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Business, 15.12.2021 01:20 shanice13

Rotich and Sinei have been in partnership for several years, sharing profits and losses in the ratio 2:1. Interest on fixed capitals was allowed at the rate of 10% per annum, but no interest
was charged or allowed on current accounts.
The following was the partnership trial balance as at 30 April 2018:
Sh.
Sh.
Fixed capital accounts
Rotich
750,000
500,000
Sinei
Current accounts
Rotich
400,000
300,000
S in ei
Leasehold premises (purchased 1 May 2000) 2,250,000
Purchases
Motor vehicle (cost)
Balance at bank
Salaries (including partners' drawings)
Stocks: 30 April 2000
Furniture and fittings (cost)
4,100,000
1,600,000
820,000
1,300,000
1,200,000
300,000
225,000
105,000
550,000
310,000
Debtors
Accountancy and audit fees
Wages
Rent, rates and electricity
General expenses (Sh.352.400 for the six 660,000
months To 31 October 2000)
Cash introduced – Tonui
1,250,000
8,750,000
Sales (Sh.3, 500,000 to 31 October 2000)
Accumulated depreciation: I May 2000
300,000
100,000
1,070,000
13,420,000
Motor vehicle
Furniture and fittings
Creditors
13,420,000
Additional information:
1. On 1 November 2000,'Tonui was admitted as a partner and from that date, profits and
losses were shared in the ratio 2:2:1. For the purpose of this admission, the value of
goodwill was agreed at Sh.3, 000,000. No account for goodwill was to be maintained in the
books, adjusting entries for transactions between the partners being made in their current
accounts. On that date, Tonui introduced Sh.1, 250,000 into the firm of which Sh.375,
000 comprised his fixed capital and the balance was credited to his current account
2. Interest on fixed capitals was still to be allowed at the rate of 10°%, per annum after Tonui
admission, no interest was to be charged or allowed on current accounts.
3. Any apportionment of gross profit was to he made on the basis of sales. Expenses, unless
otherwise indicated, were to be apportioned on a time basis.
4. A charge was to be made for depreciation on motor vehicle and furniture and fittings o4
20%and 10% per annum respectively, calculated on cost.
5. On 30 April 2001, the stock was valued at Sh. 1,275,000.
7. A difference in the books of Sh.48, 000 had been written off at 30 April 2018 to general
6. Salaries included the following partners' drawings:
Sales returns of Sh.32, 000 had been debited to sales returns but had not
, Salaries included the following partners' drawings:
Rotich Sh.150, 000, Sinei Sh. 120,000 and Tonui Sh.62, 500
expenses, which was later found to be due to the following clerical errors:
been posted to the account of the customer concerned;
• The purchases journal had been under cast by Sh.80, 000.
8 Doubtful debts (for which full provision was required) amounted to Sh.30, 000 and Sinos
000 as at 31 October and 30 April 2018 respectively.
8. On 30 April 2018, rates and rent paid in advance amounted to Sh.50,000 and a provision of
Sh.15,000 for electricity consumed was required.
Required:
(a) Trading and profit and loss account for the year ended 30 April 2018,
(b) Partners current accounts for the year ended 30 April 2018.
(c) Balance sheet

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Answers: 2

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