Reid and Benson are in partnership as lecturers and tutors. Interest is to be allowed on capital and on the opening balances on the current accounts at a rate of 5% per annum and Reid is to be given a salary of £18,000 per annum. Interest is to be charged on drawings at 5% per annum (see notes below) and the profits and losses are to be shared Reid 60% and Benson 40%.

The following trial balance was extracted from the books of the partnership at 31 December 20X3.

• A provision for doubtful debts is to be carried forward of £1,500.
• Insurances paid in advance at 31 December 20X2 were General £50; Professional Indemnity £100.
• Fixtures and fittings are to be depreciated at 10% on cost.
• Interest on drawings are: Benson £550, Reid £1,050.
• Stock of books at 31 December 20X2 was £1,500.

Required:

Prepare a profit and loss account together with an appropriation account at 31 December 20X3 together with a balance sheet as at that date.

Transcribed Image Text:

Capital account - Benson Capital account - Reid Current account - Benson Current account - Reid Drawings - Reid Drawings - Benson Sales - goods and services Purchases of textbooks for distribution Returns inwards and outwards Carriage inwards Staff salaries Rent Insurance - general Insurance public indemnity Compensation paid due to Benson error General expenses Bad debts written off Fixtures and fittings - cost Fixtures and fittings - depreciation Debtors and creditors Cash Total 4 17,000 20,000 291,830 800 3,150 141,150 2,500 1,000 1,500 10,000 9,500 1,150 74,000 137,500 400 711,480 £ 50,000 75,000 4,000 5,000 541,750 330 12,000 23,400 711,480