John and Banu are partners. The partners provided the following list of balances at 31 March 2021. $ Revenue 158000 Inventory at 1 April 2020 9400 Purchases 69200 Rates and insurance 11250 Wages 10475 General expenses 9675 Discount allowed 2000 Commission receivable 4800 Balance at bank 4000 Trade receivables 14150 Trade payables 5835 Premises at cost 130000 Fittings at cost 18000 Provision for depreciation of fittings 8100 Loan from John 10000 Capital accounts John 75000 Banu 50000 Current accounts John 4050 Banu 2365 Drawings John 19000 Banu 21000 Additional information 1 Inventory at 31 March 2021 was valued at $9200. 2 Rates of $650 were unpaid at 31 March 2021. 3 Commission receivable of $300 was due at 31 March 2021. 4 Depreciation on fittings is to be charged at 15% per annum using the straight-line method. 5 The partnership agreement provides for: interest on partner's loan of 5% per annum interest on drawings of 6% interest on capital of 3% per annum a salary to John of $8500 per annum residual profits and losses to be shared 40% to John and 60% to Banu. REQUIRED

1. (a)Prepare the income statement for John and Banu for the year ended 31 March 2021. John and Banu Income Statement for the year ended 31 March 2021 $ $[9]
2. (b)Prepare the appropriation account for John and Banu for the year ended 31 March 2021. John and Banu Appropriation Account for the year ended 31 March 2021 $ $[5]
3. (c)(i)charging interest on the partners' drawings[1]
4. (c)(ii)paying interest on the loan from John.[1]
5. (d)Complete the table by placing a tick (✔) against each statement which describes an advantage to John of being in a partnership with Banu. Continuity of existence of the business Banu may have skills and knowledge which John does not have John is only liable for business debts up to the amount he agreed to contribute Additional finance is available to the business Risks and responsibilities are shared John is bound by the actions of Banu carried out on behalf of the business John can discuss matters with Banu before making decisions[4]

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