Question: L and M are partners in Elem Co. each contributing $50,000 towards their capital. On March 31, 2018 the business reported the following: a. Sales

L and M are partners in Elem Co. each contributing $50,000 towards their capital. On March 31, 2018 the business reported the following: a. Sales turnover of $900,000 b.Cost of goods sold $400,000 c. Operating Expenses $200,000 d. L and M are to be paid a salary of $3,000 and $2,000 salary per month respectively. e. Both the partners are to receive interest on capital @6% per annum. f. M is to receive a bonus of $30,000 if sales exceeded $600,000 in any year and L is to be paid a commission of 4% on all sales. There was no agreement regarding the sharing of profits between partners. The provisions of the Partnership Act was to be applied in this case. REQUIRED: Determine the capital account balances of the partners on March 31, 2018. Complete the table by listing answer to A-M (see picture to assist)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!