Question
Sakwiba and Inonge are trading in partnership, sharing profits and losses and equally. Interest at 5% per annum is allowed or charged on both the
Sakwiba and Inonge are trading in partnership, sharing profits and losses and equally. Interest at 5% per annum is allowed or charged on both the capital account and the current account balances at the beginning of the year. Interest is charged on drawings at 5% per annum. The partners are entitled to annual salaries of: Sakwiba ZMW12,000; Inonge ZMW8,000.
Sakwiba and Inonge
Trial Balance as at 31 December 2020
Dr Cr
ZMW ZMW
Capital accounts: Sakwiba 100,000
Inonge 50,000
Current accounts: Sakwiba 2,000
Inonge 600
Cash drawings for the year: Sakwiba 15,000
Inonge 10,000
Freehold premises at cost 50,000
Stock at 1 January 2020 75,000
Fixtures and fittings at cost 15,000
Purchases and purchase returns 380,000 12,000
Bank 31,600
Sales and sales returns 6,000 508,000
Trade debtors and trade creditors 52,400 33,300
Carriage inwards 21,500
Carriage outwards 3,000
Staff salaries 42,000
VAT 8,700
Office expenses 7,500
Provision for doubtful debts 2,000
Advertising 5,000
Discounts 1,200 1,000
Bad debts 1,400
Rent and business rates 2,800
Accumulated provision for depreciation of fixtures and fittings 3,000
720,000 720,000
At 31 December 2020:
- Stock on hand was valued at ZMW68,000.
- Purchase invoices amounting to ZMW3,000 for goods included in the stock valuation at (a) above had not been recorded.
- Staff salaries owing ZMW900.
- Business rates paid in advance ZMW200.
- Provision for doubtful debts to be increased to ZMW2,400.
- Goods withdrawn by partners for private use had not been recorded and were valued at: Sakwiba 500, Inonge ZMW630. No interest is to be charged on these amounts.
- Provision is to be made for depreciation of fixtures and fittings at 10% on cost.
- Interest on drawings for the year is to be charged: Sakwiba ZMW360, Inonge ZMW280.
Required:
Prepare the partnership profit and loss account for the year ended 31 December 2020, and the balance sheet as at that date.
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