i. Interest on drawings in respect of the current financial year, the interest amounted to K500o for Shumba and K1000 for Shula. An investigation indicated that credit losses could be K4000 during the next financial period and the allowance for credit losses must be adjusted accordingly. Prepare: a) An income statement for the year ended 28 February 2002; b) Statement showing changes in the equity of the partnership for the year ended 28 February 2002. NB: Show all calculations.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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