The partnership of Sewell Grange and Jones has just

completed #8254
The partnership of Sewell, Grange and Jones has just completed its first year in business. The
partnership agreement stipulates that profits should be apportioned in the ratio of Sewell 3,
Grange 2 and Jones 1 after allowing interest on capital at 12 per cent per annum and crediting
Sewell with a salary of £15,000.The following information relates to their first financial year that
ended on 31 October 20X3:1. The partners introduced the following amounts as capital on 1
November
20X2:_________________£Sewel..............50000Gronge............40000Jones...............200002.
Cash drawings during the year
were:_________________£Sewel..............3900Gronge............4500Jones...............24003. The
draft statement of profit and loss for the year showed a profit for the year of £61,720.4. Included
in the motor expenses account for the year was a bill for £300 that related to Grange's private
motoring expenses.5. No entries had been made in the financial statements to record the
following:a. As a result of a cash flow problem during April, Grange invested a further £10,000
as capital with effect from 1 May 20X3, and on the same date Jones brought into the business
additional items of equipment at an agreed valuation of £6,000. In addition, in order to settle a
debt, Jones had privately undertaken some work for Foster, a creditor of the partnership. Foster
accepted the work as full settlement of the £12,000 the partnership owed her for materials.b.
Sewell had accepted a holiday provided by Miller, a credit customer of the partnership. The
holiday, which was valued at £1,000, was accepted in full settlement of a debt of £2,500 that
Miller owed to the partnership and that he was unable to pay.c. Each partner had taken goods
for his own use during the year at cost as
follows:_________________£Sewel..............1400Gronge............2100Jones...............2100It is
the policy of the firm to depreciate equipment at the rate of 10 per cent per annum based on the
cost of equipment held at the end of each financial year.Requireda. The appropriation account
for the year ended 31 October 20X3 showing clearly the corrected profit from the first year's
trading.b. The capital and current accounts of Sewell, Grange and Jones for the year ended 31
October 20X3.View Solution:
The partnership of Sewell Grange and Jones has just completed

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