May 2014 P2

1. Thirsts contribution = $20, 000

Add ratios (3+1)
This becomes denominator of fraction i.e. (2/3 = Swigger, 1/3 = Thirst)
Multiply each fraction by total capital (2/3 x $60,000 = $40,000)

b) Swigger and Thirst

Profit and Loss Appropriation Account
For The Month Ended June 30th 2014
$ $
Net Profit 15 380
Add: Interest on Drawings
Swigger 4 000
Thirst 300 4 300
19 680
Less: Salary
Swigger
Thirst 18 000

Less: Interest on Capital

Swigger 4 000
Thirst 2 000
6 000
24 000

Profit Share
Swigger
Thirst