I'm doing a Sage course and need help with processing typical transactions affecting a partnership, like interest on drawings and capital, partners' salaries, and profit appropriation.
If the scanario in an exam is not a year end, how would this be done? Would you simply dr/cr the current accout for each item above and dr/cr an expense account in P/L like "Partners' P/L Appropriation"?
Also, if you wanted to appropriate profit to the respective currents accounts at y/e, how to do? Would you run year end to get a P/L balance and then do a PYear journal to clear that to the current accounts, and would Sage let you post to a P/L or retained earnings a/c?
Any ideas anyone on the best ways to do these transactions - in an exam either as monthly transactions, or in case of profit share, at y/end?
I am sorry but reading this thread left me massively confused about Sage protocols fpr partnerships, on what should be a straigntforward matter - if you are a proficient bookkeeper.
Can I indicate what I think should be the journal entries IN SAGE and you [or others can correct - please??]
Int on Drawings: [ monthly] Cr [set up in P&L] Partners' Appropriation a/c [o'head]; Dr Partners' Current a/cs
Int on Capital: [monthly] Dr [set up in P&L] Partners' Appropriation a/c [o'head]; Cr Partners' Current a/cs
Partners' Salaries: Dr [set up in P&L] Partners' Appropriation a/c [o'head]; Cr Partners' Current a/cs
Profit appropriation: THIS IS PURELY A GUESS
Run year end routine, then [if Sage allows], Dr P&L or retained earnings, Cr Partners' Current a/cs, but as a prior year entry, after setting up new financialyear. CAN YOU POST TO A SAGE- GENERATED "P&L" line after y/end has been done??
Interest on Loan [Partner] [non cash item] Dr P&L, Cr Partner current a/c.
For my Sage exam, any of these might, I think, be examined, except the Profit Appropr. though I have been told that we might be asked in the written section in how to do this.
Could you come back to say whether these entries appear correct, especially the "Partners' Appropriation a/c", which I see as an overhead which would clear down to P&L balance once y/end routine was run
Don't know if this link is of use. It is the help info on the Ask Sage website, which gives Sage's solutions how to treat various partnership transactions.
Not sure why you are classing some of the transactions as overheads? The transaction mainly involve the P&L account and the partners capital and current account, which are in the Capital 32xx range in Sage
I am preparing for an IAB Sage Adv. Sage exam and the usual scenario is to start a business from scratch in terms of Sage Accounting. So if the paper did not include P&L balance b/fwd or retained earnings, you would have to put the offset to current acct transactions somewhere. And if you used an overhead acct, the p&l run would look a bit odd, but when you came to run year end, it would clear down to P&L or ret. earnings, so effect is the same. Unfortunately, there are no past papers with this scenario but /y/end routines are inthe syllabus.
@Apollo. It would have been nice to post how you got on with your Level III Computerised Bookkeeping exam.
I'm doing the same, but can make the following statements on your comments:
(1) All Appropriation of Profits for Partnership Accounts occurs below net profit
(2) Nothing would be happening at the Overhead level
(3) What you are doing is assuming that you are having to use the standard accounts available in Sage, as well as the existing Chart of Accounts structure - without making any changes for yourself. This is incorrect.
(4) I think the ICB Level III Computerised Bookkeeping exam is looking for knowledge and skill in setting-up Sage (for example) accounts to properly reflect the accounting requirements partnerships.
The exam is pretty straightforward, but you've got to know your stuff - bookkeeping as well as Sage.
