Partnerships — practice question

Tadeen and Yadid are lawyers who have worked in partnership for many years. The partners supplied the trial balance shown at 30 April 2024. Additional information: Rates and insurance include $1920 for the period 1 March 2024 to 28 February 2025. By 30 April 2024, salaries of $1800 were owing and unpaid. Irrecoverable receivables amounting to $670 must be written off. Depreciation on fittings and equipment is to be charged at 15% per annum by the straight line method. The partnership agreement states that interest on partner’s loan is 6% per annum, interest on drawings is 5%, interest on capital is 3% per annum, Yadid is to receive a salary of $10 000 per annum, and residual profits and losses are to be divided 60% to Tadeen and 40% to Yadid. The partners employ one lawyer together with office staff. The lawyer, Lakia, is paid $25 000 but has decided to leave. Tadeen and Yadid have identified a replacement lawyer, Raim. He has been practising law for 15 years and is well known locally. However, Raim wants to join the business as a partner rather than remain an employee and would expect 40% of the partnership’s residual profit each year.