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 R 835 000 Accumulated depreciation: buildings (65 000) Equipment at carrying amount 270 000 Debtors 103 000 Capital- Andile 400 000 Capital- Sipho Current account- Andile. Credit balance (1 March 2020) 300 000 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 The following must still be taken.into. account 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 Land and buildings at cost R 835 000 Accumulated depreciation: buildings (65 000) Equipment at carrying amount 270 000 Debtors 103 000 Capital- Andile 400 000 Capital- Sipho Current account- Andile. Credit balance (1 March 2020) 300 000 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 The following must still be taken.into. account 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.
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter23: Accounting For Partnerships
Section: Chapter Questions
Problem 2.1AP
Related questions
Question
Transcribed Image Text: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
Appropriation
Andile -R
Sipho - R
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
Transcribed Image Text: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
The following must still be taken.into. account:
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.
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