Required: The statement of profit and loss for the year ended 30 September 2020. Partners’ current accounts as at 30 September 2020. Statement of financial position as at 30 September 2020
Lanie, Justin and Adam are in
The
| $ | $ | |
|---|---|---|
| Sales | 60,000 | |
| Inventory (1 October 2019) | 9,000 | |
| Purchases | 30,000 | |
| Operating expenses | 19,200 | |
| Loan from: Justin | 3,000 | |
| Adam | 6,000 | |
| Land | 3,000 | |
| Building | 15,000 | |
| Plant and machinery (cost) | 21,000 | |
| 12,000 | ||
| 12,000 | 9,900 | |
| Bank overdraft | 3,300 | |
| Capital accounts: Lanie | 7,500 | |
| Justin | 6,000 | |
| Adam | 3,000 | |
| Current accounts: Lanie | 600 | |
| Justin | 900 | |
| Adam | 600 | |
| Drawings: Lanie | 900 | |
| Justin | 1,200 | |
| Adam | 600 | |
| 112,800 | 112,800 |
Additional information:
1. On 1 April 2020, the terms of the partnership agreement were changed. The new terms provided as follows:
- A profit-sharing ratio of 5:3:2 for Lanie, Justin and Adam respectively.
- Salaries of $ 30 per month to Justin and Adam.
- Interest on capital at the rate of 5% per annum.
- For the purpose of the changes ,
goodwill was valued at $3,600 and was to be written off immediately while the land and buildings were valued at $6, 000 and $19,200 respectively.
2. Sales include a credit sale of $1,800 in respect of goods sold on the basis of confirmation by the customer. The goods had cost $600. As at 30 September 2020; the customer had not confirmed whether he would buy the goods.
3. Interest on the loans from Justin and Adam is to be charged at the rate of 10% per annum. This interest had not been paid as at 30 September 2020.
4. Closing inventory as at 30 September 2020 was valued at $ 7,200.
5. Unless where otherwise provided, the incomes and expenses accrued evenly throughout the year.
Required:
- The statement of
profit and loss for the year ended 30 September 2020. - Partners’ current accounts as at 30 September 2020.
Statement of financial position as at 30 September 2020
Step by step
Solved in 4 steps
