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BED 1201 FINANCIAL ACCOUNTING IICAT I WEEKEND QUESTION ONE Kirui, Libe and Maca are in partnership sharing profits and losses in the ratios 1:1...
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BED 1201 FINANCIAL ACCOUNTING II  CAT I WEEKENDQUESTION ONE

Kirui, Libe and Maca are in partnership sharing profits and losses in the ratios 1:2:1 respectively.

The trial balance of the partnership at 31 December 2018 was as follows:

                                                                                            DR                                          CR

Shsshs

Capital accounts:

Kirui                                                                                                                                2400,000

Libe                                                                                                                                 1920,000

Maca                                                                                                                               1440,000

Current accounts:

Kirui                                                                                                      96,000

Libe                                                                                                                             52,800

Maca                                                                                                     29,040

Drawings

Kirui                                                                                      1022,520

Libe                                                                                        729,680

Maca                                                                                      484840

Bad debts provision at 1 January 2018 31200

Debtors and creditors                                                        3479,040                         1105,440

Shop fixtures at cost                             1680,000

Office furniture at cost                                                         72,000

Stock at 1 stJan 20181262,400

Purchases                                            10,644,480

Sales                                                                                                      14,755,200

Carriage inward                                                                    60960             

Returns inward and out ward                                            76,800 27,840

Rent and rates                                                                       652,800

Insurances                                                                              152,160

General expenses                                                                  311,040

Staff salaries                                                                         1,696,800

Carriage outwards                                                               149,760

Bank overdraft                                                                                                                           376,800

Selling expenses                                                                   23,040

Provision for depreciation:

Shop fixtures at 1 Jan 2018                                                                                                      240,000

Furniture at 1 January 2018 24,000

                                                                                                22,498,320                                 22,498,320

The following further information is provided:

1.      Stock at 31 December 2018 was sh 1,948,800

2.      Rates paid in advance amounted to sh 42,240

3.      Depreciation was to be provided at 10% on shop fixtures and 20% on furniture both on cost

4.      At 31st December 2018sh 2760 was owing in respect of selling expenses

5.      Some bad debts amounting to sh 7200 are to be written off

6.      Bad debts provision is to be increased to sh 80,640


The partnership deed provides:

                                i.           Macha is to receive an annual salary of sh 240,00

                              ii.           Interest of 5% is to be allowed on fixed capital

                             iii.           Interest of 2.5% is to be charged on drawings regardless of when the withdrawal is made

                            iv.           No interest is to be allowed on current accounts

Required

a)     Income statement                                                             8mks

b)     Statement of financial position                                        7mk

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