ormation given below was extracted from the accounting records of Total Limited, a partnership business with Glen and Murry as partners. Information: Extract from the ledger of Total Limited on 30 June 2021 R Capital: Glen 400 000 Capital: Murry 300 000 Current a/c: Glen (01 July 2020) 45 000 CR Current a/c: Murry (01 July 2020) 42 000 DR Drawings: Glen 95 000 Drawings: Murry 110 000 The following must be taken into account: 1. On 30 June 2021 the Profit and Loss account reflected a net profit of R940 000. 2. Partners are entitled to interest at 14% p.a. on their capital balances. Note: Glen decreased his capital contribution by R90 000 on 01 July 2020. This capital decrease has been recorded. 3. Partners are entitled to the following monthly salaries: • Glen R13 000 for the first ten months of the financial year and R15 000 • for the next two months. • Murry R10 000 per month throughout the year. 4. Partner Murry is entitled to a bonus equal to 10% of the net profit before any of the above appropriations have been taken into account. 5. The remaining profit/shortfall must be shared equally between Glen and Murry. Required: Prepare the Statement of Changes in Equity for the year ended 30 June 2021. Use the following format: Statement of changes in equity ……………………………… Capital accounts: Balance at Balance at Current accounts Appropriation Balance at Appropriations: Balance at _______________ _______________
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.
The information given below was extracted from the accounting records of Total Limited, a
Information:
Extract from the ledger of Total Limited on 30 June 2021
| R | ||
| Capital: Glen | 400 000 | |
| Capital: Murry | 300 000 | |
| Current a/c: Glen (01 July 2020) | 45 000 | CR |
| Current a/c: Murry (01 July 2020) | 42 000 | DR |
| Drawings: Glen | 95 000 | |
| Drawings: Murry | 110 000 |
The following must be taken into account:
1. On 30 June 2021 the
2. Partners are entitled to interest at 14% p.a. on their capital balances.
Note: Glen decreased his capital contribution by R90 000 on 01 July 2020.
This capital decrease has been recorded.
3. Partners are entitled to the following monthly salaries:
• Glen R13 000 for the first ten months of the financial year and R15 000
• for the next two months.
• Murry R10 000 per month throughout the year.
4. Partner Murry is entitled to a bonus equal to 10% of the net profit before
any of the above appropriations have been taken into account.
5. The remaining profit/shortfall must be shared equally between Glen and Murry.
Required:
Prepare the Statement of Changes in Equity for the year ended 30 June 2021.
Use the following format:
Statement of changes in equity ………………………………
|
Capital accounts: Balance at Balance at |
|||
| Current accounts | Appropriation | ||
| Balance at | |||
| Appropriations: | |||
| Balance at |
_______________ _______________ |
________________ |
------ ------ _______________ _________________ |
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