The partners

Josh, Kelly and Lee have been carrying out a trading business for several

years. According to the terms of their partnership agreement, profits and

losses are to be shared between Josh 50%, Kelly 30% and Lee 20%. The yearly

salaries of Josh and Lee are $10,000 and $12,000 respectively. Interest of 10%

is allowed on the partners’ capital account balances outstanding as at the

beginning of the financial year. Interest of 10% is allowed or charged on

current account balances outstanding at the beginning of the financial year.

Interest at 10% is charged on drawings for the year irrespective of when the

drawings were made. Interest of 15% is allowed on the loan accounts of the

partners.

The account balances at the

beginning of the financial year (1

The drawings account balances as at 31

For the year ended 31^st

March 2021, the partnership recorded a net profit of $156,000. Josh and Lee

were each entitled to one year salary for the financial year ended 31