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
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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.      

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