Reference no: EM132969309

Question: Payne and Cain were partners in a retail business sharing profits and losses: Payne 2/3 and Cain 1/3. Interest on Capital was at the rate of 10% per annum and interest on drawings was at the rate of 5% per annum. Accounts were made up to 31 March in each year.

The following was the partnership Trial balance as at 31st March 2010: Details

Details
Dr
Cr
Capital: Payne
                                     92,000
Capital: Cain
                                     62,000
Building
160,000
Purchases
80,000
Motor vehicle
25,000
Bank
                                     2,200
Current accounts:
Payne
                                     30,000
Cain
5,000
Drawings:
Payne (commenced 1 April 2009)
13,000
Cain (commenced 1 April 2009)
10,000
Sales
                                  166,000
Inventory 1April 2009
10,000
Shop Fittings
30,000
Accounts Payable
                                    20,500
Provision for depreciation: Motor Vehicle
                                    6,000
Debtors
31,000
Utilities
7,000
Provision for depreciation: Shop Fittings
                                    6,600
Wages
8,700
Rent
5,600
                                                 
 385,300                           385,300

You are provided with the following additional information
i. On 31st March 2010, closing inventory was $18,000
ii. Salaries for Payne, and Cain $900, and $600 per month, respectively.
iii. Rent prepaid was $1,300.
iv. Depreciation is to be provided using the reducing balance method for Motor Vehicle at 10% per annum and for fittings at 20% per annum on cost.

REQUIRED:

A. Prepare the Partnership Income Statement and Appropriation account for period ending 31st March 2010.

B. Prepare the Current Account for each partner.