QUESTION $3(20$ Marks$)$

Use the information provided below to prepare the Statement of Changes in Equity for the year ended

$28$ February $2023.$

INFORMATION

The information given below was extracted from the accounting records of Kelso Traders, a partnership

business with Kelly and Solly as partners.

Balances in the ledger as at $28$ February $2023$

Debit Credit

R R

Capital: Kelly $1000000$

Capital: Solly $600000$

Current a$/$c: Kelly $(01$ March $2022)100000$

Current a$/$c: Solly $(01$ March $2022)40000$

Drawings: Kelly $800000$

Drawings: Solly $600000$

The following must be considered:

$($a$)$ The net profit according to the Statement of Comprehensive Income amounted to R$1600000$ on $28$

February $2023($the end of the financial year$).$ The sales for the year ended $28$ February $2023$ amounted

to R$4000000.$

$($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: The partners increased their capital contributions by R$200000$ each on $28$ February $2023.$ The

capital changes have been recorded.

$$ The partners are entitled to the following monthly salaries:

Kelly R$20000$

Solly R$15000$

$$ Kelly is entitled to a special bonus equal to $5\%$ of the amount by which the annual sales exceed

R$3000000.$

$$ Kelly and Solly share the remaining profits or losses in the ratio $3$:$2$ respectively