Question No:1

Mr. Suhail and Mr. Said decided to start a partnership business. They drafted a partnership deed with the help of a consultant and started the business on 01.11.2020

Some of the key extracts of the partnership deed is given as follows:

Resolved that.

a. Each partner is to bring in OMR 15,000 as capital

b. Each partner is to get 5% interest on capital

c. Mr. Suhail is entitled to get a salary of OMR 400 per month

d. Firm is entitled to charge 6% interest per annum on partners drawings.

Summary of transactions:

November: 2020

a. Capital contribution: Mr. Suhail OMR 15000; Mr. Said: OMR 15000

b. Purchase of goods- OMR 8,000

c. Sales of goods- OMR 18,000

d. Wages- OMR 200

e. Salary to employees- OMR 1,200

f. Other administrative expenses- OMR 800

g. Rent of building- OMR 1,000

h. Electricity charges- OMR 15

i. Water charges- OMR 5

j. Travelling expenses- OMR 50

k. Furniture purchase- OMR 1,500

l. Electrical fittings- OMR 200

m. Drawings of partners-: Mr. Suhail OMR 200; Mr. Said; OMR 150

n. Salary to Mr. Suhail- OMR 400

December 2020:

a. Salary to employees- OMR 1,200

b. Rent of building- OMR 1,000

c. Electricity charges- OMR 12

d. Water charges- OMR 4

e. Travelling expenses- OMR 20

f. Other administrative expenses- OMR 200

g. Salary to Mr Suhail-OMR 400

h. Purchase of goods- OMR 10,000

i. Sales of goods OMR 18,000

Closing stock at the end of the year is valued at OMR 20,000

Required:

a. Trading, profit and loss account for the year ended 31st December 2020

b. Profit and loss appropriation account for the year ended 31stDecember 2020

c. Partners Capital account as per fluctuating method and fixed method

d. Balance sheet of the firm as on 31.12.2020