Question 1 {COMPULSORY)

Rona and Rus are in partnership and the following Trial Balance was extracted from the books of the partnership on December 31 2019.

	Dr$	Cr$
Fixed Capital Accounts:
Rona		14,000
Rus		9,000
Current Accounts for 1 January 2019:
Rona	1,200
Rus		900
Drawings:
Rona	6,400
Rus	5,500
Purchases and Sales	46,800	72,700
Rates	2,600
Bad Debts	260
General Expenses	8,900
Wages	6,400
Premises	10,000
Fixtures and Fittings	3,000
Bank		1,560
Cash	200
Debtors and Creditors	7,200	4,400
Stock (at 1 January 2019)	4,100
	102,560	102,560

Required:

1. The Partnership Trading Account showing clearly the cost of sales, the Profit and Loss Account and the Appropriation Account for the year ended December 31, 2019. (20 marks)

2. The Balance Sheet as at 31 December 2019. (10 marks)

3. The Current Accounts (7 marks)

4. The Capital Accounts (3 marks)

In preparing the accounts, the following matters are to be taken into consideration:

1. Stock at 31 December 2019 was valued at $4,900.
2. Rates at $360 had been paid in advance.
3. The premises were extended during the year at a cost of $5,000, which has been debited to the General Expenses Account.
4. Rus paid $600 for goods for resale by the firm from her private bank account. No entries have been made in the firms books.
5. Fixtures and Fittings are to be depreciated by 10%.
6. After preparation of the Trial Balance, the bank sent a statement which showed that interest of $200 had been charged to the bank account. This expense has not been dealt with in the books of the partnership.

Interest is to be allowed on partners capitals at the rate of 10% per annum and after providing a salary of $4,000 tp Rona the remaining profit is to be shared by Rona and Rus in the ratio of 3:2.