Question one a) Explain the following terms using a suitable illustration

i) Subscription in arrears ii) Issued share capital

iii) Prime costs iv) Partnership deed v) Capital expenditure The following list of balances as at 30 September 2009 has been extracted from the books of Brick and Stone, trading in partnership, sharing the profits and loss in proportions 3;2 respectively Printing, stationery and postages Ksh 3,500 Sales 322,100 Stock in hand at 1 October 2008 23,000 Purchases 208,200 Rents and rates 10,300 Heat and light 8,700 Staff salaries 36,100 Telephone charges 2,900 Motor vehicle running costs 5,600 Discounts allowable 950 Discounts receivable 370 Sales returns 2,100 Purchases returns 6,100 Carriages inwards 1,700 Carriages outwards 2,400 Fixtures and fittings; at cost 26,000 Provision for depreciation 11,200 Motor vehicles; at cost 46,000 Provision for depreciations 25,000 Provision for doubtful debts Drawings; Brick 300 Stone 11,000 Current accounts balances at 1st October 2008 Brick 3,600(Cr)

Stone 2,400(Cr) Capital accounts balances at 1st October 2008 Brick 33,000 Stone Debtors Creditors Balance at bank Additional information; a) Kshs. 10,000 is to be transferred from Brick capital account to a newly opened brick loan account on 1st July 2009, interest at 10% per annum on the loan is to be credited to brick. b) Stone is to be credited with a salary at the rate of Kshs. 12,000 per annum from 1st April 2009. c) Stock in hand at 30 September 2009 has been valued at cost Kshs 32,000 d) Telephone charges accrued due at 30th September 2009 amounted to Kshs. 400 and rent of Kshs. 600 prepaid at that date. e) During the year ended 30 September 2009 stone has taken goods costing Kshs 1,000 for his own use. f) Depreciation is to be provided at the following annual rates on the straight line basis Fixtures and fittings 10% Motor vehicles 20% Required 1. Prepare trading profit and loss account for the year ended 30th October 2009

2. Prepare partners balance sheet as at 30th October 2009