Accounts Prep 2 - BPP book

freck59
freck59 Registered Posts: 39 ? ? ?
I thought I was getting there but I'm confused now!

Can someone who is more confident of their knowledge than I am take a look at page 97 and 98 of the new AAT Accounts Prep 2 book and tell me why the current accounts of Jenny and Clare don't show the interest on capital, the interest on drawings and Clare's salary.

I have noticed that on Page 97 the amounts to be appropriated add up to the net profit only if you add in Interest on Drawings into Clare's account - which they've totally missed out - although they've included it in the figures!

Is it another error on their part or am I following the wrong scent!

Have the exam on 15th June and I'm really not confident - the last thing I need is mistakes in the text books!

Comments

  • sdv
    sdv Registered Posts: 585
    Reconcilliation between the amounts posted to the current account and Net profit

    Share of Net profit attributed to Jenny
    Interest on capital ............................1,200
    Share of profit.................................41,600 Total share of profit £42,800

    LESS Interest on drawings (chargable to clients)...........................£1,300

    Net profit Credit to the current account ........................................£41,500........£41,500

    Share of Net profit attributed to Clare
    Salary.............................................10,000
    Interest on capital ...............................800
    Share of profit.................................20,800 Total share of profit £31,600

    LESS Interest on drawings (chargable to clients)...........................£1,100

    Net profit Credit to the current account ........................................£30,500........£30,500


    Total Profit credited to the current accounts .....................................................£72,000


    Total Net profit available for distribution...........................................£74,400
    less Interest on drawings NOT distributed (1,300 + 1,100)see above...£2,400....£72,000 (reconciles)

    In the book the author has missed printing the £1,100 figure in his workings

    but (10,000 +800 +20,800) does not come 30,500 unless you take off £1,100

    All other workings are correct.

    I hope this clears your confusion
  • freck59
    freck59 Registered Posts: 39 ? ? ?
    Thanks SDV - I'll have to go through those figures again when my brain is a bit more responsive! I think I may be a lost cause - I seem to have come to the end of my usefulness.

    I appreciate the time taken in answering and will go through it though - it bugs the life out of me when I think I'm right and I'm not!
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