Question 1 (10 marks)

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 31^st December, 2020.

DR CR

Rent Expenses 400,000

Bank overdraft 100,000

Discount 50,000 100,000

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:

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

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.

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

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

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

You are required to prepare:

Income Statement ( 2.5 Marks)

Profit and Loss Appropriation Account (2.5 marks)

Partners current account (2.5 marks)

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