Question

HA DISTRIBUTORS Statement of Changes in Equity for the year ended 29 February 2017 CAPITAL ACCOUNTS Handy Balance on 01 March 2016 Changes in capital Balance on 28 February 2017 Andy QUESTION 5 PARTNERSHIPS (20 Marks) The following information was extracted from the accounting records of H.A.Distributors, a partnership owned by partners, HANDY and ANDY. Total Required: Prepare the Statement of changes in Equity for the year ended 28 February 2017 Use the format given below. Copy in your answer book. Handy Andy INFORMATION. CURRENT ACCOUNTS Balances on 01 March 2016 Net profit for the year Interest on capital Salaries Bonus Interest on drawing Share of remaining profit / loss Balances on 28 February 2017 Capital : Handy Capital : Andy Current Account: Handy (01 March 2016 ) Current Account : Andy [ 01 March 2016] Drawings : Handy Drawings: Andy 200 000 150 000 4 500 DR 3500 DR 181 034 184 522 Drawings Balances on 28 February 2017 2. On 28 February the Statement of Comprehensive Income reflected a Profit for the year of R 378 000. 3. Partners are entitled to the following monthly salary: Handy, R9 750 Andy, R9 000 4. Partners are entitled to interest on their capital at 15% per annum. NB: The following changes were made to their capital during the year, • Handy increased his capital by R50 000 on 01 July 2016. • Andy decreased his capital by R30 000 on 01 November 2016 5. Andy is entitled to a bonus under the following conditions: • Bonus of R50 000 if the profit for the year is above R400 000. • Bonus of R30 000 if the profit for the year is below R400 000 6. The bookkeeper has calculated the following interest on drawings to be charged to the partners on their respective drawings during the year: • Handy, R7 400 • Andy, R5 200 7. Partners have agreed to share the remaining profit / loss in the ratio of their capitals at the end of the year.

Answer 1

statement of changes in equity for the year
ended 29 Feb 2017:
Capital A/cs	Handy	Andy	Total
Balance on 1/3/2016	150000	120000	270000
Changes in capital	50000	30000	80000
Balance on 28/2/2017	200000	150000	350000
Current A/cs	Handy	Andy	Total
Balances on 1/3/2016	4500	3500	8000
Net Profit for the year
Interest on capital	22500	18000	40500	(on opening capital a/c)
Salaries	9750	9000	18750
Bonus		30000	30000
Interest on drawing	-7400	-5200	-12600
Share of remaining Profit	172200	129150	301350	(378000-76650)*2/3.5	(378000-76650)*1.5/3.5
Total	201550	180950	382500
Less:Drawings	181034	184522	365556
Balances on 28/2/2017	20516 (Dr.)	3572 (Cr.)	16944 (Dr.)