ADVANCE ACCOUNTING

Ken and Oscar have been in parnership for some years as estate agents.The partnership
agreement states that they share profits and losses in the ratio 3:2.Interest on capital is
payable at the rate of 4%per annum;whilst interest on drawings is charged at the rate of 5% per annum.A salary of K15,000 is paid to Ken and a salary of K10,000 is paid to Oscar.
The following Trial Balance has been extracted from the books at 31 July 2021.

Sales commission received
Electricity
Wages and salaries
Repairs
General expenses
Capital accounts:Ken at 1 June 2020
Oscar at 1 June 2020
Current accounts:Ken at 1 June 2020
Oscar at 1 June 2020
Office Premises
Provision for depreciation of premises
Office equipment
Provision for depreciation of office equipment
Receivables
Payables
Bank
Drawings:Ken
Oscar

Dr
K
7,000
16,500
9,800
20,000

2,500
60,000
44,000
45,000
65,000
20,000
25,000
314,800

Cr
K
139,100

60,000
50,000
5,000
15,200
13,500
32,000

314,800

Additional information:
1.Electricity owing at 31 July 2021 amounted to K1,200
2.Included in the general expenses is an item of office cquipment purchased during the
year for K5,000.This item has not yet been included in the office cquipment account. 3.Repairs include an amount of K9,000 which relates to extension of office premises. 4.Wages and salaries of K16,500 include an eror of K2,000 salary paid to Ken and
K1,000 salary paid to Oscar.

5.Depreciation is to be provided as follows:

OfTice equipment:10%per anmum on cost using the straight line method.A full year’s depreciation is provided on all office cquipment held on 31 July 2021,regardless of the date of purchase.
Office Premises:2″%per annum by the straight line method.The rate applies
to the cost value at the year end,regardless of the date of any additions during the year.
Required:
Prepare for Ken and Osear:
a)The Statement of Profit and Hoss (Profit and Loss and Appropriation Account)for
the year ended 31 July 2021. (6 marks)
b) The Current Accounts for the year ended 31 July 2021. (4 marks)
c)The Statement of Financial Position as at 31 July 2021. (5 marks)
d)Identify two (2)typical contents of the partnership agrecment. (2 marks)
e)Bricfly state three advantages of a partnership (3 marks)

Firstly, please do not simply type out a full question and expect to be provided with a full answer. You must have an answer in the same book in which you found the question and so ask about whatever it is in the answer that you are not clear about. Then I will explain!

However secondly, partnership accounting was removed from all ACCA syllabuses many years ago and so you cannot possibly be asked a question like this in the Paper FA exam!!

(Part (e) of your question could just be relevant for the exam and is explained in our free lectures. Our lectures cover everything needed to be able to pass the Paper FA exam well.)

Finally, this is not ‘advanced accounting’ 🙂