SAPATO and SIAME have been in partnership, selling computers and related accessories. Their agreement provides that each of them is entitled to interest on capital of 5% per annum and is charged interest on drawings of 2% per annum. Their profit sharing ratio is 3:2 respectively.
The firm’s trial balance as at 31 December, 2018, was as follows:
Carriage Inwards 16,700
Returns Inwards 15,200
Salaries and wages 45,000
Office expenses 3,200
Rent and rates 3,800
Postage and stationery 2,650
Bad debts written off 4,500
Provision for bad debts (01.01.18) 780
Discounts received 250
Trade Creditors 38,400
Trade Debtors 48,500
Stock at (01.01.18) 65,400
Motor Vehicles at cost 20,000
Office equipment at cost 18,000
Provision for depreciation at (01/01/18)
Motor Vehicles 4,000
Office equipment 3,600
Cash at bank 16,900
Drawings: – Sapato 35,000
Current accounts: -Sapato 6,240
Capital accounts: -Sapato 45,000
(i) Rent and rates paid in advance K990
(ii) Arrears for postage and stationery are K360
(iii) The provision for bad debts is to be adjusted to K 500
(iv) With effect from 1 July 2011 partners were entitle to a salary per annum as follows:
Sapato, K36,000, Siame K24,000
(v) Motor vehicles are to be depreciated at 20% per annum on a reducing balance basis, and Office equipment at 10% on a straight line basis.
(vi) Stock at 31 December, 2018 was valued at K82,800.
(a) Prepare the Partnership Statement of Comprehensive Income.
(b) Prepare the Appropriation Account and Current Accounts for the Partnership for the year ended 31 December 2018
(c) A statement of Financial Position as at 31 December 2018