QUESTION 4 PARTNERSHIPS (20 MARKS)

The information given below was extracted from the accounting records of Gateway Traders, a partnership business with Gatehead and Wayne as partners. REQUIRED Prepare the Statement of Changes in Equity for the year ended 29 February 2016. Use the following format:

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 29 February 2016

Capital Accounts	Gatehead (R)		Wayne (R)		Total (R)
Balance at 28 February 2015
Changes in capital
Balance at 29 February 2016
Current Accounts	Gatehead (R)		Wayne (R)		Total (R)
Balance at 28 February 2015
Net profit for the year
Interest on capital
Salaries
Bonus
Profit Share
Drawings
Balance at 29 February 2016

INFORMATION

Extract from the ledger of Gateway Traders as at 29 February 2016
	R
Capital: Gatehead	400 000
Capital: Wayne	300 000
Current a/c: Gatehead (01 March 2015)	25 000
Current a/c: Wayne (01 March 2015)	30 000
Drawings: Gatehead	150 000
Drawings: Wayne	200 000

m

DR CR

7

The following must be taken into account:

1. (a) On 29 February 2016 the Statement of Comprehensive Income reflected a net profit of R500 000.

2. (b) The partnership agreement provided for interest on capital at 10% p.a. on the balances on the capital accounts. However, the partners agreed to increase the interest rate to 12% p.a. with effect from 01 September 2015.

3. (c) The partners are entitled to the following monthly salaries: Gatehead R13 000

   Wayne R12 000

4. (d) Wayne is entitled to a special bonus of 10% of the net profit (before any appropriations).

5. (e) The balance of the profit must be shared between Gatehead and Wayne in the ratio 3:2

   respectively.

m

8