Adax Designs Services is a partnership with Adam and Max as partners. The partnership has been operating successfully for a number.of years now. The partners have a written partnership agreement. The following information was extracted from the accounting records of Adax, Design Services for the financial year ended 28 February 2021: Balances in the ledger as at 28 February 2021 R Land and buildings at cost 835 000 Accumulated depreciation: buildings (65 000) Equipment at carrying amount 270 000 Debtors 103 000 Capital- Andile 400 000 Capital- Sipho 300 000 Current account- Andile Credit balance (1 March 2020) 40 000 Current account -Sipho - Debit balance (1 March 2020 20 000 Drawings - Andile: General 130 000 Drawings - Sipho: General Net profit for the year ended 28 February 2021 The following must still be taken.into, account 102 000 800 000 1. The partnership agreement makes provision for the following: Interest on capital must be provided at 12% per year on the balances in the capital accounts for the period 1 March 2020 to 31 August 2020. The interest rate increases to 15% per year for the remainder of the year je 1 September 2020 to 28 February 2021. The capital accounts remained unchanged. Interest on current accounts must be provided at 12% per year on the opening balances of the current accounts. The partners are entitled to the following monthly salaries: - Andile R18 000 per month for a full year. Sipho R20 000 per year month for the full year.
Adax Designs Services is a partnership with Adam and Max as partners. The partnership has been operating successfully for a number.of years now. The partners have a written partnership agreement. The following information was extracted from the accounting records of Adax, Design Services for the financial year ended 28 February 2021: Balances in the ledger as at 28 February 2021 R Land and buildings at cost 835 000 Accumulated depreciation: buildings (65 000) Equipment at carrying amount 270 000 Debtors 103 000 Capital- Andile 400 000 Capital- Sipho 300 000 Current account- Andile Credit balance (1 March 2020) 40 000 Current account -Sipho - Debit balance (1 March 2020 20 000 Drawings - Andile: General 130 000 Drawings - Sipho: General Net profit for the year ended 28 February 2021 The following must still be taken.into, account 102 000 800 000 1. The partnership agreement makes provision for the following: Interest on capital must be provided at 12% per year on the balances in the capital accounts for the period 1 March 2020 to 31 August 2020. The interest rate increases to 15% per year for the remainder of the year je 1 September 2020 to 28 February 2021. The capital accounts remained unchanged. Interest on current accounts must be provided at 12% per year on the opening balances of the current accounts. The partners are entitled to the following monthly salaries: - Andile R18 000 per month for a full year. Sipho R20 000 per year month for the full year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:ll Telkom-StayHome.. - 23:44
O NI 12% C
Andile and Sipho withdrew 50% of their monthly salaries in cash as drawings.
These amounts are not included in the drawings account shown above.
Sipho is entitled to a special bonus equal to 2,5% of the net profit for the year.
Andile and Sipho share profits and losses in the ratio of 3:2 respectively.
Required:
Use the information provided above to prepare the statement of changes in equity (current
accounts only) for the year ended 28 February 2021.
Use the following format: Capital accounts section is NOT required.
Adax Design Services
Statement of changes in equity for the year ended 28 February 2021
Current Accounts only
Andile -R
Sipho -R
Appropriation
Balances at 1 March 2020
Profit for the year
Appropriations:
Interest on capital
Interest on current accounts
Salaries -partners
Bonus - Sipho
Remaining profits
Share of profits
Drawings
Balance at 28 February 2021
Q a
Transcribed Image Text:ull Telkom-StayHome... 23:45
QI 11% C
Adax Designs Services is a partnership with Adam and Max as partners. The
partnership has been operating successfully for a number of years now. The partners
have a written partnership agreement. The following information was extracted from the
accounting records of Adax. Design Services for the financial year ended 28 February
2021:
Balances in the ledger as at 28 February 2021
Land and buildings at cost
835 000
Accumulated depreciation: buildings
(65 000)
Equipment at carrying amount
270 000
Debtors
103 000
Capital- Andile
400 000
Capital- Sipho
300 000
Current account- Andile Credit balance (1 March 2020)
40 000
Current account -Sipho - Debit balance (1 March 2020
20 000
Drawings - Andile: General
130 000
Drawings - Sipho: General
102 000
Net profit for the year ended 28 February 2021
800 000
The following must still be taken.into account:
1. The partnership agreement makes provision for the following:
Interest on capital must be provided at 12% per year on the balances in the
capital accounts for the period 1 March 2020 to 31 August 2020. The interest rate
increases to 15% per year for the remainder of the year je 1 September 2020 to
28 February 2021. The capital accounts remained unchanged.
Interest on current accounts must be provided at 12% per year on the opening
balances of the current accounts.
The partners are entitled to the following monthly salaries:
Andile R18 000 per month for a full year.
Sipho R20 000 per year month for the full year.
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