Akila and Darius are in partnership. Their partnership agreement states the following:
interest on capital of 3% per annum
interest on drawings of 5%
a salary to Akila of $9500 per annum
residual profits and losses to be shared 60% to Akila and 40% to Darius.
The partners supplied the following balances.
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
The profit for the year ended 30 April 2023 was $42304.
(a)[6]
On the facing 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 usually part of a partnership agreement.
(d)[5]
Advise Akila and Darius whether they should set up a limited company. Support your answer with two advantages and two disadvantages of Akila and Darius setting up a limited company.
Worked solution & mark scheme
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