ez and Marshall are in Partnership operating a manufacturing business. They share profit in the ratio 3:2. The trial balance at December 31, 2020 was as follows: Trial Balance as at December 31, 2020 DR CR   $ $ FactoryEquipment at cost 26,000   Office-Motor Vehicles at cost 36,800   Provision for depreciation at Dec 31, 2

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question

Mendez and Marshall are in Partnership operating a manufacturing business. They share profit in the ratio 3:2. The trial balance at December 31, 2020 was as follows:

Trial Balance as at December 31, 2020

DR

CR

 

$

$

FactoryEquipment at cost

26,000

 

Office-Motor Vehicles at cost

36,800

 

Provision for depreciation at Dec 31, 2019:

   

Office-Equipment

 

7,800

Office-Motor Vehicles

 

14,720

Stock of Finish Goods at Dec 31, 2019

99,880

 

Debtors and Creditors

83,840

65,100

Cash at Bank

19272

 

Work in Progress at Dec 31, 2019

25,000

 

Direct Expenses

18,900

 

Direct Wages

31,500

 

Electricity

15,000

 

Insurance

5,000

 

Purchase of Raw Materials

120,000

 

Factory Maintenance

12,567

 

Provision for unrealized profit

 

15,447

Raw Material at Dec 31,2019

30,000

 

Sales

 

361,480

Salaries (Office Staff)

45,668

 

Office Expenses

3,480

 

Current Accounts at Dec 31, 2019:

   

Mendez

 

5,516

       Marshall

 

4,844

Capital Accounts:

   

Mendez

 

86,000

Marshall

 

50,000

Drawings:

   

Mendez

16,000

 

Marshall

22,000

 

Total

610,907

610,907

Additional Information:

  1. Stock of finish goods at Dec 31, 2020 was valued at $109,360
  2. Stock of raw material at Dec 31, 2020 was valued at $25,000
  3. Work-in-progress at Dec 31, 2020 was valued at $19,200
  4. Factory profit is 20% on the cost of production.
  5. Office expenses owing $440
  6. Electricity prepaid is $3000
  1. The factory is responsible for 70% of the electricity, while the office is responsible for 60% of the insurance
  2. Provision for Depreciation: Motor Vehicle 20% of cost, Factory Equipment 10% on the reducing balance method..
  3. Interest is to be charged on drawings is 5% per annum.
  4. Interest is allowed on capital accounts at the rate of 6% per annum.
  5. Marshall is allowed a salary of $15,000 per annum.

Required:

Prepare the partners’ manufacturing, trading, and profit and loss account for the year ended December 31, 2020.      

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Completing the Accounting Cycle
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education