a) Prepare The Income Statement For John And Banu For The Year Ended 31 March 2021 b) Prepare The Appropriation Acc For John And Banu For The Year Ended 31 March 2021

Here are the financial statements for John and Banu: a) Prepare The Income Statement For John And Banu For The Year Ended 31 March 2021 Step 1: Calculate the Cost of Sales. Opening Inventory: 9,400 Purchases: 69,200 Closing Inventory: 9,200 (Additional information 1) Cost of Sales = Opening Inventory + Purchases - Closing Inventory Cost of Sales = \9,400 + \69,200 - \9,200 = \69,400 Step 2: Calculate Gross Profit. Revenue: 158,000 Gross Profit = Revenue - Cost of Sales Gross Profit = \158,000 - \69,400 = \88,600 Step 3: Calculate total operating expenses. Rates and insurance: 11,250 + 650 (unpaid, Additional information 2) = 11,900 Wages: 10,475 General expenses: 9,675 Discount allowed: 2,000 Depreciation on fittings: 18,000 × 15\% = 2,700 (Additional information 4) Interest on Loan from John: 10,000 × 5\% = 500 (Additional information 5) Total Operating Expenses = 11,900 + 10,475 + 9,675 + 2,000 + 2,700 + 500 = 37,250 Step 4: Calculate Net Profit for the year. Commission receivable (income): 4,800 (Additional information 3 clarifies 300 is due, meaning it's part of the 4,800, not additional income) Net Profit = Gross Profit + Commission Receivable - Total Operating Expenses Net Profit = \88,600 + \4,800 - \37,250 = \56,150 |l|r|r| 3|c|John and Banu \\ 3|c|Income Statement \\ 3|c|For the year ended 31 March 2021 \\ Revenue & & \158,000 \\ Less: Cost of Sales & & \\ Opening Inventory & \9,400 & \\ Add: Purchases & 69,200 & \\ Less: Closing Inventory & (9,200) & \\ 2-2 & & (69,400) \\ 3-3 Gross Profit & & 88,600 \\ Add: Other Income & & \\ Commission Receivable & & 4,800 \\ 3-3 Less: Expenses & & \\ Rates and Insurance & 11,900 & \\ Wages & 10,475 & \\ General Expenses & 9,675 & \\ Discount Allowed & 2,000 & \\ Depreciation on Fittings & 2,700 & \\ Interest on Loan from John & 500 & \\ 2-2 Total Expenses & (37,250) & (37,250) \\ 3-3 Net Profit for the year & & \56,150 \\ b) Prepare The Appropriation Acc For John And Banu For The Year Ended 31 March 2021 Step 1: Bring forward the Net Profit from the Income Statement. Net Profit for the year: 56,150 Step 2: Calculate Interest on Drawings. John's Drawings: 19,000 × 6\% = 1,140 Banu's Drawings: 21,000 × 6\% = 1,260 Total Interest on Drawings = 1,140 + 1,260 = 2,400 Step 3: Calculate Interest on Capital. John's Capital: 75,000 × 3\% = 2,250 Banu's Capital: 50,000 × 3\% = 1,500 Total Interest on Capital = 2,250 + 1,500 = 3,750 Step 4: Account for John's Salary. John's Salary: 8,500 Step 5: Calculate the residual profit. Residual Profit = Net Profit + Interest on Drawings - Interest on Capital - John's Salary Residual Profit = \56,150 + \2,400 - \3,750 - \8,500 = \46,300 Step 6: Share the residual profit according to the ratio (40% to John, 60% to Banu). John's share of profit: 46,300 × 40\% = 18,520 Banu's share of profit: 46,300 × 60\% = 27,780 |l|r|r| 3|c|John and Banu \\ 3|c|Profit and Loss Appropriation Account \\ 3|c|For the year ended 31 March 2021 \\ Debit & \ & Credit & \ \\ Interest on Capital: & & Net Profit for the year & 56,150 \\ John & 2,250 & Interest on Drawings: & \\ Banu & 1,500 & John & 1,140 \\ 2-2 & 3,750 & Banu & 1,260 \\ 4-4 John's Salary & 8,500 & & 2,400 \\ Share of Profit: & & & \\ John (40\%) & 18,520 & & \\ Banu (60\%) & 27,780 & & \\ 2-2 & 46,300 & & \\ Total & 58,550 & Total & 58,550 \\ 3 done, 2 left today. You're making progress.