Bong, Harry and Mallu formed a partnership to carry on the business of an ethnic store in Bangkok. They are to receive equal shares of the profits and can make drawings during a year, not exceeding Baht (B) 20,000 each. They invested an amount of B 3,600,000. 

Transactions of the first financial year are as follows:

(a) Delivery vans purchased during the year, B 1,284,000. These vans are to be depreciated over 5 years, assuming a salvage value of 5%.

(b) Sales are made on 30 days credit and collection losses during the year amounted to 1% of the sales. Total sales during the year amounted to B 4,800,000 and receivables outstanding, B 600,000.

(c) Purchases are on 45 days credit and total purchases during the year amounted to B 3,320,800. Payables outstanding at close of the year were B 368,000.

(d) Inventory of merchandise available at the end of the year was B 256,500. Wages and other operating expenses were B 785,000. The firm owed B12,890 in wages at the end of the year.

(e) They have signed promissory notes amounting to B 85,000.

(f) It is expected that 1.5% of the accounts receivable outstanding may be bad. Drawings by the partners amounted to: B 18,000 by Mallu, B 20,000 by Bong and B 12,800 by Harry.

(g) All cash transactions were carried through the bank with which the firm had entered into an overdraft agreement, having a limit of B 1,200,000.

Question

Prepare a profit and loss account for the year and a balance sheet as at the end of the year.