Self-test Filling and Kap are partners in a dentistry business. The following trial balance was extracted from their books on 31 March 2006.

Debit Credit

£ £

Capital accounts 1 April 2005 – Filling 100,000

– Kap 50,000 Current accounts 1 April 2005 – Filling 5,000

– Kap 15,000 Drawings – Filling 100,000

– Kap 95,000 Bank 7,500 Wages to assistants 40,000 Creditors 3,415 Administration expenses 8,500 Fittings and equipment at cost 60,000 Provision for depreciation on fittings and equipment 1 April 2005 18,000 Advertising 840 Materials bought and fees received 22,000 420,000 Stock of materials 1 April 2005 2,000 Cash in hand 275 Loan from Filling 10,000 Premises 255,300 606,415 606,415 Their partnership agreement provides that Profits and losses are to be shared in the ratio 3:2 to Filling and Kap respectively.

Interest on fixed capital is allowed at 5 per cent per year.

Each partner is paid an annual salary of £80,000.

Additional information:

1. Stock of materials at 31 March 2006 was £640.

2. The fittings and equipment are to be depreciated by 10 per cent of cost per annum.

3. Interest at 5 per cent per annum on the loan is to be paid to Filling, through her current account.

4. Filling’s family has used the business for dental care. This has not been recorded in the accounts. The estimated cost is £500.

5. An insurance bill amounting to £1,800 and covering the year from 1 October 2005 had not been paid.

6. Interest on drawings: Filling £1,000 and Kap £950.

From the information given, prepare for the partnership for the year ended 31 March 2006:

(a) a profit and loss account;

(b) a profit and loss appropriation account;

(c) partners’ current accounts;

(d) a balance sheet at 31 March 2006.

Note: You are not required to show details of the current accounts in the balance sheet. You need only show the balances of the current accounts at 31 March 2006.
(Edexcel Accounting 7011, May 2006)