Question

the (20 MARKS) was extracted from the accounting records of TiMal Traders, a partnership QUESTION 4 PARTNERSHIPS The information given below was extracted from the aco business with Tin and Mol as partners. REQUIRED Prepare the Statement of changes in equity for the year following format ement of changes in equity for the year ended 31 December 2018 using the (20) Total (R) STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 December 2010 Capital Accounts Tim (R) Mol(R) Balance at 1 January 2018 Changes in capital Balance at 31 December 2018 Total (R) Mol (R) Tim (R) > Current Accounts Balance at 1 January 2018 Net profit for the year Interest on capital Salaries Bonus Profit Share Drawings Balance at 31 December 2018 Credit (R) INFORMATION Extract from the ledger of TiMol Traders as at 31 December 2018: Debit (R) Capital: Tim Capital: Mol Current account: Tim (01 January 2018) Current account: Mol (01 January 2018) Drawings: Tim Drawings: Mol 1 000 000 600 000 80000 20000 480 000 520 000

Answer 1

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DEC 2018 Amount in R Capital Accounts Tim Mol Total Balance at 1 january 2018 800,000 400,000 1,200,000 Changes in Capital 200,000 200,000 400,000 Balance at 31 Dec 2018 1,000,000 600,000 1,600,000 Tim Mol Total Current Accounts Balance at 1 january 2018 Net Profit for the year Interest on Capital Salaries Bonus Profit share Drawings Balance at 31 Dec 2018 20,000 700,000 (90,000) (360,000) 80,000 700,000 (150,000) (288,000) (70,000) (221,000) (480,000) (429,000) 100,000 1,400,000 (240,000) (648,000) (70,000) (442,000) (1,000,000) (900,000) (221,000) (520,000) (471,000)

Note:

1. It has been assumed that the net profit of R 1400,000 has not considered the other appropriations that are to be made to the partners.

2. The capital balance as on 31 Dec 2018 has already considered the increase of R 200,000 each by the two partners. Therefore, capital balance as on 1 Jan 2018 is calculated as shown above.

3. Interest on capital of 15% is calculated on closing capital balance of 10,00,000 & 600,000 for both the partners.

4. Special Bonus of R 70,000 for Tim is calculated by multiplying 5% with R 1400,000.

5. The profit remaining for appropriation is calculated as below:

Amount in R 1,400,000 Particluars Net profit Less: Appropriations Interest on Capital Salaries Bonus Balance profit remaining for appropriation (240,000) (648,000) (70,000) 442,000

6. Drawing is not a charge on profit. Hence, not considered for appropriations above.