Question

QUESTION 2 Kim, Khloe & Co. is in clothing line business. Below is their business information on 31 December 2018 RM Beginning capital: Kim 60,000 Khloe 40,000 Partner's drawings: Kim 16,500 Khloe 7,000 Annual Salaries: Kim 28,800 Khloe 21,600 Additional information i. The net profit for the year 31 December 2018 was RM90,000 ii. Interest is charged on capital and drawings at 5% and 4 % per annum respectively ii. The partners agreed to share profit and losses based on capital ratio REQUIRED: a) Prepare the journal entry to record the initial investment of both partners in the partnership b) Prepare the Profit and Loss Appropriation Account of Kim, Khloe & Co. for the year ended 31 December 2018.

Answer 1

a)	Journal entries to record intial investments
	Cash A/C Dr			60000
	To Capital A/C				60000
	(Being Kim Captial Bought Into Business)
	Cash A/C Dr			40000
	To Capital A/C				40000
	(Being Khole Captial Bought Into Business)
b)	Profit and Loss Appropriation A/C for the year ending 31 December 2018
	Particulars		Amount	Particulars	Amount
	To Salaries:			By Profit and Loss A/C (Net Profit)	90000
	Kim		28800
	Khole		21600	By Interest On Drawings:
				Kim (16500*4%)	660
	To Interest on capital:			Khole (7000*4%)	280
	Kim (60000*5%)		3000
	Khole (40000*5%)		2000
	To Share of profit: (Balancing Figure 35540 in capital ratio)
	Kim		21324
	Khole		14216
			90940		90940

Thanks for such interesting question

will be happy if you give me nice credit and comment for my sincere effort to your valuable question