Question

QUESTION 2         FINANCIAL STATEMENTS OF A PARTNERSHIP        (20) The information given below was extracted from the accounting records of Vampesy Traders, a partnership business with Vam and Pesy as partners. REQUIRED Prepare the Statement of Changes in Equity for the year ended 28 February 2018

INFORMATION BALANCES IN THE LEDGER ON 29 FEBRUARY 2018 DEBIT CREDIT R R Capital: Vam 400 000 Capital: Pesy 300 000 Current a/c: Vam (01 March 2017) 40 000 Current a/c: Pesy (01 March 2017) 20 000 Drawings: Vam 250 000 Drawings: Pesy 150 000

The following must be taken into account: (a) The net profit according to the Profit and Loss account amounted to R500 000 on 28 February 2018.

(b) The partnership agreement makes provision for the following: ■ Interest on capital must be provided at 15% per annum on the balances in the capital accounts. Note: The partners increased their capital contributions by R100 000 each on 01 March 2017. The capital changes have been recorded.

■ The partners are entitled to the following monthly salaries: Vam R10 000 Pesy R12 000   ■ Vam is entitled to a special bonus of 10% of the net profit.

■ Vam and Pesy share the remaining profits or losses equally.

Answer 1

Solution:

Given data:

Accounting records of Vampesy Traders, a partnership business with Vam and Pesy as partners

* Capital: Vam = 400 000

Pesy =300 000

*Current a/c: Vam (01 March 2017) = 40 000

Pesy (01 March 2017) = 20 000

*Drawings: Vam = 250 000

Pesy = 150 000

*net profit =5,00,000

*Capital contribution by 1,00,000 each

*salaries: Vam =10 000

Pesy = 12 000

*Vam is entitled to a special bonus of 10% of the net profit.

Preparation of the Statement of Changes in Equity for the year ended 28 February 2018