1. Steve and Jane are in partnership. The terms of the partnership are:

1. Profit and losses to be shared in the ratios of 2/3, Jane 1/3
2. 10% interest is allowable on fixed capitals
3. 10% interest is to charged on drawings, whenever taken
4. Jane is to have a salary of $6,000

The following profit and loss account for the year ended 31 December 2007

Steve and Jane

Profit and loss Account for the year ended 31 December 2007

$ $ $

Net Profit b/d 56,000

Less:

Wages 17,560

Interest on loan from T. Briggs 2,000

Interest on capital:

Steve 4,000

Jane 6,000 10,000

Drawings:

Steve 6,000

Jane 9,000 15,000

Rent 4,440 49,000

Net Profit 7,000

Steve and Jane are surprised at the above accounts.

The following is also made available:

1. Wages includes Janes salary 0f $6,000
2. No interest has been charged on drawings
3. Other balances include the following as at 31 December 2007:

Capital $

Steve 40,000

Jane 60,000

Current accounts:

Steve 500 Dr

Jane 3,700 Cr

Using the information above

a) Redraft the profit and loss account