Self-test Rush and Aldridge are in partnership sharing profits and losses in the ratio 3:2 respectively. The following list of balances has been extracted from the books of the business for the year ended 30 November 2006.

£

Land at cost 120,000 Fixtures and fittings (cost) 70,000 Fixtures and fittings (depreciation) 20,000 Creditors 17,000 Debtors 21,000 Balance at bank (Cr) 7,500 Bank loan 20,000 Provision for bad debts 1,000 Sales 98,000 Purchases 39,000 Stock (1-12-05) 11,000 Rent and rates 3,000 Insurance 1,500 Salaries and wages 13,700 Office expenses 2,800 Heating and lighting 1,750 Advertising 900 Capital account – Rush 80,000

– Aldridge 50,000 Current account – Rush (cr) 3,850

– Aldridge (dr) 2,000 Drawings – Rush 3,700

– Aldridge 7,000 The following information is also available:
(i) At 30.11.06:
Closing stock £13,800.
Rent outstanding £500.
Salaries outstanding £1,120.
£80 insurance prepaid for the following year.
(ii) Provision for bad debts needs increasing to £1,150.
(iii) Interest of £2,000 on the bank loan needs to be included in the accounts.
(iv) Fixtures and fittings are depreciated at 10 per cent on a reducing balance basis.
(v) Partnership salaries are as follows:
Rush £8,000.
Aldridge £2,000.
(vi) Interest on capital is allowed at 10 per cent.
Required:

(a) From the list of balances (at 30.11.06) prepare the trial balance for Rush and Aldridge.

(b) Prepare a trading and profit and loss account and a balance sheet as at 30 November 2006.
(ABE, Introduction to Accounting, June 2007)