Hamisi and Peter are partners, sharing profits and losses in the ratio 3:2. The following is the trial balance in the partnership books at 31st December 2020. Dr Cr Shs Shs Capital Account at 1st January 2020 - Hamisi 16,400 - Peter 13,200 - Hamisi 3,600 - Peter 2,400 Provision for doubtful debts 480 Purchases 101,640 Sales 131,860 Vans at cost 11,600 Fittings at cost 2,400 Provision for depreciation –Vans -Fittings 1,140 Stock (1st January 2020) 17,360 Petty cash 40 Office expenses 6,400 Vehicle expenses 3,960 Motor car at cost (1st January 2020) 1,600 Debtors and Creditors 12,200 4,200 Bank 540 Salaries 7,360 Insurance 620 Discounts allowed 2,560 _____ 173,740 173,740 The following additional information is available:- (a) Stock at 31st December 2020 was valued at Shs. 26,380. (b) Depreciation is to be provided at 10% per annum, on the written down value of the fittings and at 20% per annum of the written down value of the vans and cars. Hamisi is to bear personally Shs. 400 of the vehicle expenses and one half of the depreciation charge on the car. (c) No rent has been paid on the business premises during the year because of a dispute with the landlord. The rental agreement provides for a rent of Shs 928 per year. (d) Bad debts of Shs 200 are to be written off, and the provision for doubtful debts to be adjusted to 2 ½ % of the remaining debtors. (e) Insurance Shs 70 has been paid in advance at 31st December, 2020. (f) Salaries, Shs 370 were owing at 31st December 2009. (g) An item of Shs 70 for bank charges appears in the bank account. (h) The partners are entitled to interest on capital at 10% per annum. REQUIRED: (a) Income Statement
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Hamisi and Peter are partners, sharing
The following is the
Dr Cr
Shs Shs
Capital Account at 1st January 2020 - Hamisi 16,400
- Peter 13,200
- Hamisi 3,600
- Peter 2,400
Provision for doubtful debts 480
Purchases 101,640
Sales 131,860
Vans at cost 11,600
Fittings at cost 2,400
Provision for
-Fittings 1,140
Stock (1st January 2020) 17,360
Petty cash 40
Office expenses 6,400
Vehicle expenses 3,960
Motor car at cost (1st January 2020) 1,600
Debtors and Creditors 12,200 4,200
Bank 540
Salaries 7,360
Insurance 620
Discounts allowed 2,560 _____
173,740 173,740
The following additional information is available:-
(a) Stock at 31st December 2020 was valued at Shs. 26,380.
(b) Depreciation is to be provided at 10% per annum, on the written down value of the fittings and at 20% per annum of the written down value of the vans and cars. Hamisi is to bear personally Shs. 400 of the vehicle expenses and one half of the depreciation charge on the car.
(c) No rent has been paid on the business premises during the year because of a dispute with the landlord. The rental agreement provides for a rent of Shs 928 per year.
(d)
(e) Insurance Shs 70 has been paid in advance at 31st December, 2020.
(f) Salaries, Shs 370 were owing at 31st December 2009.
(g) An item of Shs 70 for bank charges appears in the bank account.
(h) The partners are entitled to interest on capital at 10% per annum.
REQUIRED:
(a) Income Statement and its accompanying Appropriation Account for the year ended 31st December 2020
(b) Partners’ Current Accounts at 31st December 2020
(c)
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