On 1 January 2018, GEHAN and RAED entered into a partnership contributing $180,000 and $90,000 respectively...

On 1 January 2018, GEHAN and RAED entered into a partnership contributing $180,000 and $90,000 respectively and sharing profits in the ratio of 2:1. RAED is allowed a salary of $15,750 per year. Interest on capital is allowed at 10% per annum. GEHAN is entitled to receive a commission of $105,000. During the year, RAED withdrew $18,000 and GEHAN $7,800; interest on the same being 12% per annum. Profit in 2018 before the above-mentioned adjustments was $75,000.

Instructions

You are required to prepare

Draw up the key chart to show every partner’s share (1 mark)
The Profit and Loss Appropriation Account (2marks)
the partners’ Capital Accounts of GEHAN and RAED. (2marks)

Expert Solution

ekkarill92 answered 2 years ago

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