Mostafa and Salma are partners in a wholesale business. Their financial year ends on 30 April.
When they started the business they drew up a partnership agreement. The terms of the agreement
included the following.
interest to be allowed on capital at 5% per annum
interest to be charged on drawings at 6%
Mostafa to be entitled to an annual salary of $12 000
residual profits and losses to be shared in the ratio of 3 : 2.
On 1 February 2019 the partners agreed that Mostafa’s salary should be increased to $15 000 per
annum.
For the year ended 30 April 2019
The profit for the year ended 30 April 2019 was $14 820.
REQUIRED
The partners provided the following information.
At 1 May 2018