Sage and Onion are trading in partnership, sharing profits and losses and equally. Interest at 5% per annum is allowed or charged on both the capital account and the current account balances at the beginning of the year. Interest is charged on drawings at 5% per annum. The partners are entitled to annual salaries of: Sage £12,000; Onion £8,000.

Required:

From the information given below, prepare the partnership profit and loss account for the year ended 31 December 20X1, and the balance sheet as at that date.

At 31 December 20X1:

(a) Stock on hand was valued at £68,000.

(b) Purchase invoices amounting to £3,000 for goods included in the stock valuation at (a) above had not been recorded.

(c) Staff salaries owing £900.

(d) Business rates paid in advance £200.

(e) Provision for doubtful debts to be increased to £2,400.

(f) Goods withdrawn by partners for private use had not been recorded and were valued at: Sage £500, Onion £630. No interest is to be charged on these amounts.

(g) Provision is to be made for depreciation of fixtures and fittings at 10% on cost.

(h) Interest on drawings for the year is to be charged: Sage £360, Onion £280.

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Capital accounts: Sage Onion Current accounts: Sage Onion Sage and Onion Trial Balance as at 31 December 20X1 Cash drawings for the year: Sage Onion Freehold premises at cost Stock at 1 January 20X1 Fixtures and fittings at cost Purchases and purchase returns Bank Sales and sales returns Trade debtors and trade creditors Carriage inwards Carriage outwards Staff salaries Dr 4 600 15,000 10,000 50,000 75,000 15,000 380,000 31,600 6,000 52,400 21,500 3,000 42,000 Cr £ 100,000 50,000 2,000 12,000 508,000 33,300