1. Partnership Accounts Session 4

2. Partnership Accounts Aims This unit is about the learner being able to prepare final accounts for both sole traders and unlimited partnerships, including the appropriation of profits. Learners will be able to draft final accounts and make necessary adjustments according to current financial standards

3. Partnership Accounts Learning outcomes By the end of the sessions all leaners will be able to correctly complete a Statement of Financial Position for a Partnership

4. Statement of Financial Position The statement of financial position of a partnership must show the year end balances on each partner’s capital and current account. The transactions can be shown in summary form.

5. Statement of financial position These are shown in the “financed by” section of the statement All other sections of the statement of financial position are prepared the same as a sole trader.

6. SFP Example Layout Financed by

7. SFP Example Layout Financed by

8. Example

9. Worked example – Len & Fred

10. Task (a) - Appropriation Account Financial Year Ending 30 th September£ Profit for appropriation38,000 Salaries Fred6,000 Interest on Capital (5%) Len (£33,000 x 5%)1650 Fred (20,000 x 5%)1000 Profit available for distribution29,350 Profit Share (2:1) Len (£29350 / 3 x 2)19567 Fred (£29350 / 3 x 2)9783 29,350

11. Worked example – Len & Fred Current Accounts Bal b/d500Bal b/d1000 Drawings1700014000Salary6000 Interest on Capital 16501000 Profit Share195679783 Balance c/d37173783 21217177832121717783 Balance b/d37173783 Len Fred LenFred

12. Worked example – Len & Fred Statement of Financial Position

13. Non-current assets: CostAcc DepreciationCarrying value Motor Vehcles 4000016000 24000 Fixtures & Fittings 22000800014000 38000 Current assets: SLCA 32000 Bank 5000 Cash 500 Closing Inventory 16000 53500 Current liabilities: PLCA 21000 Loan 10000 31000 Total net assets 60500 Financed by LenFred Total Capital Account 33000 20000 53000 Current Account 37173783 7500 Total 36717 23783 60500

14. Non-current assets: CostAcc DepreciationCarrying value Motor Vehcles 4000016000 24000 Fixtures & Fittings 22000800014000 38000 Current assets: SLCA 32000 Bank 5000 Cash 500 Closing Inventory 16000 53500 Current liabilities: PLCA 21000 Loan 10000 31000 Total net assets 60500 Financed by LenFred Total Capital Account 33000 20000 53000 Current Account 37173783 7500 Total 36717 23783 60500

15. Practice Questions