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Partnership Current Account

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  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Ken Garrett.
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  • July 14, 2019 at 4:58 pm #523076
    chrismchale

    Hi I am having trouble trying to figure out this question. It is taken from an online mock test

    17. Michael and Donald have been in partnership for several years, sharing profits and losses in the ratio 3 : 4. At 1 January they had the following credit balances on their capital and current accounts.
    Capital Current
    Michael $65,000 $11,486
    Donald $80,000 $9,637

    The partnership statement of profit or loss for the year to 31 December shows a net profit of $28,595 and the partners have made drawings of $16,500 each. What is the balance on Michael’s current account at 31 December?

    Can you help me with this?
    I have tried to figure it out but no hope.

    Thank you
    Chris

    July 22, 2019 at 7:31 am #524538
    Ken Garrett
    Keymaster

    Michael’s starts with 11,486 (presumably Cr)

    From this, subtract drawings of 16,500 and add his share of profits 3/7 x 28,595

    So 11,486 – 16,500 + 12,255 = 7,241.

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