Partnerships

Question 1

Appropriation section layout - partnerships

Answer 1

Profit for the year

Add interest on drawings
Less interest on equity
Less salary

Residual profit
Profit share

Question 2

Current account layout

Answer 2

(Date, Details, Dr, Cr, Balance)
Balance

Interest on equity
Interest on loan
Salary
Profit share

Interest on drawings
Drawings

Question 3

Steps for adding a new partner

Answer 3

Revalue the assets
Split profit on revaluation
Calculate share of goodwill
Calculate new profit sharing ratio
Calculate share of goodwill written off partner’s equity accounts
Update equity accounts

Question 4

Changes to SOFP for partnerships

Answer 4

4. Non current liabilities
   Loan from partner
5. Equity
   Equity - Partner 1, Partner 2
   Current accounts - Partner 1, Partner 2
6. Reserves
   Revaluation reserve

Question 6

Equity Account layout for new partner

Answer 6

(Date, Details, Dr, Cr, Balance)
Cash and cash equivalents
Assets
Goodwill written off

Question 7

Equity Account layout for existing partner

Answer 7

(Date, Details, Dr, Cr, Balance)
Balance
Profit on revaluation
Goodwill
Goodwill written off