Answer Question 5 on the following pages. Donney and Raj are in partnership sharing profits and losses in the ratio 2:1. Interest is allowed on capital at the rate of 4% per annum. Raj receives a salary of $12000 per annum. The following balances were extracted from the books on 30 September 2011: Capital accounts Donney $150000 Raj $100000 Current accounts Donney $15000 Cr Raj $3500 Dr Drawings Donney $15000 Raj $15000 Revenue (sales) $365000 Inventory at 1 October 2010 $53500 Purchases $173000 Returns inwards $9200 Returns outwards $5500 Carriage $16500 Administration expenses $25750 Advertising $23480 Wages and salaries $66700 Land and buildings $170000 Motor vehicles (cost) $75000 Fixtures and fittings (cost) $50000 Provisions for depreciation Motor vehicles $25000 Fixtures and fittings $24000 Sundry expenses $10250 Loan interest paid $2000 8% Loan repayable 31 December 2025 $50000 Trade receivables $62500 Provision for doubtful debts $2000 Trade payables $30500 Bank $4380 Cr Additional information: 1 Inventory at 30 September 2011, $61 450. 2 Carriage is to be apportioned 30% to the collection of purchases and 70% to the delivery of goods to customers. 3 At 30 September 2011: Administration expenses, $630, were prepaid. Wages and salaries, $2700, were accrued. 4 Depreciation is to be charged on: Motor vehicles at the rate of 20% per annum using the diminishing (reducing) balance method. Fixtures and fittings at the rate of 15% on cost using the straight-line method. 5 Trade receivables include a debt of $2500 which is considered irrecoverable. 6 The provision for doubtful debts is to be maintained at 4% of trade receivables. REQUIRED

1. (a)Prepare the income statement and appropriation account of Donney and Raj for the year ended 30 September 2011.[23]
2. (b)Prepare the balance sheet of Donney and Raj at 30 September 2011. The current accounts details may be included within the balance sheet or in account format outside the balance sheet.[17]