Bala and Ade had been together in partnership for several years in plastic manufacturing, sharing profits and losses in the ratio of 3:2 after payment of salaries of N3,000,000 p.a. to each partner.

On September 1, 2020, Ngozi was admitted into partnership on the following terms:

• (a) She paid N2,800,000 to the partnership as her capital contribution; and
• (b) She would be entitled to a salary of N2,700,000 per annum and a 20% share of profits after charging all salaries.

Bala and Ade are to continue their old profit-sharing ratios, and Ngozi’s 20% share of profits is guaranteed at a minimum of N1,500,000 per annum by the old partners.

On December 31, 2020, the following balances were extracted from the partnership books of Bala, Ade, and Ngozi:

You are informed that:

• (i) Allowances for doubtful debts should be maintained at 5% of receivables.
• (ii) Inventory at December 31, 2020, was valued at N12,000,000.
• (iii) Depreciation on plant and machinery is 20% per annum, and on motor vehicles, it is 25% per annum.

You are required to prepare the following:
a. Statement of profit or loss and appropriation for the year ended December 31, 2020, accounting for Ngozi on a pro-rata time basis. (12 Marks)
b. Partners’ current accounts for the above period. (8 Marks)