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Clay and Clark are partners of a business selling digital book. They share profits in the ratio of 3:2, charges interest on capital at 5% per annum, interest on drawings at 4% per annum and annual salary of RM14,100 is paid to Clark. On 1 December 2020 the partners have agreed to admit Christy, of which profits and losses are then to be shared in the ratio of 2.2.1. Interest on capital will be 6% per annum and annual salary of RM12,000 is to be paid to Christy. Interest on drawings remains unchanged. The financial year end of the business is on 31 December 2020. Below is the Statement of Financial Position before the appropriation of the profit for the year between the partners: Clay, Clark and Christy Statement of Financial Position as at 31 December 2020 RM 57,650 35 270 92,920 Non-current assets Equipment Motor vehicle Current assets Inventories Trade receivables Bank Total assets 1.260 1.815 60,000 63,075 155,995 Clay EQUITY AND LIABILITIES Owners' equity Capital accounts Current accounts Drawings Christy 20,000 42,000 15,547 5.100 52.447 Clark 25,000 12.863 (3.500 34,353 Total 87.000 28.410 (8.500 106,810 46,788 20.000 Net profit for the year CUTTON TOURS TOWY TZ,000 ZONU Drawings (5,100) (3,500) (8.600) 52,447 34,363 20,000 106,810 Net profit for the year 46,788 Total owners' equity 153,59a Current liability - payables 2,397 Total equity and liabilities 155,005 Following Christy's admission, the partners revalued their assets. Equipment is revalued to RM59,490 while inventories are revalued to RM790. The partners have also obtained the goodwill of the business being RM2,750. Profit or losses on the revaluation and goodwill are to be shared according to the partners' profit sharing ratio. Required: Prepare the following: (a) The partners' capital accounts, showing the profit or loss on the revaluation of assets and the goodwill of the partners. (8 marks) (b) The appropriation accounts up to the sharing of residual profits of the partners. Partners withdrew money from the business on 30 Nov 2020. Following this, update the partners' current accounts and prepare statement of financial position. (22 marks)

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