Andreas, Jude and Sandy are in business together, sharing profits in the proportion 3 : 2 : 1. Their partnership agreement provides for interest on their fixed capital balances of 8 per cent per annum, and that Sandy should receive a salary of £13,400 per annum. Their trial balance as at 30 June year 3 was as follows:

Adjustments a Non-current assets are to be depreciated at the rate of 20 per cent per annum on a reducing balance basis.

b Closing inventory amounted to £18,900.

c Business expenses of £2,735 have been incurred but not yet recorded.

d A provision for bad debts amounting to 10 per cent of receivables is to be created.

Prepare an income statement and an appropriation account for the year ending 30 June year 3, and a statement of financial position as at that date.

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Bank Business expenses 42,800 38,150 Capital accounts as at 30 June year 2 Andreas Jude Sandy Payables M 120,000 150,000 100,000 8,000 Current accounts as at 30 June year 2 Andreas 15,000 Jude 13,000 Sandy 4,600 Receivables 11,150 Drawings accounts as at 30 June year 3 Andreas 51,000 Jude 72,000 Sandy 38,400 Plant and equipment at cost 290,000 Goodwill 100,000 Inventories as at 30 June year 2 12,000 Provision for depreciation as at 30 June year 2 50,000 Purchases 78,900 Sales 283,000 739,000 739,000