Question
A and B share profits and losses in the ratio of 70% and 30% respectively. The trial balance as at 31 December 2016 was as
A and B share profits and losses in the ratio of 70% and 30% respectively. The trial balance as at 31 December 2016 was as follows:
Dr Cr
K K
Office equipment at cost 9,200
Motor vehicles at cost 21,400
Provision for depreciation:
- Motor vehicles 12,800
- Office equipment 3,600
Inventory 38,410
Receivables and payables 41,940 32,216
Cash in bank 2,118
Cash in hand 317
Sales 180,400
Purchases 136,680
Salaries 27,400
Office expenses 2,130
Discounts allowed 312
Current accounts:
A 7,382
B 7,009
Capital accounts: A 50,000
B 20,000
Drawings A 17,500
B 16,000
313,407,313,407
The following notes are relevant at 31 December, 2016
- Inventory at 31 December 2016 K41,312
- Office expenses owing K240
- Provide for depreciation : motor vehicles 25% on cost, office expenses 20% on cost
- Charge interest on capital at 5% per annum
- Interest on Drawings: A K300; B K200;
Q.1
Required:
- Discuss the importance of the Partnership Act 1890
- Using the information in the case study above, prepare the income statement for A and B for the year ending 31 December 2016.
- Using your answer in (a) above prepare the Profit and Loss Appropriation Account for the partners.
- Using your answer in (c) above prepare the partners current accounts in columnar format.
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