Question 1 (10 marks)

A. Devine and Vicky are partners dealing in cosmetics and other assorted goods. They share profit and losses in ratio 3:2. The trial balance below was extracted from the books of the partners as at 31st December, 2020.

DR CR

Rent Expenses 400,000

Bank overdraft 100,000

Discount50,000 100,000

Turnover 2,100,000

Cost of Sales 700,000

Receivable 400,000

Patent 400,000

Stocks (31/12/2019) 150,000

Loan from Devine at 15% per annum 200,000

Land 900,000

Motor vehicle 600,000

Equipment 400,000

Provision for depreciation:

Motor vehicles 140,000

Equipment 240,000

Payable 300,000

Drawings:

Devine 70,000

Vicky 60,000

Capital Account:

Devine 500,000

Vicky 300,000

Current Account:

Devine 120,000

Vicky 30,000

Total 4,630,000 4,630,000

The following information is relevant:

i. Interest on loan from Devine had neither been paid nor provided for.

ii. Motor Vehicles and Equipment are to be depreciated at the rate of the 10% and 20% percent per annum respectively on the reducing balance methods.

iii. Rent expenses outstanding at 31/12/2000 amounted to GHc 50,000.

iv. Capital attracts interest of 10% per annum. Vicky is to be paid a monthly salary of GHc 3,000.

v. No interest is allowed or charged on current accounts or on drawings or on drawings.

You are required to prepare:

a. Income Statement ( 2.5 Marks)

b. Profit and Loss Appropriation Account (2.5 marks)

c. Partners current account (2.5 marks)

d. Statement of Financial Position as at 31/12/2000 (2.5marks)