Darius and Edgar are in partnership. The partnership agreement states that they share profits and losses in the ratio 3:2. Interest on capital is allowed at the rate of 5% per annum. Edgar is entitled to a salary of $12000 per annum. The following balances were extracted from the books on 31 July 2014. Leasehold buildings (cost) $ 75000 Motor vehicles (cost) 40000 Fixtures and fittings (cost) 25000 Provisions for depreciation: Leasehold buildings 18000 Motor vehicles 10000 Fixtures and fittings 15000 Trade payables 55 900 Trade receivables 39 500 Provision for doubtful debts 1900 8% Bank loan (repayable 31 March 2015) 40000 Bank interest paid 1600 Bank 31400 Dr Capital accounts: Darius 40000 Edgar 40000 Current accounts at 1 August 2013: Darius 500 Cr Edgar 900 Cr Drawings: Darius 12000 Edgar 12000 Purchases 148 300 Revenue 256 000 Returns inwards 5200 Inventory at 1 August 2013 25 800 Heat and light 7600 Other operating expenses 6350 Wages and salaries 28 950 Motor vehicle expenses 11000 Rent receivable 3500 Rent payable 12000 Additional information at 31 July 2014 1 Inventory was valued at $34 100. 2 Other operating expenses prepaid $1800. 3 Rent receivable of $1500 was outstanding. 4 Depreciation is to be charged on all non-current assets owned at the end of the year as follows: (i) an appropriate amount is to be charged on the leasehold buildings which are held on a 25 year lease (ii) motor vehicles at the rate of 30% per annum using the diminishing (reducing) balance method (iii) fixtures and fittings at the rate of 10% per annum using the straight-line method. 5 Trade receivables of $4500 are irrecoverable. The provision for doubtful debts is to be maintained at 4%. 6 On 31 January 2014 the partners had agreed to allow Edgar to increase his capital by $20000. Edgar paid a cheque into the partnership bank account on that date. REQUIRED

1. (a)Prepare the income statement and appropriation account for the year ended 31 July 2014. Darius and Edgar Income Statement and Appropriation Account for the year ended 31 July 2014[23]
2. (b)Prepare the current accounts for the year ended 31 July 2014. Current accounts Details Darius $ Edgar $ Details Darius $ Edgar $[4]
3. (c)Prepare the statement of financial position at 31 July 2014. Darius and Edgar Statement of Financial Position at 31 July 2014[13]