Question

QUESTION 4 PARTNERSHIPS (20 MARKS)

The information given below was extracted from the accounting records of Gateway Traders, a partnership business with Gatehead and Wayne as partners.
REQUIRED
Prepare the Statement of Changes in Equity for the year ended 29 February 2016. Use the following format:

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 29 February 2016

Capital Accounts	Gatehead (R)		Wayne (R)		Total (R)
Balance at 28 February 2015
Changes in capital
Balance at 29 February 2016
Current Accounts	Gatehead (R)		Wayne (R)		Total (R)
Balance at 28 February 2015
Net profit for the year
Interest on capital
Salaries
Bonus
Profit Share
Drawings
Balance at 29 February 2016

INFORMATION

Extract from the ledger of Gateway Traders as at 29 February 2016
	R
Capital: Gatehead	400 000
Capital: Wayne	300 000
Current a/c: Gatehead (01 March 2015)	25 000
Current a/c: Wayne (01 March 2015)	30 000
Drawings: Gatehead	150 000
Drawings: Wayne	200 000

m

DR CR

7

The following must be taken into account:

1. (a) On 29 February 2016 the Statement of Comprehensive Income reflected a net profit of R500 000.

2. (b) The partnership agreement provided for interest on capital at 10% p.a. on the balances on the capital accounts. However, the partners agreed to increase the interest rate to 12% p.a. with effect from 01 September 2015.

3. (c) The partners are entitled to the following monthly salaries: Gatehead R13 000

   Wayne R12 000

4. (d) Wayne is entitled to a special bonus of 10% of the net profit (before any appropriations).

5. (e) The balance of the profit must be shared between Gatehead and Wayne in the ratio 3:2

   respectively.

Answer 1

Answex Given data, → Gateway traders are in a partnership business with Gate head and Wayne as Pasttners + on 29th february 2016 it reflected a net profit 0 R5.00,000) → The pourtnership agreement provided interest on capital @ 10% pest annum and interest rate @ 2% peau annum. with effect from 01.09.2015 → Theist monthly Salalties are Gatehead = R13,000 wayne R 12.000 → Bonus gate @ 10% of the net profit → profit Shaving ratio between the pasitness → capitals of the partners Gatehead R 4.00, 00 Wayne - R 3.00.00 > Drawing during the year Gatehead R 150.000 Wayne - R 2.00.000)

for the Statement of year ended change in equity february 29, 2016: Total (R) 7,00,000 capital accounts Gatchead (R) | Wayne (R) Balance at 284 .00, 000 3,00.000 februcoy 2015 changes in capital Balance at 29 14,00.000 3.00.000] february 2016 [7,00.000) current accounts Gatehead (Ⓡ) | Wayne (R) -25,000 (Dr) | 30,000 CCR) Total (B) 5.000 1 5,00.000 Balance at 28 february 2015 Net profit four the year Interest on Capital Salaries 77,000 33.000 44,000 3,00.000 1,56,000 1,44.000 50.000 50,000 Bonus porofit 73.000 43,800 share 29,200 1,50.000 2.00,000 350.000 Drawings Balance at 29 february 2016 68,800 (CR) 186,200 CORT 11.55.000

WORKING . Notçs 1 calculation of Salaay: Gatehead: 13.000 x12 -11,56,000 Wayne - 12.000x12 -144.000 2) calculation of interest on capital. Gatehead, 4,00.000. *10Y. 6lia + 4100,000 x124. *6112 - [441000 Wayne, 3,00,000 * 10% x6112 + 3. 00. 000 xQY. x 6/2 -133.000