Ali and Sai are in partnership, and their financial year finishes on 30 June. The partnership agreement contains these terms.
Interest on capital is allowed at 6% per annum.
Interest on drawings is charged at 5%.
Sai receives a partnership salary of $10050 per annum.
Ali and Sai divide residual profits and losses in the ratio 3:2.
Ali and Sai have given the following details:
Drawings for the year ended 30 June 2024: Ali $11000, Sai $16000
Capital at 1 July 2023: Ali $60000, Sai $40000
Current account at 1 July 2023: Ali $1800 debit, Sai $250 credit
Profit for the year before interest on loan was $42700.
Ali lent $10000 to the partnership at an interest rate of 5% per annum. The interest for the year ended 30 June 2024 has already been paid. No other loans are held by the partnership.
(a)[8]
Prepare the profit and loss appropriation account for the year ended 30 June 2024.
(b)[8]
Prepare the capital and current accounts for Sai for the year ended 30 June 2024, then carry the balances down on 1 July 2024.
(c)[2]
State two disadvantages that can arise from operating as a partnership.
(d)[2]
Prepare the journal entry for the payment of interest on the loan supplied by Ali. A narrative is not needed.
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