Appropiation Account

kazsamx

I'm having a look at the past paper for June 06, in the second part, can some one advise me how to calculate the net profit in the appropriation account for year ending April 2006........for some reason I don't seem to be able to work this one out.......Thanks in anticipation

numberjunky

Assuming you have the correct figure of 122200 as your NET profit the little sneaky thing they often do is to give you a problem of sharing the profit over two different time periods so to start with you have to take 122200 x 9/12 to get the NET POFIT figure for May -Jan which is 91650. Then 122200 x 3/12 for Feb - April.

Continuing on with each part of the year you can now take the salaries and apply the same formula so Ade's salary is 10900 x 9/12 to give 8175.

The same applies to the interest on capital. 30000 x 6% (which will give the yearly total of Int. On Cap of 1800 - now apply formula...so 1800 x 9/12 to give 1350 for May - Jan

Now, if you have done your Goodwill calculations correctly, there should be a different second half year Capital balance for both partners and a new capital balance fo the new partner.

The main thing to remember is that the profit, before anything is subtracted or shared out should be, in this case divided over the two periods of 9 months and 3 months amd the same formula must be performed on salaries and Int on Cap.

It is all explained in the answer sheet but maybe there is still something you can't see - hope I've helped.

kazsamx

Thanks

Wicked Thanks for that your a star:thumbup1:, will give this a good going over and see if it works for me.