Question 1

Mina and Tina are in Partnership operating a manufacturing business. They share profit in the ratio 3:2. The trial balance at December 31, 2020 was as follows:

Trial Balance as at December 31, 2020	DR	CR
	$	$
Plant & Equipment at cost	52,000
Office-Motor Vehicles at cost	73,600
Provision for depreciation at Dec 31, 2019:
Plant & Equipment		15,600
Office-Motor Vehicles		29,440
Stock of Finish Goods at Dec 31, 2019	199,760
Debtors and Creditors	167,680	130,200
Cash at Bank	38544
Work in Progress at Dec 31, 2019	50,000
Direct Expenses	37,800
Direct Wages	63,000
Electricity	30,000
Insurance	10,000
Purchase of Raw Materials	240,000
Factory Maintenance	25,134
Provision for unrealized profit		30,894
Raw Material at Dec 31,2019	60,000
Sales		722,960
Salaries (Office Staff)	91,336
Office Expenses	6,960
Current Accounts at Dec 31, 2019:
Mina		11,032
Tina		9,688
Capital Accounts:
Mina		172,000
Tina		100,000
Drawings:
Mina	32,000
Tina	44,000
Total	1,221,814	1,221,814

Additional Information:

1. Stock of finish goods at Dec 31, 2020 was valued at $150,400
2. Stock of raw material at Dec 31, 2020 was valued at $32,000
3. Work-in-progress at Dec 31, 2020 was valued at $41,000
4. Factory profit is 15% on the cost of production.
5. Insurance owing $1,800
6. Electricity prepaid is $5,600
7. The factory is responsible for 65% of the electricity, while the office is responsible for 70% of the insurance
8. Provision for Depreciation: Motor Vehicle 20% of cost, Plant & Equipment 15% on the reducing balance method.
9. Interest is to be charged on drawings is 5% per annum.
10. Interest is allowed on capital accounts at the rate of 6% per annum.
11. Mina is allowed a salary of $15,000 per annum, while Tina is allowed a salary of $25,000 per annum

Required:

1. Prepare the partners manufacturing, trading, and profit and loss account for the year ended December 31, 2020. (30 Marks)
2. Prepare the partners appropriation account for the year ended December 31, 2020

(10 marks)

3. Prepare the partners current accounts for the year ended December 31, 2020. (7 Marks)

4. Prepare the partners capital accounts for the year ended December 31, 2020. (3 Marks)

5. Prepare the partners balance sheet for the year ended December 31, 2020 (20 Marks)

6. Calculate the following ratios and comment on the results: (10 marks)

• Gross profit percentage
• Net Profit percentage
• Debtor collection period