Question

The information below relates to “NOT partnership business” for the year ended 31st December, 2019 Nyamekye Oliver Twist GH¢’000 GH¢’000 GH¢’000 Capital Introduced 20,000 30,000 40,000 Drawings 10,000 15,000 20,000 i. Nyamekye is entitled to a salaries amounted to GH¢ 9,350,000 per annum, sharing Profit or loss on the basis of capital contributed. ii. Net profit for the period ended 31st December, 2019 was GH¢ 38,500,000. Interest on drawings and Capital are 5% and 10% per annum respectively. All expenses and incomes accrue evenly. iii. Oliver advanced a loan amounted to GH¢ 300,000,000 to “NOT Partnership Business” on 1st September, 2019 but charged an interest of 12.5% per annum on the loan. iv. Twist Retired on 31st December, 2019 but granted his net worth in the partnership business as a loan to the business charging Interest of 9% per annum on the loan. Required a. Prepare Profit or Loss Appropriation for the year ended 31/12/2019. (9 marks) b. Partners’ Capital Account for the year ended 31/12/2019 in the absence of current account.

Answer 1

Answer :

Profit and loss Appropriation

For the year ended December 31.2019

-	Amount	Amount
Net Profit	-	GHC 38,500,000
Add : Interest on drawings	-	-
Nyamekye (10000000*5%)	GHC 500,000	-
Oliver (15000000*5%)	GHC 750,000	-
Twist (20000000*5%)	GHC 1,000,000	GHC 2,250,000
Less : Salary to Nyamekye	-	GHC 9,350,000
Less : Interest on capital	-	-
Nyamekye (20000000*10%)	GHC 2,000,000	-
Oliver (30000000*10%)	GHC 3,000,000	-
Twist (40000000*10%)	GHC 4,000,000	GHC 9,000,000
Less : Interst on Loan from Oliver (300000000*12.5%*4/12)	-	GHC 12,500,000
Balance to be shared to partners	-	GHC 9,900,000
Share of profit to partners	-	-
Nyamekye (9900000*2/9)	GHC 2,200,000	-
Oliver (9900000*3/9)	GHC 3,300,000	-
Twist (9900000*4/9)	GHC 4,400,000	-

Nyamekye Capital

Account	Debit	Account	Credit
Drawings	GHC 10,000,000	Beginning balance	GHC 20,000,000
Interest on Drawings	GHC 500,000	Salary	GHC 9,350,000
Ending Balance	GHC 23,050,000	Interest on captial	GHC 2,000,000
		Share profit	GHC 2,200,000
Total	GHC 33,550,000	Total	GHC 33,350,000

Oliver Capital

Account	Debit	Account	Credit
Drawings	GHC15,000,000	Beginning balance	GHC 30,000,000
Interest on Drawings	GHC750,000	Interest on capital	GHC 3,000,000
Ending Balance	GHC 33,050,000	Share of profit	GHC 3,300,000
		Interest on Loan	GHC 12,500,000
Total	GHC 48,800,000	Total	GHC 48,800,000

Twist Capital

Account	Debit	Account	Credit
Drawings	GHC20,000,000	Beginning balance	GHC 40,000,000
Interest on Drawings	GHC1,000,000	Interest on capital	GHC 4,000,000
Twist Loan	GHC 27,400,000	Share of profit	GHC 4,400,000
Total	GHC 48,400,000	Total	GHC 48,400,000