Tom, Dick and Harry are partners sharing profits in the ratio 2:1:1, respectively, after allowing Tom a salary of £3,000 per month and interest on capital account balances at 6% per annum. The year-end Trial Balance is stated. You are informed as follows:

(a) The cost of inventory at the year-end was £412,000.

(b) Dick as owner of the premises is to receive rent of £4,000 per month.

(c) £30,000 drawn by Tom as salary is included within the balance in the Salaries account.

(d) Non-current assets are to be depreciated at 20% per annum, using the reducing balance method.

Required: Set out:

(a) partners’ Current accounts in columnar form;

(b) the Statement of income for the year ended 31 March 2012 and the Statement of financial position as at that date.

Clue: One way of sorting out the amount drawn by Tom as salary is to transfer that amount from the Salaries account to Tom’s Current account, proceed to identify partnership profit and, at the time of appropriation, give Tom the credit for the full salary due to him.

Transcribed Image Text:

Trial Balance as at 31 March 2012 £'000 £0 Non-current assets Depreciation - 31.3.2011 Inventory - 31.3.2011 Rent paid to Dick Salaries Interest paid to Tom Receivables and payables Purchases Postage and telephone Sales Advertising Current accounts: Tom Dick Harry 12% Loan from Tom Cash and bank balance 640 - 365 40 214 9 544 2,172 32 - 165 - ININ 12 92 £'000 300 428 3,096 - 126 34 100 T