Legal Practice Management
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 30th April 2013:
Fees received from clients
Administrative Expenses 287,770 Staff Salaries 620,000 Drawings:
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 30th April 2013:
- 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.
- 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.
- a) The profit and loss and appropriation account for the year ended 30th April 2013
(11 marks) b) The partners’ current accounts for the year ended 30th April 2013
(4 marks)ATP 106 Legal Practice Management r 2013-1