Question 5 (13 marks)

Susan and Tina have been in partnership for several years. They share profits and losses equally. On 1 January 2019, Bella was invited to join the partnership.

Upon the admission of Bella,

1. No assets were revalued upwards or downwards;
2. Goodwill was valued at $220,000 and no goodwill account was to be opened in the books; and
3. Bella introduced $130,000 into the partnership and brought in additional amount to pay for her share of goodwill.

However, they did not make any entries regarding the admission of Bella in the books. The trial balance as at 31 December 2019 was shown as follows:

Susan and Tina Trial Balance as at 31 December 2019
	Dr		Cr
	$		$
Net profit for the year			67,000
Furniture and fittings, Net book value	140,000
Motor vehicles, Net book value	88,000
Inventory as at 31 December 2019	20,000
Bank			11,500
Trade receivable	58,100
Trade payable			39,400
Salary to Susan	4,000
Capital accounts:
- Susan			110,000
- Tina			80,000
Current accounts:
- Susan			38,500
- Tina	12,300
Drawings:
- Susan (made on 1 November 2019)	6,000
- Tina (made on 1 December 2019)	18,000
	346,400		346,400

The followings were the partnership agreement among Susan, Tina and Bella:

• Profits and losses are shared in the following ratio: Susan 40%, Tina 30% and Bella 30%.
• Susan is entitled to partners' salaries of $10,000 annually.
• 10% interest is charged on partners' drawings.
• Each partner's capital balance is fixed at $130,000. Any surplus or deficit would be transferred to their respective current accounts.

REQURIED:

(a) Prepare the appropriation account for the year ended 31 December 2019.

(4 marks)

(b) Prepare capital and current account in columnar form for the year ended 31 December 2019. (9 marks)