10.7 Green and Amber are in partnership as traders, sharing profits and losses, Green § and Amber Amber also receives a salary of £5,000 per annum before the profits are shared. Green and Amber decide to admit Red into the partnership on 1 October 20X9, and the new partnership agreement provides for the following arrangements from that date:

(a) Amber and Red to receive salaries of £6,000 and £4,000 respectively, both salaries to be calculated on an annual basis.

(b) Interest to be allowed on capital at the rate of 10 per cent per annum.

(c) Goodwill to be brought into the books at a valuation of £18,000, and shared between Green and Amber, § and j respectively.
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(d) The remainder of the profits, after charging partnership salaries and interest on capital, are to be shared between Green, Amber and Red in the ratio of Green §, Amber § and Red j.
The firm’s bookkeeper extracts the following information from the books of account, for the year ended 31 March 20X0.
£
General expenses, including bank charges 33,049 Administration expenses, including rent, rates, insurances and electricity 19,363 Bad debts 328 Interest on loan made by Smith 800 Discounts received 1,110 Purchases of goods for resale 232,174 Stock of goods as at 1 April 20X9 28,567 Sales, less returns inwards 323,072 Fixtures and fittings, at cost 3,000 Motor vehicles, at cost 15,000 Accumulated depreciation written off:
Motor vehicles to 31 March 20X9 4,500 Fixtures and fittings 1,450 Partners’ capital accounts:
Green 18,000 Amber 14,000 Partners’ current accounts:
Green 1,236 (credit)
Amber 894 (credit)
Partners’ drawings:
Green 9,860 Amber 6,340 Red 2,100 Trade creditors 18,433 Petty cash balance 50 Balance at bank as per cashbook 14,100 Trade debtors 27,964 Toan from Smith 10,000 The following information is relevant to the above accounting period:
1. Stock on hand, as at 31 March 20X0, is valued at £33,259, while there are amounts out¬ standing for rent and electricity of £300 and £276, respectively. No entries have yet been made in the books, in respect of these items.
2. A provision for doubtful debts is to be made, amounting to £500.
3. Depreciation is written off on the straight-line basis, at the following rates:
Fixtures and fittings 10 per cent per annum Motor vehicles 20 per cent per annum There has been no change made in either of these assets, during the year ended 31 March 20X0.

4. The adjustments to be made in respect of goodwill (£18,000) have not yet been effected in the relevant accounts.
5. The bank statements for the month of March 20X0 were not received until several days after the extraction of the above information from the books of account. Upon checking the statements, it is discovered that the bank has debited charges of £64. In all other respects, the balance shown on the bank statements as at 31 March 20X0 agreed with the balance shown in the cashbook.
6. By agreement between the partners, any credit balance outstanding on Red’s current account at the end of each financial year is to be transferred to his capital account. Such transfers are to cease when the sum of £10,000 has been credited to capital account.
The allocation of profits between the partners is to be determined on a time basis.
Required:
From the above information, prepare a trading and profit and loss account (including an appropriation account) for the year ended 31 March 20X0, together with a balance sheet as at that date. Ignore taxation.