Sister and Sledge are trading in partnership, sharing profits and losses in the ratio of 2:1, respectively. The partners are entitled to salaries of Sister £6,000 per annum and Sledge £5,000 per annum. There is the following additional information.

(1) Stock as at 31 December 2005 was valued at £8,800.

(2) Staff salaries owing £290.

(3) Advertising paid in advance £200.

(4) Provision for bad and doubtful debts to be increased to £720.

(5) Provision should be made for depreciation of 2 % on land and buildings on cost, and for fixtures and fittings at 10 % on cost.

Required: Prepare the trading and profit and loss and appropriation account for the year ended 31 December 2005 and the balance sheet as at 31 December 2005.

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Capital accounts: Sister Sledge Current accounts: Sister Sledge Drawings: Sister Trial Balance as at 31 December 2005 12,500 5,000 1,500 600 9,800 Sledge 6,700 Long-term loan 40,250 Land and buildings at cost 164,850 Stock as at 1 January 2005 9,500 Fixtures and fittings at cost 12,500 Purchases 126,000 Cash at bank 3,480 Sales 305,400 Trade debtors 9,600 Carriage inwards 200