Homework Answers
| statement of profit (2017) | Amt in $ |
| revenue | 6,42,000.00 |
| Less: exp | 4,80,000.00 |
| Add: repair exp wrongly charged to repair | 9,000.00 |
| Less:interest on capital | 23,200.00 |
| Less: compensation allowance | 53,000.00 |
| Less: drawings | 61,000.00 |
| Less: Repair for Fiz home | 9,000.00 |
| profit | 24,800.00 |
| ALLOCATION OF PROFIT IN THE RATIO OF 6:4 | |
| Fitz(24800*6/10 | 14,880.00 |
| Leu(24800*4/10) | 9,920.00 |
| statement of capital | |||
| fitz(amt in $) | leu(amt in $) | ||
| opening capital contribution | 1,70,000.00 | 1,20,000.00 | |
| Add | interest on capital(8% of capital contribution) | 13,600.00 | 9,600.00 |
| add | compensation allowance(as given) | 8,000.00 | 45,000.00 |
| less | drawings | 11,000.00 | 50,000.00 |
| less | fitz home repair | 9,000.00 | |
| add | profit allocated | 14,880.00 | 9,920.00 |
| closing capital | 1,86,480.00 | 1,34,520.00 | |
2.
| worksheet for 2018 | |
| Amt in $ | |
| interest of wen | 20% |
| capital contributed(A) | 1,10,000.00 |
| total capital of Fitz & Leu(B) | 3,21,000.00 |
| total capital of the new firm(A+B) | 4,31,000.00 |
| value of Wen's share(20% of new capital)C | 86,200.00 |
| bonus calculation(A-C) | 23,800.00 |
3.
Firstly , in relation to the capital interest contribution made by each partner should get interest on amount invested therefore interest ratio is as per law and is correct , secondly, compensation allowance is in very less to Fitz as because he is not a working partner , he is working occasionally and therefore leu is getting compensation as in salary, thirdly , income is divided in the ratio of capital contributed by partner i.e 6:4 which is fair enough.
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