River, Stream and Pool are in partnership with an agreement to share profits in the ratio...
River, Stream and Pool are in partnership with an agreement to share profits in the ratio 3:2:1 respectively. They also agree that:
all three should receive interest at 12% on capital
pool should receive a salary of Shs.6 million per annum
interest will be charged on withdrawals at the rate of 5% (charged on the end of the year withdrawals balances)
The interest rate on the loan by River is 5%
The statement of financial position as at 31 December 2016 revealed the following.
Sh. ‘000’ Sh. ‘000’
Capital accounts: River 20,000
Stream 8,000
Pool 6,000
34, 000
Current accounts: River 3,500
Stream (700)
Pool 1,800
4,600
Loan account (River) 6,000
Capital employed to finance net long – term assets and working capital 44, 600
Withdrawals on account made during the year to 31 December 2016 were as follows:
Sh ‘000’
River 6,000
Stream 4,000
Pool 7,000
The net profit for the year to 31 December 2016 was Shs. 24.53 million before deducting loan interest.
Required :
a) Partners’ appropriation account ( 5 marks)
b)Partners’ Capital accounts (5 marks)
c)Partners’ Current accounts, for the year ended 31st December 2016. ( 10 marks)
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River, Stream and Pool are in
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