Neco 2023 Financial Accounting Question 45

Three partners X, Y and Z run a business with a profit‑sharing ratio of 4:3:2. Their opening capital balances on 1 January are X = \(200{,}000\) ₦, Y = \(150{,}000\) ₦ and Z = \(100{,}000\) ₦. During the year the partnership earned a net profit of \(210{,}000\) ₦. Interest on capital at 8\% per annum is charged on the opening capitals. The partners also receive salaries: X = \(30{,}000\) ₦, Y = \(25{,}000\) ₦, Z = \(20{,}000\) ₦. At year‑end the partnership is dissolved. The assets and liabilities are: Assets - Machinery (cost \(180{,}000\) ₦, accumulated depreciation \(60{,}000\) ₦) - Inventory \(40{,}000\) ₦ - Debtors \(70{,}000\) ₦ - Cash \(20{,}000\) ₦ Liabilities - Bank loan (current) \(80{,}000\) ₦ - Trade creditors \(30{,}000\) ₦ Goodwill has not been recorded. The partners agree to settle the partnership by first paying off all liabilities and then distributing the remaining assets in the profit‑sharing ratio after adjusting for interest and salaries. Calculate: a) The interest on capital for each partner. b) The amount of profit remaining after deducting interest and salaries, and each partner's share of that profit. c) The total amount each partner will receive on dissolution (including return of capital, interest, salary and profit share) before any shortfall is considered. d) Whether there is a shortfall; if so, allocate the shortfall among the partners in the profit‑sharing ratio and state the final amount each partner receives.