1. Q and P have similar businesses and decided to amalgamate and form a partnership. On January 2007 they had the following assets and liabilities.

P Q

$ $

Equipment 7,000 8,500

Debtors 2,100 3,900

Stock 12,000 9,000

Premises 15,000 -

Motor Van - 7,200

Creditors 1,970 2,040

Prepaid Expenses 300 230

Expenses Owing 430 790

From 1 January 2007, they agreed that:

1. Profits and losses would be shared equally;
2. Interest on capital at 10% would be allowed;
3. P was to get a salary of $2,000 per annum;
4. Interest on drawings at 10% per annum would be charged; for 2007 this amounted to $120 for Q $200 for P.

For the year to 31 December 2007, a net profit of $23,680 was made. Qs drawings were $5,200 and Ps $8,400.

1. Draw up capital accounts as they would be shown in the balance sheet as at 31 December 2007 assuming fluctuating capitals accounts are to be used. (Be Specific with working)