Question 3
A and B are in a partnership in which profits and losses are shared equally.
The partners’ balances on the capital and current accounts at the year ended December 31, 2020 were as followed:
| Partners | Capital Account | Current Account |
| | $ | $ |
| A | 500,000 | 50,000 CR |
| B | 450,000 | 75,000 CR |
Notes:
I. During the year, A had drawings amounting to $250,000 and B $220,000.
II. B receives a partnership salary of $60,000 for extra duties in the company.
III. The net profit of the partnership, before taking any of the above into account was $600,000.
IV. Interest allowed on the capital account at the rate of 10% per annum, and interest to be charged on drawing at 10%.
Required:
a) The Appropriation Account for A and B partnership business for the year ended December 31, 2020.
b) The partners’ capital account as at December 31, 2020
c) The partners’ current account as at December 31, 2020