QUESTION 2 The information given below was extracted from the accounting records
ID: 2328428 • Letter: Q
Question
QUESTION 2 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 FINANCIAL STATEMENTS OF A PARTNERSHIP 20 INFORMATION BALANCES IN THE LEDGER ON 29 FEBRUARY 2018 DEBIT CREDIT Capital: Vam Capital: Pesy Current a/c: Vam (01 March 2017) Current a/c: Pesy (01 March 2017) Drawings: Vam Drawings: Pesy 400 000 300 000 40 000 20 000 250 000 150 000 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 Pesy R10 000 R12 000 . vam is entitled to a special bonus of 10% of the net profit. Vam and Pesy share the remaining profits or losses equallyExplanation / Answer
Statement of changes in equity as on 28th Feb ,2018. Particulars Partners Vam Pesy Opening Current A/c balances 40,000 20,000 (+) Profit 2,50,000 2,50,000 2,90,000 2,70,000 (+) Interest on Capital 60,000 45,000 (4,00,000*15/100, 3,00,000*15/100) (+) Salaries 1,20,000 1,44,000 (+) Bonus 50,000 - (-) Drawings -2,50,000 -1,50,000 Net increase in owner's Equity 5,60,000 5,79,000 Note: It is assumed that Interest on capital & Partners salaries has been already debited to the profit and loss account. If not, or profit distribution we have to taken the above in to consideration