ACCA FA2 CURRENT ACCOUNT
Michael and Donald have been in partnership for several years sharing profits and losses in the ratio 3:4. At 1 January they had the following credit balances on their capital and current accounts.
| Capital Account | Current Account | |
| Michael | 60,000 | 90,000 | Donald | 60,000 | 90,000 |
The partnership statement of profit or loss for the year to 31 December shows a profit of $14,000. And the partners had made drawings of $45,000 each.
What is the balance of Michael's current account at 31 December?
Suggested Solution. Michael's current account
| Debit | Credit | ||
| Drawings | 45,000 | Opening balance | 90,000 |
| Share of partnership profit | 6,000 | ||
| Balance at 31 Dec | 51,000 |
Working:
Michael's Share of profit
=14,000 X 3/7
=$6,000
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