Bong, Harry and Mallu

Bong, Harry and Mallu formed a partnership to carry on the business of an ethnic store in Bangkok.

They are to receive equal shares of the profits and can make drawings during a year, not exceeding

Baht $($B$)20,000$ each. They invested an amount of B $3,600,000.$

Transactions of the first financial year are as follows:

$($a$)$ Delivery vans purchased during the year, B $1,284,000.$ These vans are to be depreciated over

$5$ years, assuming a salvage value of $5\%.$

$($b$)$ Sales are made on $30$ days credit and collection losses during the year amounted to $1\%$ of

the sales. Total sales during the year amounted to B $4,800,000$ and receivables outstanding,

B $600,000.$

$($c$)$ Purchases are on $45$ days credit and total purchases during the year amounted to B $3,320,800.$

Payables outstanding at close of the year were B $368,000.$

$($d$)$ Inventory of merchandise available at the end of the year was B $256,500.$ Wages and other

operating expenses were B $785,000.$ The firm owed B$12,890$ in wages at the end of the year.

$($e$)$ They have signed promissory notes amounting to B $85,000.$

$($f$)$ It is expected that $1\mathrm{.}5\%$ of the accounts receivable outstanding may be bad. Drawings by the

partners amounted to: B $18,000$ by Mallu, B $20,000$ by Bong and B $12,800$ by Harry.

$($g$)$ All cash transactions were carried through the bank with which the firm had entered into an

overdraft agreement, having a limit of B $1,200,000.$

Question

Prepare a profit and loss account for the year and a balance sheet as at the end of the year.