Partnership Trading & P&L - Approp. Account - Current Accounts & Balance Sheet.

Partnership Trading and Profit and Loss Account, Appropriation Account, Current Accounts and Balance

Elton, Janet and Alvin operate a wholesale business in Half Way Tree, St. Andrew, Jamaica. Their partnership agreement requires that profits and losses be shared in the ratio 3:2:1 respectively. Partners are to receive salaries as follows: Elton $600,000 per annum; Janet $450,000 per annum; and Alvin $350,000 per annum. The partnership agreement also stipulates that partners be paid 5% interests on their capitals and that interest on drawings be charged at 10% per annum. On December 31, 2016, the following Trial Balance was extracted from the partnership’s books:

Trial Balance as at December 31, 2016

Details/Accounts	$	$
Bank		400,000
Office furniture, etc.	3,000,000
Accumulated depreciation on office furniture, etc.		600,000
Printing and stationery	300,000
Return of goods	in400,000	out150,000
Cash drawings: Elton	500,000
Janet	750,000
Alvin	450,000
Telephone	520,000
Administrative salaries	4,800,000
Cash in hand	2,500,000
Rent	1,200,000
Provision for bad and doubtful debts		200,000
Purchases	10,150,000
Insurance	360,000
Motor vehicles	10,000,000
Provision for depreciation on motor vehicles		2,000,000
Sales		30,500,000
Debtors and creditors	4,000,000	3,000,000
Discounts	1,000,000	650,000
Inventory, January 1, 2016	6,000,000
Commission	500,000	300,000
Capital Accounts: Elton-01/01/16		4,500,000
Janet-01/01/16		3,500,000
Alvin-01/01/16		2,500,000
Current Accounts: Elton-01/01/16		500,000
Janet-01/01/16	320,000
Alvin-01/01/16		450,000
Bad debts written off	100,000
Carriage inwards	400,000
Motor vehicle running costs	2,000,000	-------------
	49,250,000	49,250,000

(i) Telephone charges $45,000 and commission payable $105,000 were outstanding on December 31, 2016.
(ii) Staff salaries include an amount of $50,000 paid to James Wright out of his January 2017 salary, while $40,000 of the insurance was for 2017.
(iii) Depreciation is recorded in the books as follows: Motor vehicles 20% Reducing Balance; Office furniture, etc. 10% on cost.
(iv) The provision for bad and doubtful debts is to be adjusted to 2½% of debtors.
(v) Discount received on December 20, 2016 for $320,000 was recorded in the account as $220,000.
(vi) Inventory on December 31, 2016 was valued at $5,000,000.

(a) The partners’ Trading and Profit and Loss Account for the financial year ending December 31, 2016. (10 marks)
(b) The Profit and Loss Appropriation Account for the financial year ending December 31, 2016. (6 marks)
(c) The partners’ current accounts for the financial year ending December 31, 2016. (6 marks)
(d)A Balance Sheet as at December 31, 2016. (8 marks)

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