Matthew Mark and Luke were in partnership sharing profits

and #8263
Matthew, Mark and Luke were in partnership sharing profits and losses in the ratio 5 : 3 : 2,
financial statements being made up annually to 30 June. Fixed capitals were to bear interest at
the rate of 5 per cent per annum, but no interest was to be allowed or received on current
accounts or drawings. Any balance on current accounts was to be paid at each year end. Luke
left the partnership on 30 September 20X2, but agreed to leave his money in the business until
a new partner was admitted, provided interest at 5 per cent was paid on all amounts due to him.
John was admitted to the partnership on 1 January 20X3, providing capital of £2,000. It was
agreed that the new profit-sharing ratio be Matthew 5, Mark 4, John 1, but Mark was to
guarantee John an income of £3,000 per annum in addition to his interest on capital.At 1 July
20X2 each partner had a fixed capital of £4,000. Drawings during the year 20X2/20X3 were as f
ollows:Matthew.......................£750Mark...........................£600Luke...........................£220John...
...........................£80The profit for the year to 30 June 20X3 was £20,000, which may be
assumed to have accrued evenly over that period. You are required to show:a. the appropriation
account;b. the partners' current accounts for the year ended 30 June 20X3.View Solution:
Matthew Mark and Luke were in partnership sharing profits and

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