A. Smith and B. Jones are in partnership, trading as A. Smith & Co., retail drapers. The following trial balance is extracted from their books at 30 June 2002:

Accumulated depreciation R1 600. Advertising R1 000. Barclays bank R6 600. Buildings, at cost R40 000. Capital A. Smith-Balance at 31 Dec. 2001 R60 000. Capital B. Jones - Balance at 31 Dec. 2001 R36 000. Creditors R13 000. Customs duty R7600. Debtors R16 000. Delivery charges R2 200. Drawings A. Smith R16 800. Furniture & fittings at cost R9 600. General expenses R4 800. Goods in transit at 30 June 2002 R 4200. Purchases R51 000. Railage inwards R6 600. Salaries & wages R9 600. Sales R97 000. Stock on hand at 31 Dec. 2001 R34 400.

They share profits and losses: A. Smith two-thirds and B. Jones one-third. Interest at 10% p.a. must be allowed on capital, but no interest is to be charged on drawings.

A provision of 5% of the debtors must be created to cover doubtful debts.

Furniture and fittings must be depreciated at the rate of 20% p.a. on cost. Stock on hand at 30 June 2002, is valued at R38 600.

REQUIRED: Income Statement and Balance Sheet