14 PARTNERSHIPS 155 t or cost ment of p records s vement d capital actions an EXAM PRACTICE Additional information at 31 March 2019: ANDRIMA: CASE STUDY: ZOE AND TAYLA s transan partner ers cune has legal SKILLS ANALYSIS, EXECUTIVE FUNCTION, DECISION MAKING Zoe and Tayla are in partnership, sharing profits equally. On 31 March 2018, the capital account balances were: lers n partne s of inte ring ratio a partne Zoe Tayla 40000 60000 On 1 April 2018, Bailey was admitted as a new partner. The partnership agreement stated: Bailey would bring in 25 000 in non-current assets and 5000 cash. Goodwill was valued at 27 000 and would not be retained in the books. Interest on capital would be paid at the rate of 2 per cent per annum. Interest on drawings to be charged on year-end balances at 5 per cent per annum. Salaries would be paid to Tayla, 5 000, and Bailey, 4000. Profits and losses would be shared in the ratio Zoe 3/9, Tayla 4/9 and Bailey 2/9. At the end of the year, 31 March 2019, the following balances were recorded: Current accounts at 1 April 2018: Zoe Tayla Drawings: Zoe profit for the year before appropriation = 63 080 the drawing included the payment of salaries to the partners there was no change during the year on the capital accounts. Q 1 Prepare the capital accounts (in columnar format) of the three partners after the admission of the new partner. (10 marks) 2 Prepare the extract of the statement of profit or loss and other comprehensive income for the year ended 31 March 2019, showing the appropriation of profit. 1200 Cr 6000 Dr (7 marks) 3 Prepare the current accounts of the partners for the year ended 31 March 2019. (9 marks) 4 Prepare an extract of the statement of financial position at 31 March 2019, showing the capital 15000 14 000 9000 section. (5 marks) 5 Evaluate the use of a partnership agreement. (6 marks) EXAM HINT Prepare capital and current accounts in columnar format not separate accounts. Remember to include the partnership salary entries to the current accounts. Opening Opening balance Zoe Tayla Baily Tayla Bailey