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Question 4 John, Lee and Tony are in partnership, preparing accounts to 31 October each year

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Question 4

John, Lee and Tony are in partnership, preparing accounts to 31 October each year. Their partnership agreement states that:

(i) The partners are entitled to 5% per annum interest on their opening capital accounts. No interest is allowed (or charged) on current account balances.

(ii) Interest is charged on the partners' drawings at 7% per annum. Their drawings during the year to 31 October 2020 were as follows: John RM30,000 Lee RM20,000 Tony RM3,000

(iii) Partners' annual salaries are RM6,000 and RM 12,000 for Lee and Tony respectively.

(iv) Remaining profits and losses are shared between John, Lee and Tony in the ratio of 5:4:1.

(v) The partners' capital and current account balances as at 1 November 2019 are as follows: Capital a/c Current a/c RM RM John 50,000 16,320 Cr Lee 30,000 1,110 Cr Tony 10,000 (590) Dr The capital account balances remained unchanged during the year to 31 October 2020.

(vi) The partnership's net profit for the year to 31 October 2020 is RM81,961.

Required:

a. Prepare a profit distribution account for the year ended 31 October 2020.

b. Prepare the partners' current accounts (in columnar form) for the year to 31 October 2020.

c. (Note: All the figures must be rounded up to the nearest RM)