DESPO PAPAETI-GEORGIOU
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DESPO PAPAETI-GEORGIOU
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UESTION 1
M To and D Wong are in partnership sharing profits and losses in the ratio 3:1 respectively. The following incomplete list of balances was extracted from the books on 30 September 2015 after preparing the Trading Account:
€
129,927 Gross Profit
Capital Accounts:
M To
D Wong
Current Accounts:
60,000
20,000
M To
D Wong
Drawings Accounts:
M To
D Wong
Trade debtors
4,500 Dr
1,500 Cr
15,000
7,500
14,800
Rent
Insurance
Lighting & heating
Vehicle running expenses
Depreciation
General expenses
Wages and salaries
The partnership agreement states that:
10,700
4,600
7,300
9,300
12,000
2,600
52,500
(1) D Wong is to receive an annual salary of e20,000
(2) The partners are entitled to interest on their fixed capitals at 6% per annum
(3) Interest is to be charged at 5% of the balance on each partne r’s drawings account at the financial year-end
The following information is also available relating to the year ended 30 September 2005:
(4) The partners decided to create a provision for doubtful debts of 2% of trade debtors
(5) Vehicle running expenses include
€1,800 to be shared equally between the partners for private use of the business vehicles
(6) Prepaid insurance amounted to
€800
(7) Accrued lighting and heating expenses amounted to €350
REQUIRED
(a) Prepare for the year ended 30 September 2015 the:
(i) Profit & Loss and Appropriation Account (12 marks)
(ii) Pa rtners’ current accounts in columnar form
(11 marks)
(b) State 2 other items a partnership agreement might cover, apart from the ones given in (1), (2) and (3) above.
(2 marks)
(Total 25 marks)
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DESPO PAPAETI-GEORGIOU
QUESTION 2
An, Shan and Zi are in partnership sharing profits in the ratio 2:1:1.
They have fixed capitals of £120,000; £60,000 and £50,000 respectively and interest on capital is allowed at the rate of 10% per annum.
During the year to 31 December 2008, the three partners took drawings of £76,000; £22,400 and
£24,000 respectively.
On 1 January 2008 all three partners had credit balances on their current accounts of £800; £640 and
£1,260 respectively.
In addition, An is paid a salary of £34,000 per annum.
The following information is also available relating to the year ended 31 December 2008:
Purchases
Sales
Stock at 1 January 2008
Stock at 31 December 2008
Depreciation
Discount received
Discount allowed
Rent payable
Light and heat
Wages
Repairs to equipment
£
402,300
645,320
23,360
25,020
17,820
2,260
1,640
24,000
28,880
45,980
7,620
REQUIRED
(a) Prepare for the year ended 31 December 2008:
(i) the Trading and Profit & Loss and Appropriation Account
(ii) the Current Accounts for the three partners in columnar format.

DESPO PAPAETI-GEORGIOU
QUESTION 3
Adder and Viper are in partnership sharing profits and losses in the ratio 3:2. The partnership agreement further states that:
(1) Viper will be credited with an annual salary of £10,000.
(2) Each partner is to be charged interest at 5% per annum on the total amount of his drawings in any year.
(3) Each partner is to be allowed interest of 4% per annum on the opening balance of his capital account in any year.
Additional information:
(1) The net profit for the year ended 31 December 2002 was £37,900.
(2) The following credit balances applied at 1 January 2002:
Capital account
Current account
Adder
£
20,000
1,800
Viper
£
15,000
4,500
(3) Drawings during the year ended 31 December 2002 amounted to:
Adder
£
16,000
Viper
£
9,500
(4) On 31 December 2002, the following transfers were made from the partners ’ current accounts to their respective capital accounts:
Adder
£
1,100
Viper
£
13,000
REQUIRED
(a) Prepare for Adder and Viper, in respect of the year ended 31 December 2002:
(i) The Profit & Loss Appropriation Account.
(8 marks)
(ii) The partners ’ Capital Accounts, in columnar format. Dates may be ignored.
(4 marks)
(iii) The partners ’ Current Accounts, in columnar format. Dates may be ignored.
(9 marks)

DESPO PAPAETI-GEORGIOU
(b) In the absence of a partnership agreement what, if anything, does the Partnership Act of
1890 specify in relation to:
(i) Interest on drawings
(ii) Interest on capital
(iii) Partners ’ salaries
(iv) Profit sharing ratio.

