Question

QUESTION 2 (5 MARKS) Following the success of his business in the first year of operations, P. Prince decided to expand his business by inviting his cousin, T. Tony, to join him as partner. The partnership commenced on 01 March 2018 trading as Princeton Traders, with the partners contributing R500 000 each as capital. The information given below was extracted from the accounting records of Princeton Traders for the financial year ended 28 February 2019. REQUIRED Complete the following extract of the Statement of Changes in Equity for the year ended 28 February 2019: EXTRACT OF STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 2019 Prince Tony Total Current Accounts Net profit for the year Interest on capital Salaries Bonus Profit Share INFORMATION Extract from the trial balance of Princeton Traders on 28 February 2019 Debit (R) Credit (R) Capital: Prince 600 000 Capital: Tony 500 000

statement of changes in Equity

Answer 1

Page : Date: Stolencent of Changes in Equity (for the year ended 26th Feb, 2019) wrcent Accounts a Princel Tony Total ONet Profit for the year I - I - 9,00000 Tulcrest on Capital 63.000 60,000 1,23,000 Salaries .11,000 105.000 2,16,000 Tote Bonus 45,000 145.000 190,000 I Net Profit Share @ 2,35,500 2,35,500 4,71,000 ! Working Notes Calentation of Interest on Capital: I Tony (for One year) = 8,00,000 x 12 = 60,000 100 A Prince (for the first 9 youths) 25,00,000 x 12 x q 100 12 = 45,000 mince (for the second 3 youths) = 6,00,000x 12 x 3 100 12 = 18,000 Total Prince Interest on Capital of 45,000 +18,000 s63,000

Page : 2 Date: Pralculetion of Saleries: Prince (900066)+(950086). z 54,000 + 57,000 1,11,000 (8500x6) (9060 X6 ) 51,000+ $4,000 =105,000 alemletion of Bows: Prince = 9,00,000x s = 45,000 100 Tony = 900,000 € = 45,000 100 o Distribution of Revening Profit : Reneerining Preafit = 900.000 - 4,29,000 = 4,71,000 Prince's share , 4,71,000 x I = 2,35,500 2 Tony Share = 4,71,000 x1 = 2,35,500