You have just taken up the position of trainee accountant and are currently undertaking work for Pet Kingdom, a successful partnership owned by partners Nial Naqvi and Zain Siddiqui

You have just taken up the position of trainee accountant and are currently
undertaking work for Pet Kingdom, a successful partnership owned by partners Nial
Naqvi and Zain Siddiqui. Pet Kingdom is based in Edinburgh and specialises in
selling animal food and other products for domestic pets. You are required to
complete the tasks outlined below.
Task Description Marks
1
Using information taken from the accounts of Pet Kingdom
prepare:
a) an Income Statement for the year ended 31 December
2016.
b) updated Current Accounts for Naqvi and Siddiqui at 31
December 2016.
c) a Statement of Financial Position as at 31 December
2016.
Task 1 can be completed as a handwritten task or
completed using spreadsheet software.
26 marks
2
Prepare Process Accounts
Task 2 can be completed as a handwritten task or
completed using spreadsheet software.
12 marks
3
Prepare investment appraisal statements and prepare a
short report.
Task 3 (a-b) must be completed using spreadsheet
software and printouts submitted as evidence.
Task 3 (c) must be completed using the template
provided.
You should pay particular attention to the printing
instructions associated with Task 3

Task 1
You have been provided with the following information taken from the accounts of
Pet Kingdom. Using this information and the additional information provided,
prepare an Income Statement, updated current accounts (for each partner) and a
Statement of Financial Position for 2016.
Pet Kingdom
Trial Balance as at 31 December 2016
£000 £000
Equity Accounts:
Naqvi 200
Siddiqui 100
Current Accounts:
Naqvi 30
Siddiqui 60
Sales Revenue 540
Purchases Returns 6
Sales Returns 15
Purchases 210
General Expenses 24
Inventory at 1 January 2016 40
Staff Salaries 90
Trade Receivables 120
Trade Payables 75
Provision for Doubtful Debts at 1 January 2016 7
Cash and Cash Equivalents 25
Property 300
Motor Vehicles (at cost) 80
Equipment (at cost) 160
Provision for Depreciation at 1 January 2016
Motor Vehicles 10
Equipment 20
Discounts 8 10
Loan – Naqvi 80
VAT 34
Drawings:
Naqvi 40
Siddiqui 50
1,167 1,167

Notes at 31 December 2016
1. Closing inventory £50,000 with a market value of £55,000.
2. The Provision for Doubtful Debts at 31 December 2016 has to be adjusted to 10% of
Trade Receivables.
3. General Expenses receivable £4,000.
4. Bonus to be paid on Staff Salaries £10,000.
5. Property has been professionally revalued at £320,000.
6. Provide for depreciation for the year as follows:
a. Motor Vehicles 10% on cost
b. Equipment 20% on the diminished balance
7. The loan from Naqvi was taken out on 1 October 2016. Finance charges are paid at 5%
per annum.
The Partnership Agreement states:
a. Siddiqui will be paid an annual salary of £24,000;
b. Interest on equity will be paid at 6% per annum;
c. Interest will be charged on drawings at the rate of 10% per annum;
d. Residual Profits/Losses are to be shared in the ratio of equity invested.