Problem: Beacon and Dobbs have been in partnership as tailors for six years. Their incomplete trial balance at 31 December 19X8 is as follows.
Debit Credit
£ £
Capital (at 1.1.X8):
- Beacon 8,000
- Dobbs 5,000
Purchases/sales 45,620 74,750
Debtors/creditors 1,210 4,360
Leasehold shop at cost 18,000
Equipment at cost 8,500
Accumulated depreciation
on equipment at 1.1.X8 1,200
Shop assistant wages 5,320
Stationery 320
Light and heat 1,850
Bank charges 45
Stock at 1.1.X8 6,630
Bank 3,815
Drawings:
- Beacon 2,200
- Dobbs 1,800
Additional information:
(i) At the end of the year there is electricity accrued to the value of £60.
(ii) Stationery unused at the end of the year was valued at £50.
(iii) The equipment is depreciated at 10% per annum on a reducing balance basis. The leasehold property is not depreciated.
(iv) The stock at 31 December 19X8 was valued at £5,970.
(v) Dobbs made further drawings of £8,000 on 10 January 19X9.
(vi) Beacon and Dobbs have a partnership agreement which states that:
- each partner receives interest on their opening capital balances at 10% per annum
- salaries are to be paid at £6,200 per annum for Beacon and £4,875 for Dobbs
- the remainder of the profit is to be split equally between the partners.
(vii) Beacon paid £2,000 of capital into the business on 15 December 19X8.
Required:
Prepare the profit and loss account for Beacon and Dobbs for the year ended 31 December 19X8.