Partnership Worksheet 7

Sue and Sam are partners in a trading business.

Their trial balance at 31 December 2016 was as follows:

Sue and Sam

Trial Balance at 31 December 2016

debit credit
$ $
Revenue 124 000
Inventory at 1 January 2019 5 390
Purchases 55 440
Discount allowed 2 400
Discount received 1 385
Carriage outwards 6 160
Insurance 7 920
General expenses 8 100
Wages 9 600
Trade receivables 11 590
Trade payables 6 051
Bank 8 136
Premises at cost 90 000
Furniture at cost 24 000
Provision for depreciation on furniture 5 600
Capital accounts
Sue 80 000
Sam 40 000
Current accounts
Sue 2 100
Sam 1 600
Drawings
Sue 15 000
Sam 17 000

260 736 260 736

Additional information

1 Inventory at 31 December 2016 was valued at $5165.

2 Depreciation on furniture is to be charged at 20% per annum using the straight-line method.

3 The insurance includes a payment of $2160 for the 12 months from 1 July 2019 to 30 June
2017.

4 The partnership agreement provides for

interest on capital of 5% per annum
a salary to Sue of $6000 per annum
residual profits and losses to be shared equally
 REQUIRED

(a) Prepare the income statement for Sue and Sam for the year ended 31 December 2016.
Sue and Sam
Income Statement for the year ended 31 December 2016
Net Purch. C.O.S. Profit
$ $ $
Revenue 124 000
Less: Cost of Sales
Opening Inventory 5 390
Purchases 55 440
60 830
Less: Closing Inventory 5 165
Cost of Sales 55 665
Gross Profit 68 335
Add: Other Income
Discount Received 1 385
69 720
Less: Operating Expenses
Discount Allowed 2 400
Carriage Outwards 6 160
Insurance ($7920-(2160/2)) 6 840
General Expenses 8 100
Wages 9 600
Depreciation of Furniture ($24000x20%) 4 800 37 900
Profit for the Year 31 820
(b) Prepare the appropriation account for Sue and Sam for the year ended 31 December 2016.
Sue and Sam
Profit and Loss Appropriation Account for the year ended 31 December 2016
$ $ $

Profit of the year 31820

Less;Interest of Capital;sue(5%x80000) 4000

;sam(5%x40000) 2000 6000

Less; Partners Salary;Sue 6000 12000

Residual Profit 43820
Share of Profits;Sue(43830 divided by 2) 21910
; Sam(43830 divide by 2) 21910 21910

(c) Prepare the current account for Sam for the year ended 31 December 2016. Balance
the account and bring down the balance on 1 January 2017.

Sue and Sam

Sam Current Account
DEBIT CREDIT
Date Details Folio $ Date Details Folio $
2016 2016
31 Dec Drawings 17000 1 Jan Balance b/d 1600
Interest
Profit of on
31 Dec Shares 21910 Dec 31 Capital 2000
Dec 31 Balance c/d 35310
38910 38910
2016
Jan 1 Balance b/d 35310

38910 3600