Reid and Benson are in partnership as lecturers and tutors. Interest is to be allowed on capital and on the opening balances on the current accounts at a rate of 5% per annum and Reid is to be given a salary of £18,000 per annum. Interest is to be charged on drawings at 5% per annum (see notes below) and the profits and losses are to be shared Reid 60% and Benson 40%. The following trial balance was extracted from the books of the partnership at 31 December 2014.

l An allowance for doubtful debts is to be created of £1,500. l Insurances paid in advance at 31 December 2013 were General £50; Professional Indemnity £100. l Fixtures and fittings are to be depreciated at 10% on cost. l Interest on drawings: Benson £550, Reid £1,050. l Inventory of books at 31 December 2014 was £1,500. Required: Prepare an income statement together with an appropriation account at 31 December 2014 together with a statement of financial position as at that date.

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Capital account - Benson Capital account - Reid Current account - Benson Current account - Reid Drawings - Reid Drawings - Benson Sales-goods and services Purchases of textbooks for distribution Returns inwards and outwards Carriage inwards Staff salaries Rent Insurance - general Insurance- public indemnity Compensation paid due to Benson error General expenses Bad debts written-off Fixtures and fittings - cost Fixtures and fittings - depreciation Accounts receivable and accounts payable Cash Total 4 17,000 20,000 291,830 800 3,150 141,150 2,500 1,000 1,500 10,000 9,500 1,150 74,000 137,500 400 711,480 50,000 75,000 4,000 5,000 541,750 330 12,000 23,400 711,480