Conroy and Evans are in partnership. Interest is allowed on capital and on the opening current account balances at 2% pa. Conroy is to be credited with a salary of N$30,000 in recognition of extra duties. Interest is charged on drawings (see note). Conroy and Evans agree to share profits equally. The following trial balance was drawn up on 28 February 2013:

N$ N$
Capital accounts

Conroy 100,000
Evans 100,000
Current account

Conroy 20,000
Evans 5,000
Drawings

Conroy 40,000
Evans 34,000
Purchases 390,000
Sales 840,000
Postage and stationery 13,000
Staff wages 120,000
Rent and insurance 34,000
General expenses 17,000
Bad debts written off 4,000
Stock (inventory) (01 03 12) 48,000
Equipment at cost 330,000
Account receivable 86,000
Account payable 36,000
Cash and bank 10,000
Prov. for doubtful debts 5,000
1,116,000 1,116,000

Notes at 28 February 2013:
• Stock (inventory) was valued at N$45,000.
• Staff wages owing amounted to N$3,000.
• Insurance prepaid amounted to N$1,000.
• Equipment is to be depreciated at 20% on cost.
• The provision for doubtful debts is to be increased to N$7,000.
• Interest on drawings to be charged: Conroy N$800, Evans N$700.

Required
a) Prepare the firm’s income statement, including the appropriation section for the year ended 28 February 2013.
b) Prepare the partners’ current accounts for the year ended 28 February 2013
c) Prepare the firm’s position statement (balance sheet) as at 28 February 2013. 

Answer rating: 100% (QA)

a Income statement for the year ended 28 February 2013 N N Sales 840000 Less Cost of sales Stock 1 March 2012 48000 Purchases 390000 Less Stock 28 Feb... View the full answer