Question 4

(b) Ken and Jack

Income Statement
For the year ended 31 December 2014
RM RM RM
Sales 256,000
Less: Returns Inwards (500)
Net Sales 255,500
Less: Cost of sales
Opening inventory 35,550
Purchases 130,500
Cost of goods available for sales 166,050
Less: Closing inventory (23,500) (142,550)
Gross Profit 112,950
Other Income
Discounts received 1,000
113,950
Less: Expenses
Wages and salaries 28,500
Insurances expenses (4,800 – 960) 3,840
Advertising expenses (1,250 + 500) 1,750
Water and electricity 2,400
Discounts allowed 1,800
Depreciation of Delivery Van (30,000 x 10% x1) 3,000
Interest on Loan from Jack (10,000 x 8% x 1) 800 (42,090)
Net Profit 71,860
Interest on drawings
– Ken (22,700 x 10% x 1) 2,270
74,130
Less: Appropriation
Partner’s Salaries
– Ken (500 x 12) 6,000
Interest on capital
- Ken (64,000 x 10% x 1) 6,400
- Jack (44,000 x 10% x 1) 4,400 10,800 (16,800)
57,330

Balance of profit shared

- Ken (57,330 x 1/2) 28,665
- Jack (57,330 x 1/2) 28,665 57,330

(a) Partners’ Current Account

A/Receivable Ken Jack A/Payable + Ken Jack
2014 RM RM 2014 RM RM
Dec 31 Drawings (2) 22,700 - Jan 1 Balance b/d (1) 2,300 1,700
31 Profit and Loss Appropriation Dec 31 Profit and Loss
- Interest on drawings (3) 2,270 - - Interest on Loan from Jack (4) - 800
31 Balance c/d (8) 18,395 35,565 31 Profit and Loss Appropriation
- Partner’s Salaries (5) 6,000 -
- Interest on capital (6) 6,400 4,400
- Balance of profit shared (7) 28,665 28,665
43,365 35,565 43,365 35,565

2015
Jan 1 Balance b/d 18,395 35,565
 (c) Ken and Jack
Statement of Financial Position
As at 31 December 2014
RM RM RM
Cost Accumulated Carrying
Depreciation Amount
Non-current Assets
Freehold premises 100,000 - 100,000
Delivery van (6,000 去年 + 3,000 今年) 30,000 (9,000) 21,000
130,000 (9,000) 121,000

Current Assets
Inventory 23,500
Accounts Receivable 24,000
Prepaid insurance expenses 960
Bank 18,000 66,460
Total Assets 187,460
Non-current Liabilities
Loan from Jack 10,000
Current Liabilities
Accounts Payable 15,000
Accrued advertising expenses 500
15,500
Total Liabilities (25,500)
Net Assets 161,960

Owners’ Equity
Capital
- Ken 64,000
- Jack 44,000 108,000
Current
- Ken 18,395
- Jack 35,565 53,960
Total Equity 161,960

(i) Interest on capital App- / Current

(ii) Partner’s Salaries - Ken App- / Current
(iii) Interest on Drawing App / Current
(iv) Interest on loan from partner PE / Current

(i) Closing inventory TC- / CA

(ii) Advertising Expenses
(iii) Depreciation of Delivery Van
(iv) Insurance Expenses
1,250 + 500 (CL) = 1,750 (PE)
Cost x % x yrs
30,000 x 10% x 1 = 3,000
Accumulated = 6,000 + 3,000 (PE) = 9,000 (NCA-)
4,800/15 x 3 = 960
4,800 – 960 (CA) = 3,840 (PE)