Description

Legal Practice Management

QUESTION ONE

David and Jeremy are in partnership as legal practitioners and share profits and losses in the ratio 3:2. Salaries of Sh.100,000/= are paid to David and Sh.150,000/= to Jeremy. Interest on capital is payable at the rate of 5% per annum on the balances at the end of the year. No interest is charged on drawings.

The following balances have been extracted from their books as of 30^th April 2013:

Sh

Fees received from clients

Administrative Expenses           287,770 Staff Salaries           620,000 Drawings:

David                                                                             170,000

Jeremy                                                              180,000

Interest received           52,000 Marketing Expenses         89,000

Office Equipment at cost 260,000 Provision for depreciation — Office Equipment 85,000 Capital Accounts:

David            oo,ooo Jeremy           200,000 Current Accounts:

David 4,200 CR Jeremy 11,300 DR Debtors 164,000

The following additional information is available on 30^th April 2013:

1. i) Staff salaries include in error Sh.80,000 salary paid to Jeremy. ii) Marketing expenses of Sh.7,500 are prepaid iii) Depreciation for office equipment is provided at 20% p.a. on a reducing balance basis.
2. iv) Debtors contain a debt of Sh8,0()() which is considered to be a bad debt. A provision of 5% is to be made against other outstanding debts.

REQUIRED:

1. a) The profit and loss and appropriation account for the year ended 30^th April 2013

(11 marks) b) The partners’ current accounts for the year ended 30^th April 2013

(4 marks)

ATP 106 Legal Practice Management r 2013-1