000.
d) Edward is to be paid any balance due to him on 1 January 2020, except $150,000, which he will leave in the partnership as a loan to be repaid over five years.
Requirement:
(a) Prepare the appropriation account for the year ended 31 December 2019. (7 Minutes)
(b) Prepare T accounts to 31 December 2019 for:
i) Partners' current accounts;
ii) Revaluation account;
iii) Partners' capital accounts;
iv) Bank account. (15 Minutes)