Exam on Accounting Principles
Table of contents
Answer all questions in this section
- List three distinguishing features of a partnership concern. (3 marks)
- Skerritt and Cymbal are in Partnership sharing profits and losses in the ratio of their capital balances. The following balances were leftover in their books after the preparation of the Trading and Profit and Loss Account on September 30, 2006.
| Capital Accounts Skerritt | $30 000 |
| Capital Accounts Cymbal | $40 000 |
| Current Accounts Skerritt | $(300) |
| Current Accounts Cymbal | $1 500 |
| Drawings Skerritt | $12 000 |
| Drawings Cymbal | $5 000 |
| Motor Vehicle at cost | $43 000 |
| Buildings at cost | $232 000 |
| Debtors | $23 300 |
| Creditors | $17 000 |
| Stock at September 30, 2006 | $18 000 |
| Cash at bank | $27 000 |
Additional information to be taken into consideration
- The net profit for the year ended September 30, 2006, is $250 000.
- Each partner earns an annual salary of $60 000.
- Interest on capital is to be paid at the rate of 5% per annum.
- Interest on drawings is to be charged at the rate of 10% per annum. Skerritt drew cash on October 31, 2005, and Cymbal drew cash on March 31, 2006.
- Accumulated depreciation on Motor Vehicles to September 30, 2006, is $8 600.
Required
- Prepare the Profit and Loss Appropriation Account for Skerritt and Cymbal for the year ended September 30, 2006. (6 marks)
- Prepare the Current Accounts of Skerritt and Cymbal on September 30, 2006. ( 5 marks)
- Prepare the Balance Sheet of Skerritt and Cymbal as of September 30, 2006, showing the working capital. (Do not show details of the current accounts in the Balance Sheet. Transfer only the closing balances from the partner’s current accounts. ) (6 marks)
