Question: Scott and King, who occupied adjacent shops, became partners as from 1st January, 1962. Capital contributed was:
The partnership agreement provided that profits should be shared threefifths to Scott and two-fifths to King, after provision for salaries at the annual rate of £630 to Scott and £420 to King and interest on the foregoing capitals introduced at 6% per annum. The cash account of the combined business for the year ending 31st December, 1962 was as follows:
King died on 31st August, 1962, and the balance found due to him as at the date of his death based on the accounts for year ending 31st December, 1962, had to carry interest at the rate of 5% per annum until paid over to his executors. The amount due on death had to include £1,000 for Goodwill payable by the remaining partner. Prepare accounts for the year ending 31st December, 1962, making provision for the
following additional items:
Depreciation on shop property 5 %
Depreciation on fittings 10%
Stocks on hand at 31st December, 1962 £4,360
Expenses outstanding £244
Creditors for goods purchased for resale £484
(Calculations to nearest £1 and month).