Hook, Line and Sinker have shared profits and losses in the ratio 3 : 2 : 1
Question:
Hook, Line and Sinker have shared profits and losses in the ratio 3 : 2 : 1 for a number of years. On 1 July 2004, the partners agreed that, from that date,
1. Hook will be entitled to a salary of $6000 per annum
2. profits and losses will be shared equally.
Information extracted from their books for the year ended 31 December 2004 was as follows.
Two thirds of the General expenses were incurred in the six months ended 31 December 2004.
On 1 April 2004, Hook made a loan of $8000 to the partnership. Interest on the loan is at a rate of 10% per annum.
Sales have accrued evenly throughout the year and all sales have earned a uniform rate of gross profit.
Required
Prepare a Trading and Profit and Loss Account for the year ended 31 December 2004 in columnar form to show the appropriation of profit before and after the change.
Step by Step Answer:
Heres the Trading and Profit and Loss Account for Hook Line and Sinker for the year ended 31 Decembe...View the full answer
