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:

1. Stock on hand was valued at ZMW68,000.
2. Purchase invoices amounting to ZMW3,000 for goods included in the stock valuation at (a) above had not been recorded.
3. Staff salaries owing ZMW900.
4. Business rates paid in advance ZMW200.
5. Provision for doubtful debts to be increased to ZMW2,400.
6. Goods withdrawn by partners for private use had not been recorded and were valued at: Sakwiba 500, Inonge ZMW630.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.
7. Provision is to be made for depreciation of fixtures and fittings at 10% on cost.
8. 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.