Question 1

Pan and Da are partners in retail business. The terms of the partnership agreement are as follows:
(i) Profit and loss ratio are to be shared between Pan and Da according to their initial capital ratio.
(ii) Pan’s salary is RM 1,200 per month.
(iii) Interest on capital of 6% per annum is to be paid to each partner.
(iv) Interest is to be charged on drawings at a rate of 4% per annum.
(v) Interest is to be charged on loan at a rate of 4% per annum.

The balances extracted from the business at 31 December 2022 is as follows:

Debit (RM) Credit (RM)
Gross Profit 102,000
Capital (1 January 2022)
- Pan 45,000
- Da 15,000
Current (1 January 2022)
- Pan 400
- Da 580
Drawings by Da 1,000
Pan’s salary 10,000
Motor Vehicles 14,000
Accumulated Depreciation of Motor Vehicles 2,000
Allowances for Doubtful Debts 420
Rent 25,500
Insurance 3,900
Accounts Receivable 31,500
Accounts Payable 12,700
Miscellaneous 650
Wages and Salaries 20,175
Shares in XYZ Ltd 10,580
Dividend 1,650
Bank 62,445
179,750 179,750
Additional information:
(i) Closing Inventory was valued at RM 40,800 at cost, RM 48,880 at market value.
(ii) One account receivable who owed RM 800 and only received three-quarter of the amount. The
balance that he owed has to declare as bad debts.
(iii) Allowances for doubtful debts is to be increased by 2% of account receivable balance.
(iv) Rent was still owing RM 700 and insurance prepaid RM 300.
(v) Depreciation of motor vehicles was 5% per annum on written down value.
(vi) On 1 August 2022, Pan increased her capital by RM 20,000, while Da decreased his capital to
RM 12,000 but left his withdrawn capital in the partnership as a loan.

Required:
(a) Income Statement (extract) for the year ended 31 December 2022; (16%)
(b) Partner’s Current (in columnar form). (4%)