Self-test Monica, Cyril and Gene are in partnership. The trial balance at 31 December 2010 is as follows:

Capital accounts – Monica 55,000

– Cyril 35,000

– Gene 15,000 Current accounts – Monica 8,600

– Cyril 3,800

– Gene 4,800 11 per cent loan due 1 December 2012 49,000 Land and buildings 211,590 Delivery vehicles at cost 40,000 Provision for depreciation on vehicles 30,210 Office expenses 2,210 Debtors’ control account 26,900 Creditors’ control account 22,850 Sales 287,300 Stock 44,970 Investment income 1,100 Goodwill at cost 19,800 Purchases 84,070 Rates 13,150 Salaries to staff 17,080 Motor expenses 3,100 Provision for bad debts 2,100 Bank 13,050 Loan interest 1,900 Bank charges 370 Returns 1,900 1,600 Printing and stationery 1,870 499,160 499,160 The following additional information must be taken into account:

(i) The stock at 31 December 2010 is valued at £31,000.

(ii) Motor expenses of £240 are to be accrued and rates of £160 have been paid in advance.

(iii) Debtors of £2,000 are to be written off as bad.

(iv) The bad debt provision at year end is £498.

(v) Depreciation on delivery vehicles is calculated at 10 per cent per annum using the straight line method.

(vi) Investment income of £320 is still to be received.

(vii) Loan interest must be provided for at the end of the year.

Monica and Gene are entitled to salaries of £19,000 and £23,000 per annum, respectively.

All the partners receive interest on capital of 9 per cent per annum.

The remaining profit or loss is divided between Monica, Cyril and Gene in the ratio of 2:2:1.

You are required to prepare a profit and loss account and appropriation account for the year ended 31 December 2010 and a balance sheet at that date.