Question 1: A and S were partners in a firm sharing profits in the ratio of their capitals contributed on commencement of business which were RO. 85,000 and RO. 60,000 respectively. The firm stared business on January 1, 2018. According to the partnership agreement interest on capital and drawings are 12% and 10% p.a. respectively. A and S are to get a monthly salary of RO. 2,000 and RO. 3,000 respectively.
The profits for year ended December 31, 2018 before making above appropriation was RO. 100,300. The drawings of A and S were RO. 40,000 and RO. 50,000, respectively. Interest on drawings amounted to RO. 2,000 for A and RO 2,500 for S. Prepare Profit and Loss Appropriation Account and partners' capital accounts assuming that their capitals arc fluctuating.
Question 2: The following is the balance sheet of A and B as on 31" December 2019
|
Liabilities
|
Amount
|
Assets
|
Amount
|
|
Sundry creditors
|
80,000
|
Bank
|
10,000
|
|
Bills Payable
|
20,000
|
Sundry debtors
|
30,000
|
|
Capital Account:
|
|
Stock
|
20,000
|
|
A
|
|
Machinery
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40,000
|
|
40,000
|
70,000
|
Land & Buildings
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70,000
|
|
B
|
|
|
|
|
30,000
|
|
|
|
|
|
170,000
|
|
170,000
|
On 1.1.2020 they decided to admit L into the partnership on the following terms:
(a) L shall bring in a capital of R.O 35,000
(b) Goodwill of the firm being valued at R.O 20,000
(c) Land and buildings be appreciated by 10%
(d) Stock is depreciated by RD 4,000 and provision for outstanding liability is created at R.O 2,000.
Required: Prepare the Revaluation account, Capital accounts, Bank account and the Balance Sheet of the reconstituted partnership.
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