Question
Tasks 1 Asha and Rasha started a partnership business in 2010 sharing profit and losses in the ratio of 60% and 40% respectively. The following
Tasks 1
Asha and Rasha started a partnership business in 2010 sharing profit and losses in the ratio of 60% and 40% respectively. The following is the trial balance of the partnership firm, which has been extracted as of 31 December 2019:
Particulars | Dr$ | Cr$ |
Land | 50,000 | |
Building | 40,000 | |
Plant & Machinery | 30,000 | |
Sales | 200,000 | |
Sales Return | 1,000 | |
Purchase | 75,000 | |
Purchase Return | 500 | |
Inventory(On 1 Janury 2019) | 11,500 | |
Salaries | 24,000 | |
Discount Received | 2,500 | |
Rent Received | 10,000 | |
Discount Allowed | 3,000 | |
Bank Loan | 25,000 | |
Loan from a partner - Rasha | 6,000 | |
Interest on Bank Loan | 2,500 | |
Bad Debts | 250 | |
Allowance for Bad Debts | 800 | |
Accounts Receivable | 25,000 | |
Accounts Payable | 11,500 | |
Cash at Bank | 22,000 | |
Cash in Hand | 2,000 | |
Insurance | 4,000 | |
Generral Expenses | 5,000 | |
Capital Account: | ||
Asha | 50,000 | |
Rasha | 20,000 | |
Drawing during the year: | ||
Asha | 12,000 | |
Rasha | 20,000 | |
Current Account: | ||
Asha | 2,500 | |
Rasha | 1,550 | |
Total | 328,800 | 328800 |
The following information is relevant:
(i) Closing inventory as of 31/12/2019 is valued at $8,000
(ii) Provision for bad debts is to be created 8% of Trade Receivables
(iii) Insurance amount included prepayment for 2020 $500 5
(iv) Salary outstanding (accrual) as on 31/12/2019 is $2,000
(v) Interest on loan given by Rasha (partner) is not provided in the partnership agreement.
(vi) The following is provided in the partnership agreement:
- Interest on drawings at 10% per annum
- Interest on Capital at 8% per annum
- Salary to Asha $5000 and to Rasha $8,000 per annum.
You are required to prepare:
a) Income Statement for the year-end 31/12/2019
b) Profit and Loss Appropriation Account (Statement of the division of Income) for the year-end 31/12/2019.
c) Partners' Capital Account in columnar form d) Partners Current Accounts in columnar form, and
e) A Statement of Financial Position (Balance Sheet) as at 31/12/2019
Note: you are required to Perform all relevant accounting entries relating to Interest on Capital Account, Interest on Drawings, Salary to partners with regards to the preparation of the partnership business.
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