Question $6$:

Mercy, Nelly and Olive are in partnership sharing profits and losses equally after allowing for interest on capital at the rates of $5\%$ per annum to the partners and a salary to Nelly of $ $60$ per month.

The trial balance of the partnership as at $30$ September $2020$ was as follows.

$ $

Sales $60,000$

Inventory $(1$ October $2019)9,000$

Purchases $30,000$

Operating expenses $19,200$

Loan from: Nelly $3,000$

Olive $6,000$

Land $3,000$

Building $15,000$

Plant and machinery $($cost$)21,000$

Accumulated depreciation $(30$ September $2020)12,000$

Accounts receivable and accounts payable $12,0009,900$

Bank overdraft $3,600$

Capital accounts: Mercy $7,500$

Nelly $6,000$

Olive $3,000$

Current accounts: Mercy $600$

Nelly $900$

Olive $600$

Drawings: Mercy $900$

Nelly $1,200$

Olive $600$

$112,800112,800$

Additional information:

$1.$ On $1$ April $2020,$ the terms of the partnership agreement were changed. The new terms provided as follows:

A profit$-$sharing ratio of $5$:$3$:$2$ for Mercy, Nelly and Olive respectively.

Salaries of $ $30$ per month to Nelly and Olive.

Interest on capital at the rate of $5\%$ per annum.

For the purpose of the changes $,$ goodwill was valued at $$3,600$ and was to be written off immediately while the land and buildings were valued at $$6,000$ and $$19,200$ respectively.

$2.$ Sales include a credit sale of $$1,800$ in respect of goods sold on the basis of confirmation by the customer. The goods had cost $$600.$ As at $30$ September $2020$; the customer had not confirmed whether he would buy the goods.

$3.$ Interest on the loans from Nelly and Olive is to be charged at the rate of $10\%$ per annum. This interest had not been paid as at $30$ September $2020.$

$4.$ Closing inventory as at $30$ September $2020$ was valued at $ $7,200.$

$5.$ Unless where otherwise provided, the incomes and expenses accrued evenly throughout the year.

Required:

The statement of profit and loss for the year ended $30$ September $2020.$

Partners$$ current accounts as at $30$ September $2020.$

Statement of financial position as at $30$ September $2020.$