PFAST - Sample Assessment 1, Q4 Appropriation accounts

lindsk87lindsk87 Posts: 19Registered
Can anyone help.

I have been looking at the appropriation account question and am struggling to understand the split of total profit for appropriation. The total profit is £80,000 to be split between 01 apr - 30 jun and 01 jul -31 mar.

I would take the total and divide by 12 to get a single month to then x by the amount of months, or divide by 1/4 etc.

I have seen the answer of 16,000 for 01 apr - 30 jun and 84,000 for 01 jul -31 mar.
80,000/125% gives me the 84,000 but i dont really understand how as for other questions dividing by 1/4 etc would get me the correct answer.

Am i doing something wrong?

Thank you

Best Answer

Answers

  • rakeshsuwalrakeshsuwal LondonPosts: 79Registered
    If you could copy paste the question here would be great so we can help. Thanks
    lindsk87
  • lindsk87lindsk87 Posts: 19Registered
    The partners at the beginning of the year were Asma and Ben

    Chris was admitted to the partnership on jul 1 20x6, when the partnership agreement changed

    summary of agreements

    partnership agreement effect until 30 jun
    profit share: Asma 60%, Ben 40%
    salary per annum: Asma £22000, Ben £18000

    partnership agreement effect from 1 jul
    profit share: Asma 50%, Ben 25%, Chris 25%
    salary per annum: Asma £22000, Ben £18000

    under both agreements partners are allowed interest on capital, calculated as follows
    Asma: £1600 for the 12 months ended 31 mar 20x7
    Ben: £1200 for the 12 months ended 31 mar 20x7
    Chris: £800 for the 9 months ended 31 mar 20x7

    you may assume interest for asma and ben accrued evenly across the year

    profit for the year ended 31 mar x7 was £80,000

    you need to prepare the appropriation account for the business for the year ended 31 mar

    Thank you for your help










  • lindsk87lindsk87 Posts: 19Registered
    Thank you for that. It makes perfect sense, I could work out how to get the 64000, just didn't know the logic behind it. Fortunately this didn't come up on the exam. It pays to read the question properly =)
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