Question 1 Prepare the Statement of Changes in Equity for the year ended 28 February 2021. INFORMATION The information given below was extracted from the accounting records of Preston Traders, a partnership business with Presley and Tony as partners. The following must be taken into account: (a) The Statement of Comprehensive Income reflected a net profit of R900 000 on 28 February 2021. (b) The partners are entitled to interest at 12% p.a. on their capital balances. Note: Presley decreased his capital by R200 000 on 01 June 2020 whilst Tony increased his capital by R200 000 on 01 September 2020. These capital changes have been recorded. (d) Tony is entitled to a bonus equal to 5% of the net profit before any of the above appropriations have been taken into account. (e) The remaining profit/loss must be shared between Presley and Tony in the ratio 3:2 respectively.
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 1
Prepare the Statement of Changes in Equity for the year ended 28 February 2021.
INFORMATION
The information given below was extracted from the accounting records of Preston Traders, a partnership business with
Presley and Tony as partners.
The following must be taken into account:
(a) The Statement of Comprehensive Income reflected a net profit of R900 000 on 28 February 2021.
(b) The partners are entitled to interest at 12% p.a. on their capital balances.
Note: Presley decreased his capital by R200 000 on 01 June 2020 whilst Tony increased his capital by R200 000 on 01 September 2020. These capital changes have been recorded.
(d) Tony is entitled to a bonus equal to 5% of the net profit before any of the above appropriations have been taken into account.
(e) The remaining
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