DESPO PAPAETI-GEORGIOU
QUESTION 4
Thames and Severn are in partnership sharing profits and losses in the ratio 2 : 3 respectively. The following Trial Balance was extracted from the partnership books at 31 December 2002:
Freehold premises
Motor vehicles, at cost
Fixtures and fittings, at cost
Plant and machinery, at cost
Capital – Thames
Capital – Severn
Drawings – Thames
Drawings – Severn
1 January 2002
1 January 2002
Rent
Salaries
Carriage In
Carriage Out
Returns In
Purchases
Sales
Insurance
Light and heat
Trade debtors
Trade creditors
General office expenses
Motor vehicle expenses
Bad debts
Provision for doubtful debts 1 January 2002
Discounts received
Discounts allowed
Interest on bank loan
Bank loan
Cash at bank
Telephone expenses
Stock 1 January 2002
Provision for Depreciation 1 January 2002
Motor vehicles
Plant and machinery
Fixtures and fittings
9,300
7,800
126,000
15,350
9,900
1,800
8,300
3,750
66,950
8,000
67,900
Dr
£
300,000
50,000
18,000
80,000
19,700
38,500
28,000
101,000
4,700
8,950
9,500
609,000
1,592,400
Cr
£
209,000
163,000
1,005,000
91,000
3,700
1,800
75,000
10,000
30,300
3,600
1,592,400

DESPO PAPAETI-GEORGIOU
QUESTION 4 CONTINUED
The following additional information has been made available in respect of the year ended
31 December 2002:
(1) Depreciation is to be provided at the following rates using the straight line method:
Fixtures and fittings
Plant and machinery
Motor vehicles
10% pa
15% pa
20% pa
(2) The Provision for Doubtful Debts is to be adjusted to 2% of debtors.
(3) Thames is to receive a salary of £25,000.
(4) The partners are to receive interest at the rate of 5% per annum based on the balance on their
Capital Accounts at 1 January 2002.
(5) Closing stock was valued at £58,900.
(6) There were no balances on the partners ’ current accounts at 1 January 2002.
(7) Accrued charges at 31 December 2002 were:
Salaries
Interest on loan
Motor vehicle expenses
Telephone
Light and heat
1,000
3,750
600
550
450
(8) The prepayments at 31 December 2002:
Rent
Insurance
4,000
50
REQUIRED
Prepare, in the books of the partnership:
(a) the Trading, Profit & Loss Account and Appropriation Account for the year ended 31 December
2002
(b) The partners' current accounts, in columnar format, in respect of the year ended 31
December 2002.

DESPO PAPAETI-GEORGIOU
QUESTION 5
Smith and Jones are partners with fixed capitals - Smith £20,000 and Jones £30,000.
The following information was extracted from the trial balance of Smith and Jones at 30 June 2014:
Freehold Land and Buildings
Motor Vehicles at cost 1 July 2013
Provision for Depreciation, Motor Vehicles 1 July 2013
Stocks 1 July 2013
Credit sales
Cash sales
Bank overdraft
Bank loan, repayable 30 June 2018
Trade creditors
Trade debtors
Provision for doubtful debts 1 July 2013
Purchases, net of drawings
Wages
Miscellaneous expenses
Loan from Jones, due 30 June 2016
Insurance
The following additional information is available:
£
30,000
72,000
14,400
42,000
181,000
67,000
19,500
30,000
38,000
27,000
627
121,000
38,000
8,500
10,000
1,000
 Profits and losses are shared in the ratio of their fixed capitals
 Jones receives a salary of £25,000 per annum
 Smith receives 15% commission on all cash sales
 Interest on partners' fixed capital is 5% per annum
 Interest on partners' loan is 10% per annum
 Interest on drawings is 6% per annum - on the total drawings in any year
•Motor vehicle depreciation is charged at 20% per annum on a straight-line basis
•Bad Debts of £500 should be written off in the year to 30 June 2014 and a provision for doubtful
debts is to be made of 3% of remaining debtors
•Interest accrued on bank loan at 30 June 2014 was £252
•Stocks at 30 June 2014 were £37,000
•Wages of £1,500 for month ending June 2014 was not paid until July 2014
•Insurance premiums of £400 were paid in advance
Drawings for the year to 30 June 2014 were:
Smith
Jones
Cash
£
6,000
2,500
Goods
£
1,000
5,000
REQUIRED
The Trading, Profit & Loss and Appropriation Account for the year ended 30 June 2014.

DESPO PAPAETI-GEORGIOU