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Csec Principles of Accounts

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CSEC: May 2018, Question #4

4/27/2019

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No. 4(a): Workings for preparation of the appropriation account of Benji and Nicka:
Calculation of interest on capital:
  1. Benji = $160,000 x 10% = $16,000.
  2. Nicka = $140,000 x 10% = $14,000
  
Calculation of interest on drawings:
  1. Benji = $6,000 x 5% = $300
  2. Nicka = $4,300 x 5% = $215
  
Calculation of share of profit using ratio of 3:2:
Remaining profits = (56,200 + 300 + 215) – (16,000 +14,000 + 5,000) = $21,715
​
  1. Benji = $21,715 x 3/5 = $13,029
  2. Nicka = $21,715 x 2/5 = $8,686
Now that all of the workings has been completed the Appropriation Account.
Preparation of the Appropriation Account of Benji and Nicka:
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No. 4(b): Preparation of the Current Account of the partners for the year ended 31st December 2017:
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No. 4(c): Calculation of the partnership’s return on investments for the year ended 31st December 2017:
 
Return on investment =   ___Net Profits      x 100 =              56,200           x 100 = 18.74%
                                             Capital Employed               (160,000 + 140,000)
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