Explore BrainMass

Explore BrainMass

    Beacon and Dobbs: Prepare profit and loss account

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    See the attached file.

    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.

    © BrainMass Inc. brainmass.com June 4, 2020, 12:53 am ad1c9bdddf
    https://brainmass.com/business/accounting/beacon-dobbs-prepare-profit-loss-account-366006

    Attachments

    Solution Summary

    Trial balance created, entries are posted to the trial balance and then partnership allocation schedule is given in the solution.

    $2.19

    ADVERTISEMENT