Chan and Fong are in partnership sharing profits and losses in the ratio 2:1. Interest is allowed on capital at the rate of 5% per annum and is charged on drawings at the rate of 5% per annum. Fong receives a salary of $10000 per annum. The following balances were extracted from the books on 30 April 2014. Revenue 480500 Inventory at 1 May 2013 47700 Purchases 209000 Returns from customers 11800 Returns to suppliers 10500 Land and buildings (cost) 250000 Motor vehicles (cost) 45000 Fixtures and fittings (cost) 28000 Provisions for depreciation: Motor vehicles 25000 Fixtures and fittings 12000 Office expenses 36500 Motor vehicle expenses 13600 Selling expenses 30800 Wages and salaries 80000 Heat and light 4750 Bank loan interest paid 9000 Capital accounts: Chan 60000 Fong 40000 Current accounts: Chan 1500 Cr Fong 4000 Cr Drawings: Chan 6000 Fong 10000 8% Loan repayable 30 March 2016 200000 Trade receivables 55000 Provision for doubtful debts 2100 Trade payables 36050 Bank 34500 Dr Additional information 1 Inventory at 30 April 2014, $38350. 2 The motor vehicle expenses are to be apportioned one quarter to collecting goods for resale and three quarters to delivery of goods to customers. 3 At 30 April 2014: (i) Heat and light, $750, was accrued (ii) Office expenses, $4000, were prepaid. 4 Half of Fong's $10000 salary had been paid to him and posted to the wages and salaries account. 5 Fixtures and fittings costing $2000 purchased by cheque on 20 April 2014 had not been recorded in the books. 6 Depreciation is to be charged on all non-current assets owned at the end of the year: (i) Motor vehicles at the rate of 25% per annum using the diminishing (reducing) balance method (ii) Fixtures and fittings at the rate of 10% using the straight-line method. 7 Trade receivables contains a debt of $7500, which is considered irrecoverable. The provision for doubtful debts is to be maintained at 6%. REQUIRED

1. (a)Prepare the income statement and appropriation account for the year ended 30 April 2014. Chan and Fong Income Statement and Appropriation Account for the year ended 30 April 2014 [22]
2. (b)Prepare the current accounts for the year ended 30 April 2014. Current accounts Details Chan $ Fong $ Details Chan $ Fong $ [4]
3. (c)Prepare the statement of financial position at 30 April 2014. Chan and Fong Statement of Financial Position at 30 April 2014 [14]