Self-test K, L and M are in partnership, sharing profits and losses 2:1:1. They prepare accounts to 31 December each year.

The following is the balance sheet as at 31 December 2008:

Fixed assets Cost Depr NBV Delivery vehicles 46,000 11,000 35,000 Office computers 11,000 4,000 7,000 57,000 15,000 42,000 Current assets Stock 16,000 Debtors 11,000 Cash at bank 3,000 30,000 Current liabilities Creditors 4,000 4,000 26,000 68,000 KLM Capital accounts 26,000 18,000 14,000 58,000 Current accounts 4,000 3,000 3,000 10,000 68,000 You are given the following information:

(i) Depreciation is charged as follows:

(a) Delivery vehicle 20 per cent straight line.

(b) Computers 15 per cent reducing balance.

(ii) Annual salary K £16,000.

(iii) Interest on capital balances at beginning of the year – 5 per cent p.a.

On 30 June 2009 L retired from the partnership. The agreement set out the following:

(a) The goodwill at the date of retirement was valued at £48,000 but it was agreed that this would not be shown in the books of the partnership.

(b) L would leave a loan account of £15,000 with the new partnership. This loan would carry interest of 10 per cent p.a.

(c) The balance of L’s capital and current accounts would be paid out in cash on 30 June 2009.

K and M continue in partnership but with the following changes as from 1 July 2009:

(i) K continues to receive an annual salary of £16,000 and M is to be paid

£12,000 p.a.

(ii) All remaining profits and losses are shared equally.

For the year ended 31 December 2009 the following details are available:

Sales 401,800 Purchases 198,300 Wages to staff 82,100 Office expenses 14,900 Drawings to 30 June 2009 – K 11,000

– L 8,000

– M 6,000 Drawings to 31 December 2009 – K 13,000

– M 9,000 Debtors at 31 December 2009 14,000 Cash at bank at 31 December 2009 41,356 Creditors at 31 December 2009 4,600 Stock at 31 December 2009 5,000 You are required to prepare a trading, profit and loss account and appropriation account for the 6 months to 30 June 2009 and for 6 months to 31 December 2009.

You are also required to prepare a balance sheet at 31 December 2009 and the partners’ accounts at that date.

Assume the profit is earned on a uniform basis throughout the year.