Prepare a Profit and Loss Account for the year ended 31 May 1998. Prepare a Balance Sheet at 31 May 1998. Comment on these suggestions referring to relevant accounting standards. Question 2 John, Paul, George and Ringo are partners in a small band. She had calculated a profit of 40,000, before deducting salaries and interest on loans, and the partners had agreed this figure.
Interest is also payable on capital accounts at the same rate based on the balances at year end.
No interest is paid on current account balances. Paul gets a salary of 7,000 a year and Ringo gets 6,000 in salary. None of John s loan to the partnership had been repaid. Clearly show all of your workings. The group would like the accountant to return and if she does she will pay 5,000 to become a partner.