Question
Nicole Smith and Angelina Jones are in partnership, trading as Smith & Co., retail drapers. The following trial balance is extracted from their books at
Nicole Smith and Angelina Jones are in partnership, trading as Smith & Co., retail drapers. The following trial balance is extracted from their books at 30 June 2018:
They share profits and losses: N. Smith two-thirds and A. 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 1992, is valued at R38 600.
You are required to: Prepare the Income Statement for the six months ended 30 June 2017.
\begin{tabular}{|l|r|r|} \hline & \multicolumn{1}{|c|}{ R } & R \\ \hline Accumulated depreciation & & 1600 \\ \hline Advertising & 1000 & \\ \hline First National Bank & 40000 & 6600 \\ \hline Building, at cost & & 60000 \\ \hline Capital N. Smith - Bal. at 31 Dec. 2017 & & 36000 \\ \hline Capital A. Jones - Bal. at 31 Dec. 2017 & 13000 & \\ \hline Creditors & 7600 & \\ \hline Customs duty & 16000 & \\ \hline Debtors & 2200 & \\ \hline Delivery charges & 16800 & \\ \hline Drawings N. Smith & 10400 & \\ \hline Drawings A. Jones & 9600 & \\ \hline Furniture and fittings at cost & 4800 & \\ \hline General expenses & 4200 & \\ \hline Goods in transit at 30 June 2018 & 51000 & \\ \hline Purchases & 6600 & \\ \hline Railage inwards & 9600 & \\ \hline Salaries and wages & & 97000 \\ \hline Sales & 34400 & \\ \hline Stock on hand at 31 Dec. 2017 & 214200 & 214200 \\ \hline \end{tabular}Step by Step Solution
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