Accounting 0452 · IGCSE · Partnerships

Partnerships — practice question

Samir and Punita operate as partners. Their partnership agreement sets out the following: interest on drawings of 5% interest on capital of 3% per annum a salary to Punita of $11000 per annum any remaining profits and losses are shared 60% to Samir and 40% to Punita. The partners gave this information. Profit for the year ended 31 December 2022 $24600 Capital account balances at 1 January 2022: Samir $80000 Punita $75000 Current account balances at 1 January 2022: Samir $6450 credit Punita $8335 credit Drawings for the year ended 31 December 2022: Samir $16000 Punita $12400
(a)[6]

For the year ended 31 December 2022, prepare the appropriation account for Samir and Punita.

(b)[6]

For the year ended 31 December 2022, prepare Punita’s current account. Balance the account and carry the balance down to 1 January 2023.

(c)[3]

Place a tick (✓) in the correct boxes below to show the effects of Samir paying the costs of his own private car from the partnership bank account.

(d)[5]

Advise Samir and Punita whether they should convert the business to a limited company. Support your answer with two advantages and two disadvantages of changing the business to a limited company.

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