Kamau And Kimani Are Partners Sharing Profits And Losses In The Ratio 3 2 Respective 2870933

Kamau and Kimani are partners sharing profits and losses in the ratio 3:2 respectively. The partnership agreement provides for Kimani to receive a salary of 4,000,000 per annum, and interest on capitals for both partners at 5% per annum. The partnership balance sheet as at 31 December 2016 was as follows: ‘000’ ‘000’ ‘000’ ‘000’ Capital accounts Premises Kamau 16,000 Less depreciation 20,800 Kimani 10,000 26,000 Equipment at cost 8,000 Depreciation (4,800) 3,200 24,000 Current accounts Kamau 3,200 Kimani (300) 2,900 Stock 5,600 Debtors 2,200 Creditors accruals 3,300 Cash 400 8,200 32,200 32,200 Document Preview:

QUESTION 03Kamau and Kimani are partners sharing profits and losses in the ratio 3:2 respectively. The partnership agreement provides for Kimani to receive a salary of 4,000,000 per annum, and interest on capitals for both partners at 5% per annum. The partnership balance sheet as at 31 December 2016 was as follows:‘000’ ‘000’ ‘000’ ‘000’Capital accounts PremisesKamau 16,000 Less depreciation 20,800Kimani 10,000 26,000 Equipment at cost 8,000Depreciation (4,800) 3,20024,000Current accountsKamau 3,200Kimani (300) 2,900 Stock 5,600Debtors 2,200Creditors accruals 3,300 Cash 400 8,20032,200 32,200On I April 2017 Kimata was admitted to the partnership. He had been a salaried employee, earning Sh.8, 000,000 per annum. The terms of his admission to the partnership were as follows:1. Kimata should introduce 12,000,000 in cash as capital into the business.2. Goodwill should be valued at 14, 000,000 for the purpose of his admission. It was agreed that goodwill should not be included in the balance sheet of the new partnership.3. Kimata should receive a salary as a partner of 6, 000,000 per annum. Kimani’s salary should be raised to 6, 000,000.4. Interest on capital should be raised from 5% to 6% per annum and calculated on the capital accounts after the elimination of goodwill.5. The new profit sharing ratio for Kamau, Kimani and Kimata should be 4:2:1 respectively.In preparing the draft financial statements for the year ended 31 December 2017, the partnership accountant, Otieno, calculated that the partnerships profit for the year was Sh.55, 155,000, and that the working capital of the business as at 31 December 2017 was:‘000’Stock 12,555Debtors 3,500Cash 8,800Creditors and accruals 3,480Profit is assumed to accrue evenly during the year.Partners cash drawings for the year were Kamau 23,705,000, Kimani 19,525,000 and Kimata 8,250,000.Required:(a) The profit and loss appropriation account for the year ended 31 December…

Attachments:

03-question.pdf

Prof. Angela

4.6/5

Calculate Price


Price (USD)
$
Open chat