Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

L and M are partners, and profits and losses are divided in the ratio of $3:2$ respectively. At the end of the year, the following details were available: Capital: L $200\,000$, M $150\,000$, with interest on capital at $8\%$ Drawings: L $30\,000$, M $20\,000$, with interest on drawings at $5\%$ Partners’ salaries: L $22\,000$, M $17\,000 The residual profit credited to L was $24\,000$. Calculate the profit for the year before appropriation.

  • A$48\,500
  • B$88\,500
  • C$104\,500
  • D$109\,500

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