Question 2 (16 marks: 29 minutes) Mark and Tom are partners in a computer store trading as Blink Computers. They share profits and losses in the ratio 3:2 On 28 February 20.10 the statement of position indicated the following: BLINK COMPUTERS STATEMENT OF FINANCIAL POSITION ON 28 FEBRUARY 20.10 ASSETS Non current assets Property, plant and equipment (land and buildings) 1 000 000 Current Assets Inventory 220 000 Cash and cash equivalent (land and buildings) 44 000 Total assets 1 264 000 EQUITY AND LIABILITIES Equity Capital: Mark 400 000 Capital: Tom 200 000 Current account : Mark 350 000 Current account : Tom 150 000 General reserve 100 000 Non current liabilities Interest free long term loan 64 000 Total equity and liabilities 1 264 000 1. On 1 March 20.10 Travis obtained a one third (1/3) interest in the partnership by depositing R650 000 into the cheque account of the partnership. 2. The partners do not want to show the general reserve on the statement of financial position after the admission of Travis. 3. The partner agreement states the following: a) Each partner is entitled to salary of R5 000 per month. b) Partners are entitled to interest on capital of 10% of the opening balance of their capital accounts. Newly admitted partners earn 10% of their capital contribution apportioned for the number of months that they served as partners. 4. Sales for the year amounted to R3 000 000. All sales were made in cash.

Page 10 of 21 5. Inventory purchases for the year amounted to R2 500 000. All purchases were made in cash. 6. Inventory on hand at 28 February 20. 11 amounted to R320 000. 7. Operating expenses of R160 000 was incurred and paid in cash during the year. Land and buildings are not depreciation. 8. Cash withdrawals by the partners during the year were as follows: Mark R65 000 Tom R30 000 Travis R75 000 Total R170 000 Required: 1) Calculate the new profit share ratio after the admission of Travis o1 March 2010. (2 marks) 2) Provide the journal entries to record the admission of Travis on 1 March 20.10. Journal narrations are not required. (6 marks) 3) Prepare the statement of financial position of the partnership on 28 February 20.11 Comparative figures are not required. (8 marks)