QUESTION I Reid and Benson are in partnership as lecturers and tutors. Interest is to be...

 

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QUESTION I 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 20X3. 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 Debtors and creditors Cash Total £ 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 Fixtures and fittings are to be depreciated at 10% on cost. Interest on drawings are: Benson £550, Reid £1,050. Stock of books at 31 December 20X2 was £1,500. 541,750 330 12,000 23,400 711,480 A provision for doubtful debts is to be carried forward of £1,500. Insurances paid in advance at 31 December 20X2 were General £50; Professional Indemnity £100. Required: Prepare a profit and loss account together with an appropriation account at 31 December 20X3 together with a balance sheet as at that date. QUESTION I 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 20X3. 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 Debtors and creditors Cash Total £ 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 Fixtures and fittings are to be depreciated at 10% on cost. Interest on drawings are: Benson £550, Reid £1,050. Stock of books at 31 December 20X2 was £1,500. 541,750 330 12,000 23,400 711,480 A provision for doubtful debts is to be carried forward of £1,500. Insurances paid in advance at 31 December 20X2 were General £50; Professional Indemnity £100. Required: Prepare a profit and loss account together with an appropriation account at 31 December 20X3 together with a balance sheet as at that date.

Answer rating: 100% (QA)

Profit Loss Account Particulars Amount Amount Particulars Amount Amount Purchase 291830 Sales 541750 ... View the full answer