Reid and Thornton, separate sole traders, agreed to close their individual businesses and form a partnership. They named the business Reid & Thornton Ltd. It was located on Reid's premises, using his assets.

Reid brought to the new business the following assets:

$

Cash 10,000

Fixtures 15,000

Equipment 25,000

Land and buildings 40,000

Thornton sold his assets and brought to the new business cash of $100,000

1. Prepare journal entries to show the capital of the partners on January 1 2019.

After a successful year of trading, the partnership made a net profit of $75 000.

The partnership agreement provides for the following:

1. Interest on drawings is to be charged at the rate of 3% per annum.

2. Interest on capital is to be paid at the rate of 5% per annum.

3. A salary of $3 000 monthly is to be paid to Reid.

4. Profits or losses are to be shared equally.

Reid withdrew $6 000 on March 1, 2019 and Thornton withdrew $7 000 on September 1, 2019.

1. Prepare the partners' Profit and Loss Appropriation Account for the year ended December 31, 2019.
2. Prepare the partners' Current Accounts as at December 31, 2019.