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 | 80,000 | 70,000 | Donald | 40,000 | 90,000 |
The partnership statement of profit or loss for the year to 31 December shows a profit of $56,000. And the partners had made drawings of $35,000 each.
What is the balance of Michael's current account at 31 December?
Suggested Solution. Michael's current account
| Debit | Credit | ||
| Drawings | 35,000 | Opening balance | 70,000 |
| Share of partnership profit | 24,000 | ||
| Balance at 31 Dec | 59,000 |
Working:
Michael's Share of profit
=56,000 X 3/7
=$24,000
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