Section A - Compulsory Question Question 1 The following list of balances is taken as at 30 June 2014 and has been extracted from the books of Elsa and Anna trading in partnership as owners of a ski shop called âFrozenâ. They share the balance of profits and losses in the proportions 1:2 respectively. £ £ Current Account Balances - Elsa 126,000 Current Account Balance - Anna 157,500 Capital Account Balance - Elsa 73,500 Capital Account Balance - Anna 10,500 Sales 420,000 Office Equipment - Cost 126,000 Office Equipment - Depreciation 50,400 Motor Vehicles - Cost 262,500 Motor Vehicles - Depreciation 52,500 Printing, stationery and postages 2,100 Stock in Hand at 1st July 2013 79,800 Purchases 157,500 Building Rental 5,250 Heat and light 3,150 Staff salaries 10,500 Telephone charges 5,250 Motor vehicle running costs 12,600 Discounts receivable 6,300 Discounts allowable 2,730 Sales Returns 6,300 Purchases returns 65,100 Carriage inwards 4,200 Carriage Outwards 6,300 Debtors 84,000 Provision for doubtful debts 2,520 Creditors 22,260 Balance at the Bank 168,000 Drawings - Anna 6,300 Drawings - Elsa 18,900 Drawings - Olaf 25,200 Total 986,580 986,580 (question continued) 26309 Page 3 of 5 Additional Information a) At 1 July 2013 Olaf was admitted into the partnership but no records were made other than the drawings noted above. Partners have decided that all profits in the future will be split as Elsa 40%, Anna 40% and Olaf 20%. Goodwill, which is not to be retained in the accounts of the new partnership, was deemed to be £300,000 at 30 June 2013. Olaf paid £100,000 into the partnership to represent his capital and this money was immediately withdrawn by Elsa (£10,000) and Anna (£90,000). These are capital withdrawals and not drawings. b) Elsa is to be credited with a salary at the rate of £1,000 per month from 1 July 2013. c) Stock in hand at 30 June 2014 has been valued at cost at £25,200. d) Staff salaries accrued due at 30 June 2014 amounted to £25,200 and heat and light of £1,890 prepaid at that date. e) Depreciation is to be provided at the following annual rates on the cost of assets existing at the year end: Office Equipment - 10% Motor Vehicles 10% Required: a) Prepare an income statement in a vertical format for the year ended 30 June 2014 together with an Appropriation Account at that date. (20 marks) b) Prepare full vertical format capital and current accounts for each partner at 30 June 2014. (10 marks) c) Prepare a statement of financial position, also in a vertical format, as at 30 June 2014 which should include full details of the partners' capital and current accounts for the year ended on that date. (20 marks) (Total 50 marks)
Section A - Compulsory Question Question 1 The following list of balances is taken as at 30 June 2014 and has been extracted from the books of Elsa and Anna trading in partnership as owners of a ski shop called âFrozenâ. They share the balance of profits and losses in the proportions 1:2 respectively. £ £ Current Account Balances - Elsa 126,000 Current Account Balance - Anna 157,500 Capital Account Balance - Elsa 73,500 Capital Account Balance - Anna 10,500 Sales 420,000 Office Equipment - Cost 126,000 Office Equipment - Depreciation 50,400 Motor Vehicles - Cost 262,500 Motor Vehicles - Depreciation 52,500 Printing, stationery and postages 2,100 Stock in Hand at 1st July 2013 79,800 Purchases 157,500 Building Rental 5,250 Heat and light 3,150 Staff salaries 10,500 Telephone charges 5,250 Motor vehicle running costs 12,600 Discounts receivable 6,300 Discounts allowable 2,730 Sales Returns 6,300 Purchases returns 65,100 Carriage inwards 4,200 Carriage Outwards 6,300 Debtors 84,000 Provision for doubtful debts 2,520 Creditors 22,260 Balance at the Bank 168,000 Drawings - Anna 6,300 Drawings - Elsa 18,900 Drawings - Olaf 25,200 Total 986,580 986,580 (question continued) 26309 Page 3 of 5 Additional Information a) At 1 July 2013 Olaf was admitted into the partnership but no records were made other than the drawings noted above. Partners have decided that all profits in the future will be split as Elsa 40%, Anna 40% and Olaf 20%. Goodwill, which is not to be retained in the accounts of the new partnership, was deemed to be £300,000 at 30 June 2013. Olaf paid £100,000 into the partnership to represent his capital and this money was immediately withdrawn by Elsa (£10,000) and Anna (£90,000). These are capital withdrawals and not drawings. b) Elsa is to be credited with a salary at the rate of £1,000 per month from 1 July 2013. c) Stock in hand at 30 June 2014 has been valued at cost at £25,200. d) Staff salaries accrued due at 30 June 2014 amounted to £25,200 and heat and light of £1,890 prepaid at that date. e) Depreciation is to be provided at the following annual rates on the cost of assets existing at the year end: Office Equipment - 10% Motor Vehicles 10% Required: a) Prepare an income statement in a vertical format for the year ended 30 June 2014 together with an Appropriation Account at that date. (20 marks) b) Prepare full vertical format capital and current accounts for each partner at 30 June 2014. (10 marks) c) Prepare a statement of financial position, also in a vertical format, as at 30 June 2014 which should include full details of the partners' capital and current accounts for the year ended on that date. (20 marks) (Total 50 marks)
