Question

On January 2018, Suraya and Camelia formed a partnership business of a 24-hours laundry centre called Clean and Neat. Suraya contributed RM15,000 cash, machine worth RM40,000 and note payable of RM30,000 to the partnership whilst Camelia contributed a building of RM78,000. For financial year ended 31 December 2018, the partnership had a net income of RM125,000. Their business information for the year ended 31 December 2018 is as follows:

Additional information:

1. Interest is charged on capital and drawings at \(8 \%\) and \(5 \%\) per annum respectively

2. Suraya and Camelia agreed to share profit and losses based on the ratio of 2.4

REQUIRED:

(a) Prepare the journal entry to record the initial investment of both partners in the partnership. 

(a) Prepare the Profit and Loss Appropriation Account of Clean and Neat for the year ended 31 December 2018.

b) Discuss any TWO (2) advantages and TWO (2) disadvantages characteristics of a corporation

Answer 1

Particulars	Debit(RM)	Credit(RM)
cash a/c    dr	15000
machine a/c dr	40000
To notes payable a/c		30000
to Suraya capital a/c		25000
Building a/c dr	78000
to camelia capital a/c		78000

Particulars	RM	Particulars	RM
Intrest on capital		Net profit b/d	125000
suraya(25000*8%)	2000
camelia(78000*5%)	3900	Intrest on drawings
		suraya(4200*8%)	26.88
Partner salaries		camelia(1800*5%)	90
Suraya	27600
camelia	33600
net profit transferred to
suraya(125116.9*2/6)	41705.63
camelia(125116.9*4/6)	83411.27
	125116.9		125116.9

Advantages:

1.Formation: their wont be many legal procedures to form a partnership firm and its easy to form.Registration is also not mandatory.

2.reward:Everyone holds an ownership and there is no seperate management or ownership.everyone can share and work and reward will be credited accordingly.

Disadvantages:

1.liabulity:Partnership firm comes with an unlimited liabulity and everone are euqlly liable for the debts of the firm.

2.legal entity:it wont lasts longer as if a parner retires or death of a partner business have to be stopped and there is no seperate legal entity