Sister and Sledge are trading in partnership, sharing profits and losses in the ratio of 2:1, respectively. The partners are entitled to salaries of Sister £6,000 per annum and Sledge

£5,000 per annum. There is the following additional information.

(1) Stock as at 31 December 2001 was valued at £8,800.

(2) Staff salaries owing £290.

(3) Advertising paid in advance £200.

(4) Provision for bad and doubtful debts to be increased to £720.

(5) Provision should be made for depreciation of 2% on land and buildings on cost, and for fixtures and fittings at 10% on cost.

Trial Balance as at 31 December 2001

‘s S Capital accounts: a Sister 12,500 Sledge 5,000 Current accounts:

Sister 1,500 Sledge 600 Drawings:

Sister 9,800 Sledge 6,700 Long-term loan 40,250 Land and buildings at cost 164,850 Stock as at 1 January 2001 9,500 Fixtures and fittings at cost 12,500 Purchases 126,000 Cash at bank 3,480 Sales 305,400 Trade debtors 9,600 Carriage inwards 200 Carriage outwards 300 Staff salaries 24,300 Trade creditors 26,300 General expenses 18,200 Provision for bad and doubtful debts 480 Advertising Layi6}5\0)

Discounts receivable 120 Discounts allowed 350 Rent and business rates 2,850 Land and buildings accumulated depreciation as at 1 January 2001 9,750 Fixtures and fittings accumulated depreciation as at 1 January 2001 3,500 Electricity 4,500 Telephone 5,720 404,800 404,800 Required:

Prepare the trading and profit and loss and appropriation account for the year ended 31 December 2001 and the balance sheet as at 31 December 2001.