Ally and Fatty are in partnership named AF Ent. Profit sharing ratio is based on their contributed capital. Ally and Fatty contributed capital of RM80,000 and RM50,000 respectively.For the year ended 31 December 2019, AF Ent. managed to generate profit of RM20,800.Interest on capital and drawings is 10% and 5% per annum respectively based on their agreement. Ally is also entitled to receive a salary of RM 400 per month.Additional info: Ally withdrew RM5,000 while Fatty withdrew RM 4,000.Required: Prepare profit and loss appropriation for AF Enterprise (the Partnership firm).

The Profit and loss appropriation account is prepared to appropriate the various expenses related to…

Answered: Ally and Fatty are in partnership named…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Ally and Fatty are in partnership named AF Ent. Profit sharing ratio is based on their contributed capital. Ally and Fatty contributed capital of RM80,000 and RM50,000 respectively.
For the year ended 31 December 2019, AF Ent. managed to generate profit of RM20,800.
Interest on capital and drawings is 10% and 5% per annum respectively based on their agreement. Ally is also entitled to receive a salary of RM 400 per month.
Additional info: Ally withdrew RM5,000 while Fatty withdrew RM 4,000.

Required: Prepare profit and loss appropriation for AF Enterprise (the Partnership firm).

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Expert Solution

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions