The accountant of Hook, Line and Sinker, a partnership of seven people, has asked your advice in dealing with the following items in the partnership accounts for the year to 31 May 19X7.

Required:
Discuss the treatment of each item with reference to relevant accounting standards and accounting concepts and conventions. Recommend the appropriate treatment for each item showing the profit effect of each recommendation made.

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(a) (i) Included in invoices prepared and dated in June 19X7 were 60,000 of goods despatched during the second half of May 19X7. (ii) Stocks of components at 31 May 19X7 include parts no longer used in production. These components originally cost 50,000 but have been written-down for purposes of the accounts to 25,000. Scrap value of these items is estimated to be 1,000. Another user has expressed interest in buying these parts for 40,000. (b) After May 19X7 a customer who accounts for 50 per cent of Hook, Line and Sinker sales suffered a serious fire which has disrupted his organisation. Payments for supplies are becoming slow and Hook, Line and Sinker sales for the current year are likely to be substantially lower than previously. This customer owed 80,000 to Hook, Line and Sinker at 31 May 19X7. (c) During the year to 31 May Hook, Line and Sinker commenced a new advertising campaign using television and expensive magazine advertising for the first time. Sales