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
Capital Accounts Cymbal
Current Accounts Skerritt
Current Accounts Cymbal
Motor Vehicle at cost
Buildings at cost
Stock at September 30, 2006
Cash at bank
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.
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)