Reference no: EM132608666

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 interest was charged or allowed on current accounts.

The following was the partnership trial balance as at 30 April 2001:

Sh. Sh.

Fixed capital accounts

Rotich 750,000

Sinei 500,000

Current accounts

Rotich 400,000

Sinei 300,000

Leasehold premises (purchased 1 May 2000) 2,250,000

Purchases 4,100,000

Motor vehicle (cost) 1,600,000

Balance at bank 820,000

Salaries (including partners' drawings) 1,300,000

Stocks: 30 April 2000 1,200,000

Furniture and fittings (cost) 300,000

Debtors 225,000

Accountancy and audit fees 105,000

Wages 550,000

Rent, rates and electricity 310,000

General expenses (Sh.352,400 for the six months

To 31 October 2000) 660,000

Cash introduced - Tonui 1,250,000

Sh. Sh.

Sales (Sh.3,500,000 to 31 October 2000) 8,750,000

Accumulated depreciation: 1 May 2000

Motor vehicle 300,000

Furniture and fittings 100,000

Creditors 1,970,000

13,420,000 13,420,000

Additional information:

1. On 1 November 2000, Tonui was admitted as a partner and from that date, profits and losses were to be dated in the ratio 2:2:1. For the purpose of this admission, the value of goodwill was agreed at Sh.3,000,000. No account for goodwill was to be maintained in the books, adjusting entries for transactions between the partners being made in their current accounts. 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 account.

2. Interest on fixed capitals was still to be allowed at the rate of 10% per annum after Tonui's admission. In addition, after Tonui's admission, no interest was to be charged or allowed on current accounts.

3. Any apportionment of gross profit was to be made on the basis of sales. Expenses, unless otherwise 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 at 20% and 10% per annum respectively, calculated on cost.

5. On 30 April 2001, the stock was valued at Sh.1,275,000.

6. Salaries included the following partners' drawings:

Rotich Sh.150,000, Sinei Sh.120,000 and Tonui Sh.62,500.

7. A difference in the books of Sh.48,000 had been written off at 30 April 2001 to general expense, which was later found to be due to the following clerical errors:

Sales returns of Sh.32,000 had been debited to sales returns but had not been posted to the account of the customer concerned :

The purchases journal had been undercast by S.80,000.

8. Doubtful debts (for which full provision was required) amounted to Sh.30,000 and Sh.40,000 as at 31 October 2000 and 30 April 2001 respectively.

9. On 30 April 2001, rates and rent paid in advance amounted to Sh.50,000 and a provision of Sh.15,000 for electricity consumed was required.

Required:

Question a) Statement of comprehensive Income for the year ended 30 April 2001.

Question b) Partners' current accounts for the year ended 30 April 2001.

Question c) Statement of financial position as at 30 April 2001.