Rotich and Sinei have been in partnership for several years, sharing profits and losses in the
ratio 2:1. Interest on fixed capitals was allowed at the rate of 10% per annum, but no interestwas charged or allowed on current accounts.The following was the partnership trial balance as at 30 April 2018:Sh.Sh.Fixed capital accountsRotich750,000500,000SineiCurrent accountsRotich400,000300,000S in eiLeasehold premises (purchased 1 May 2000) 2,250,000PurchasesMotor vehicle (cost)Balance at bankSalaries (including partners’ drawings)Stocks: 30 April 2000Furniture and fittings (cost)4,100,0001,600,000820,0001,300,0001,200,000300,000225,000105,000550,000310,000DebtorsAccountancy and audit feesWagesRent, rates and electricityGeneral expenses (Sh.352.400 for the six 660,000months To 31 October 2000)Cash introduced – Tonui1,250,0008,750,000Sales (Sh.3, 500,000 to 31 October 2000)Accumulated depreciation: I May 2000300,000100,0001,070,00013,420,000Motor vehicleFurniture and fittingsCreditors13,420,000Additional information:1. On 1 November 2000,’Tonui was admitted as a partner and from that date, profits andlosses were shared in the ratio 2:2:1. For the purpose of this admission, the value ofgoodwill was agreed at Sh.3, 000,000. No account for goodwill was to be maintained in thebooks, adjusting entries for transactions between the partners being made in their currentaccounts. On that date, Tonui introduced Sh.1, 250,000 into the firm of which Sh.375,000 comprised his fixed capital and the balance was credited to his current account2. Interest on fixed capitals was still to be allowed at the rate of 10°%, per annum after Tonuiadmission, no interest was to be charged or allowed on current accounts.3. Any apportionment of gross profit was to he made on the basis of sales. Expenses, unlessotherwise indicated, were to be apportioned on a time basis.4. A charge was to be made for depreciation on motor vehicle and furniture and fittings o420%and 10% per annum respectively, calculated on cost.5. On 30 April 2001, the stock was valued at Sh. 1,275,000.7. A difference in the books of Sh.48, 000 had been written off at 30 April 2018 to general6. Salaries included the following partners’ drawings:Sales returns of Sh.32, 000 had been debited to sales returns but had not, Salaries included the following partners’ drawings:Rotich Sh.150, 000, Sinei Sh. 120,000 and Tonui Sh.62, 500expenses, which was later found to be due to the following clerical errors:been posted to the account of the customer concerned;• The purchases journal had been under cast by Sh.80, 000.8 Doubtful debts (for which full provision was required) amounted to Sh.30, 000 and Sinos000 as at 31 October and 30 April 2018 respectively.8. On 30 April 2018, rates and rent paid in advance amounted to Sh.50,000 and a provision ofSh.15,000 for electricity consumed was required.Required:(a) Trading and profit and loss account for the year ended 30 April 2018,(b) Partners current accounts for the year ended 30 April 2018.(c) Balance sheet
Please let us know your comments regarding the correct answer to the question. Each of your comments will be evaluated by us and correct comments will be shared.