ANSWER FOR QUIZ 1 PARTNERSHIP ACCOUNTS

The profit needs to be adjusted to account for the loan interest of 9% x RM25,000 = RM2,250.
The revised profit for appropriation is RM45,500 RM2,250 = RM43 250.

Ali and Baba

Appropriation Account for the year ended 31 December 2016

RM RM
Revised profit 43 250
Add: Interest on drawings
Ali (15,000 x 4%) 600
Baba (22,000 x 4%) 880 1 480

Less: Interest on capital

Ali (35,000 x 5%) 1 750
Baba (21,000 x 5%) 1 050 (2,800)

Less: Salary
Baba (8 500)
33 430
Profit share
Ali (60%) 20058
Baba (40%) 13 372 33 430

CURRENT ACCOUNT
Ali Baba Ali Baba
RM RM RM RM

01/01/12 Balance b/d - 4 200 01/01/12 Balance b/d 2 500 -

31/12/12 Interest on 600 880 31/12/12 Interest on 2 080 1 560
drawings capital
31/12/12 Drawings 15 000 22 000 31/12/12 Salary - 8 500
31/12/12 Share of 20 058 13 372
profit
31/12/12 Balance c/d 9 038 - 31/12/12 Balance c/d - 3 648
24 638 27 080 24 638 27 080
01/01/13 Balance b/d 3 648 01/01/13 Balance b/d 9 038

Ali and Baba

Balance Sheet extract as at 31 December 2016

Financed by:
Capital Account: Ali 35,000
Baba 21,000 46,000

Current Account: Ali 9 038

Baba (3 648) (5,390)
40,610