Sarah and Betty were in partnership sharing profits and losses in the ratio they contributed their capital, after allowing interest
Sarah and Betty were in partnership sharing profits and losses in the ratio they contributed their capital, after allowing interest at 6% per annum on their fixed Capital account balances and allowing Betty a salary of £2,000 per month. The premises used by the business belong to Sarah who has been promised a rent of £2,000 per month. The Trial Balance extracted at the year-end is set out. You are informed as follows:
(i) Salaries account includes £22,000 drawn by Betty.
(ii) Goods costing £8,000 removed by Sarah for personal use have not been accounted for.
(iii) As at the year-end advertising £9,000 and general expenses £12,000 remain unpaid.
(iv) Trade receivables of £4,000 should be written off and the allowance for doubtful debts adjusted to cover 5% of remaining trade receivables.
(v) Depreciation should be written off on furniture and motor vehicles at 10% and 20% per annum respectively, using the reducing balance method.
(vi) Cost of year-end inventory has been ascertained to be £364,000. This includes at £24,000 the cost of some shop-soiled items which are expected to be sold for £17,000 after reconditioning them at a cost of £2,000.
The Statement of income for the year ended 31 December 2012 and the Statement of financial position as at that date.
This problem has been solved!
Step by Step Answer: