A and B had been in partnership for many years as architects, sharing profits equally. It had
Question:
A and B had been in partnership for many years as architects, sharing profits equally. It had been their custom to ignore fees, etc., earned on uncompleted matters when preparing annual accounts. On 1.1.2017, they entered into a new partnership agreement under which the profits earned in any year were to be distributed as follows :Although they shared profits in accordance with the new agreement, they continued to prepare their accounts upon the old basis, i.e., ignoring fees earned on uncompleted work. At the end of 2018, it was pointed out to them that they were not following the terms of their agreement, and it was agreed that such correcting entries as might be necessary, should be put through as on 31.12.2017.
The profits already dealt with were :
The outstanding fees not brought into account on 31st December each year were :Assuming that the books were duly closed at the end of each year, give the entries necessary to correct the Partners’ Accounts.
Step by Step Answer:
Financial Accounting Volume II
ISBN: 9789387886230
4th Edition
Authors: Mohamed Hanif, Amitabha Mukherjee