Walter and Vera are in partnership. The following trial balance is available at 31 August 2014.

Additional information:

• Depreciation on furniture and equipment is charged at 10 per cent per annum on cost.

• I he partnership agreement originally stated that all profits and losses were to be shared equally. However, this agreement was changed on 1 January 2014 due to Walter's it health. On this date it was agreed that Vera would receive a salary of $9000 per annum, and interest on capital was to be charged at 6 per cent per annum. Residual profits or losses should be shared equally.

Prepare an income statement for the year ended 31 August 2014, an appropriation account for the year ended 31 August 2014 and a statement of financial position at 31 August 2014. Assume profits arose evenly throughout the year.

Transcribed Image Text:

Trial balance at 31 August 2014 Dr Cr so00 $000 Bank overdraft 8 Capital accounts Walter 200 Vera 250 Current accounts: Walter 5 Vera 12 Drawings: Walter 34 Vera 44 Fumiture and equipment Cost 160 Provision for depreciation, 1 September 2013 80 General expenses 20 Gross profit 135 Inventory, 31 August 2014 Premises at cost 33 270