Accounting 0452 · IGCSE · Partnerships

Partnerships — practice question

Akila and Darius are partners. Their partnership agreement states the following: interest on capital at 3% per annum interest on drawings at 5% a salary of $9500 per annum to Akila remaining profits and losses to be divided 60% to Akila and 40% to Darius. The partners produced the following balance list. Capital accounts at 1 May 2022: Akila $90000; Darius $65000 Current accounts at 1 May 2022: Akila $2600 debit; Darius $4745 credit Drawings for the year ended 30 April 2023: Akila $19400; Darius $16320 Profit for the year ended 30 April 2023 amounted to $42304.
(a)[6]

On the opposite page, Prepare the appropriation account for Akila and Darius for the year ended 30 April 2023.

(b(i))[5]

Prepare Akila’s current account for the year ended 30 April 2023.

(b(ii))[2]

Calculate the balance on Akila’s current account at 30 April 2023 if he had been due $1000 loan interest from the partnership.

(c)[2]

State two further items that are normally included in a partnership agreement.

(d)[5]

Advise Akila and Darius whether they should form a limited company. Support your answer with two advantages and two disadvantages of Akila and Darius forming a limited company.

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