QUESTION 2
(20 MARKS)
REQUIRED
Use the information provided below to prepare the Statement of Changes in Equity for the year ended 28 February 2022.
INFORMATION
The information given below was extracted from the accounting records of Clairwood Traders, a partnership business with Claire and Woody as partners.
Balances in the ledger as at 28 February 2022
Debit (R)
Credit (R)
Capital: Claire
500 000
Capital: Woody
400 000
Current a/c: Claire (01 March 2021)
100 000
Current a/c: Woody (01 March 2021)
40 000
Drawings: Claire
500 000
Drawings: Woody
300 000
The following must be considered:
(a)
The net profit for the financial year ended 28 February 2022 amounted to R900 000.
(b)
The partnership agreement makes provision for the following:
■
Interest on capital must be provided at 15% per annum on the balances in the capital accounts. Note: Claire increased her capital by R100 000 on 01 September 2021. On the same date, Woody decreased his capital by R100 000. The capital changes have been recorded.
■
The partners are entitled to the following monthly salaries:
Claire R7 000
Woody R6 000
Note: The partners’ salaries were increased by 12% with effect from 01 November 2021.
■
Claire is entitled to a bonus equal to 80% of her salary for February 2022.
■
Claire and Woody share the remaining profit or loss equally.