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Tasks 1 Asha and Rasha started a partnership business in 2010 sharing profit and losses in...

Tasks 1

Asha and Rasha started a partnership business in 2010 sharing profit and losses in the ratio of 60% and 40% respectively. The following is the trial balance of the partnership firm, which has been extracted as of 31 December 2019:

Particulars	Dr$	Cr$
Land	50,000
Building	40,000
Plant & Machinery	30,000
Sales		200,000
Sales Return	1,000
Purchase	75,000
Purchase Return		500
Inventory(On 1 Janury 2019)	11,500
Salaries	24,000
Discount Received		2,500
Rent Received		10,000
Discount Allowed	3,000
Bank Loan		25,000
Loan from a partner - Rasha		6,000
Interest on Bank Loan	2,500
Bad Debts	250
Allowance for Bad Debts		800
Accounts Receivable	25,000
Accounts Payable		11,500
Cash at Bank	22,000
Cash in Hand	2,000
Insurance	4,000
Generral Expenses	5,000
Capital Account:
Asha		50,000
Rasha		20,000
Drawing during the year:
Asha	12,000
Rasha	20,000
Current Account:
Asha		2,500
Rasha	1,550
Total	328,800	328800

The following information is relevant:

(i) Closing inventory as of 31/12/2019 is valued at $8,000

(ii) Provision for bad debts is to be created 8% of Trade Receivables

(iii) Insurance amount included prepayment for 2020 $500 5

(iv) Salary outstanding (accrual) as on 31/12/2019 is $2,000

(v) Interest on loan given by Rasha (partner) is not provided in the partnership agreement.

(vi) The following is provided in the partnership agreement:

- Interest on drawings at 10% per annum

- Interest on Capital at 8% per annum

- Salary to Asha $5000 and to Rasha $8,000 per annum.

You are required to prepare:

a) Income Statement for the year-end 31/12/2019

b) Profit and Loss Appropriation Account (Statement of the division of Income) for the year-end 31/12/2019.

c) Partners' Capital Account in columnar form d) Partners’ Current Accounts in columnar form, and

e) A Statement of Financial Position (Balance Sheet) as at 31/12/2019

Note: you are required to Perform all relevant accounting entries relating to Interest on Capital Account, Interest on Drawings, Salary to partners with regards to the preparation of the partnership business.

Expert Solution

ekkarill92 answered 1 year ago

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