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M5
Level 3
| Question | Answer |
|---|---|
| Depreciation | Transfer to Machinery A/c first, closing Prov Deprec A/c and achieve correct Net Book Value (NBV) prior to a Revaluation. |
| Capital Ben | CR Bal b/d -£100,000; Revalue -£32,000 = £132,000 |
| Depreciation | Transfer to Machinery A/c first, closing Prov Deprec A/c and achieve correct Net Book Value (NBV) prior to a Revaluation |
| Decrease in Value | DR Machinery £200,000; CR less Deprec to Date £30,000 = £170,000 CR Devalued - £70,000 |
| Account Balances | Capital - CR Balance Current - DR Balance; Partner more Drawings out than in Credit short-term approval other Partners Drawings - DR Drawings, CR Bank as normal Balance transferred to Current A/c not Capital, as is the case with a Sole Trade |
| Agreement | * Capital by each Partner * Profit Sharing Ratio * Interest Rate (if any) on Capital * Interest Rate (if any) on Drawings * Salaries paid to Partners |
| Appropriation A/c | Temporary Adjustment for Salaries/Commissions Interest on Capital/Drawings |
| Capital Ben | CR Bal b/d -£100,000; Revalue -£32,000 = £132,000 |
| Capital Frank | CR Bal b/d -£150,000; Revalue -£48,000 = -£198,000 |
| Current A/c | Drawings | Salary/Commission Int Drawings | Int Capital DR Loss on Profit | CR Share of Profit CR b/d - Underdrawn Profits (owes Partner) DR b/d - Overdrawn Profits (Partner owes) |
| Fixed Capital A/c | CR Capital, Further Capital, Increase Asset DR Decrease Asset |
| Interest Drawings Pro-Rata Date Withdrawal end F Yr. 1st Jan 12 months. July Int 6 months. 6% Interest - F Y March 2018 | £75 DR Current, £46.75 DR, add to Net Profit prior to sharing remaining Profits. £550 July x 6% = £33 / 12 x 6 = 24.75 £400 Feb x 6% = £24 / 12 x 2 = £4.00 |
| Limited Liability | Partners personally liable Debts Partnership. * Joint - Partner; Liability outstanding debt Once from any Partner * Several - Shared between Partners. Liable their Share of Debt from ALL or NUMBER of Partners. |
| No Agreement * Profits or Loss shared equally 1:1 (2) * Interest Capital/Drawings Not Allowed * Salaries Not Allowed Partnership created, also with New Partner * Rules not altered without creating a New Partnership | * No New Partners without consent All Partners * Differences - settled Majority * Business not changed without consent All Partners * All Partners right to examine the Books * Partner Leaves (Death or Retires), cease Trading and new |
| Profit Sharing Ratio | Profits or Losses shared all Partners. Net Profit is moved to “Appropriation A/c”, divided among Partners according to Terms Partnership Agreement. Adjustments made before sharing Profit in Appropriation A/c |
| Profit Sharing Ratio | Percentages format - 70%, 30% or 7/10, 3/10 Ratio 3:2:1 (6): Partner 1=3, Partner 2=2, Partner 1=1 £180,000 / 6 = £30,000 x 3 £90,000; x 2 £60,000; x 1 £30,000 |
| Prov Deprec A/c | CR Bal b/d -£30,000; DR + Revalue £30,000 = £00,000 |
| Revaluation of Assets Increase or Decrease Capital A/cs according to PSR | Premises at Cost 275,000 Frank Capital 150,000 Ben Capital 100,000 Increase £75,000 to £350,000 - PSR 3:2(5) Frank 75,000 / 5 = 15,000 x 3 45,000; x 2 30,000 |
| Revaluation with Depreciation | Machinery DR Bal b/d £200,000 less CR Deprec £30,000 = £170,000 DR + Revaluation £80,000 = £250,000 |
Created by:
teresa1903
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