Annika Mashabe (AM) and Sarah Kunene (SK) are in a partnership. They own and manage a...

   

Transcribed Image Text:

Annika Mashabe (AM) and Sarah Kunene (SK) are in a partnership. They own and manage a business trading as 'Everything Beauty" that sells and distributes beauty products to all of the major beauty salons throughout South Africa. Terms of the partnership are: • Profits and losses are shared in a ratio of 3:2 between AM and SK; • Interest on capital is 12% per annum on the balance in the partner's capital accounts (no interest is charged on the current accounts or drawings); and . AM is entitled to a salary of R8 000 per month and SK to a salary of RS 000 per month. The following is an extract of the trial balance as at 30 September 2021 (the financial year end): Account description Capital accounts (1 Oct 2020) AM -SK Current accounts (1 Oct 2020) AM SK - Trade and other payables Loan from AM Trade and other receivables Allowance for expected credit losses (1 Oct 2020) Profit for the year Notes 1 2 3 4 338 000 Debit R 1045 000 Sorbet (Pty) Ltd Supplier Ledger Debit (R) 157 000 Credit R 01/09/2021 Opening balance 15/09/2021 Purchases 450 000 300 000 Notes 1. Included in the trade and other payables balance at year end is an amount of R338 000 owing to one of Everything Beauty's largest suppliers Sorbet (Pty) Ltd. The supplier statement for September 2021 received from Sorbet (Pty) Ltd reflected an amount of R507 750 owing by Everything Beauty. The partners were confused as to why the balance per the supplier statement did not agree to the balance per the supplier ledger extracted presented below: 138 000 92 000 1320 000 250 000 1180 000 315 000 18/10/2021 Bank 30/09/2021 Closing Balance The partners confirmed that the opening balance on 1 September 2021 was correctly determined. The purchases made on 15 September 2021 was recorded exclusive of VAT. The payment was made on 18 October 2021. Both Sorbet (Pty) Ltd and the partnership are registered VAT vendors. Credit (R) 410 000 85 000 2. AM advanced a loan to the partnership of R250 000 on 1 August 2021. The loan bears interest at 6% per annum and is repayable in 3 year's time. The interest has not yet been accounted for. 3. The balance for trade and other receivables above has not yet taken the following items into account: . All attempts to recover an amount of R20 000 owing from Mr Andy Shaw failed and the partners decided to write it off as bad debt during September 2021. This amount was not included in the opening balance for the allowance for expected credit losses as at 1 October 2020. • . R15 000 was received from Mr Danny Teeger during April 2021 with regards to his debt owed which was previously written off as bad debt in August 2020. The partners applied an appropriate credit loss model and estimates an allowance for expected credit losses for the year ended 30 September 2021of RT 050 000 4. Included in profit for the year is 3 months of AM's salary that has been paid to her. No other entries related to the terms of the partnership have been accounted for. Additional information: Ignore VAT except for part a) of the required. A VAT rate of 15% is applicable. Round all amounts to the nearest Rand where applicable You are required to: (a) Write a memorandum to the partners in which you discuss why the balance per the supplier statement received by Sorbet (Pty) Ltd does not agree to the balance per the supplier ledger for the month of September 2021 (refer to note 1). Your answer should include relevant calculations and a calculation of the correct balance per the Sorbet (Pty) Ltd supplier ledger (b) Determine the amount owing to Annika Mashaba on withdrawal should she decide to withdraw from the partnership after 30 September 2021. Ignore VAT. Marks (6) (15) Annika Mashabe (AM) and Sarah Kunene (SK) are in a partnership. They own and manage a business trading as 'Everything Beauty" that sells and distributes beauty products to all of the major beauty salons throughout South Africa. Terms of the partnership are: • Profits and losses are shared in a ratio of 3:2 between AM and SK; • Interest on capital is 12% per annum on the balance in the partner's capital accounts (no interest is charged on the current accounts or drawings); and . AM is entitled to a salary of R8 000 per month and SK to a salary of RS 000 per month. The following is an extract of the trial balance as at 30 September 2021 (the financial year end): Account description Capital accounts (1 Oct 2020) AM -SK Current accounts (1 Oct 2020) AM SK - Trade and other payables Loan from AM Trade and other receivables Allowance for expected credit losses (1 Oct 2020) Profit for the year Notes 1 2 3 4 338 000 Debit R 1045 000 Sorbet (Pty) Ltd Supplier Ledger Debit (R) 157 000 Credit R 01/09/2021 Opening balance 15/09/2021 Purchases 450 000 300 000 Notes 1. Included in the trade and other payables balance at year end is an amount of R338 000 owing to one of Everything Beauty's largest suppliers Sorbet (Pty) Ltd. The supplier statement for September 2021 received from Sorbet (Pty) Ltd reflected an amount of R507 750 owing by Everything Beauty. The partners were confused as to why the balance per the supplier statement did not agree to the balance per the supplier ledger extracted presented below: 138 000 92 000 1320 000 250 000 1180 000 315 000 18/10/2021 Bank 30/09/2021 Closing Balance The partners confirmed that the opening balance on 1 September 2021 was correctly determined. The purchases made on 15 September 2021 was recorded exclusive of VAT. The payment was made on 18 October 2021. Both Sorbet (Pty) Ltd and the partnership are registered VAT vendors. Credit (R) 410 000 85 000 2. AM advanced a loan to the partnership of R250 000 on 1 August 2021. The loan bears interest at 6% per annum and is repayable in 3 year's time. The interest has not yet been accounted for. 3. The balance for trade and other receivables above has not yet taken the following items into account: . All attempts to recover an amount of R20 000 owing from Mr Andy Shaw failed and the partners decided to write it off as bad debt during September 2021. This amount was not included in the opening balance for the allowance for expected credit losses as at 1 October 2020. • . R15 000 was received from Mr Danny Teeger during April 2021 with regards to his debt owed which was previously written off as bad debt in August 2020. The partners applied an appropriate credit loss model and estimates an allowance for expected credit losses for the year ended 30 September 2021of RT 050 000 4. Included in profit for the year is 3 months of AM's salary that has been paid to her. No other entries related to the terms of the partnership have been accounted for. Additional information: Ignore VAT except for part a) of the required. A VAT rate of 15% is applicable. Round all amounts to the nearest Rand where applicable You are required to: (a) Write a memorandum to the partners in which you discuss why the balance per the supplier statement received by Sorbet (Pty) Ltd does not agree to the balance per the supplier ledger for the month of September 2021 (refer to note 1). Your answer should include relevant calculations and a calculation of the correct balance per the Sorbet (Pty) Ltd supplier ledger (b) Determine the amount owing to Annika Mashaba on withdrawal should she decide to withdraw from the partnership after 30 September 2021. Ignore VAT. Marks (6) (15)

Answer rating: 100% (QA)

a Memorandum to the partners regarding the balance discrepancy in the Sorbet Pty Ltd supplier statement Date Date To Annika Mashabe AM and Sarah Kunen... View the full answer