Question 2 (25 Marks) Beef and Steak are prestigious chefs and partners in an upmarket gourmet restaurant trading as "The Grill House". They share profits and losses in the ratio 3:2. On 31 July 2021 the statement of financial position indicated the following: "The Grill House" Statement of the financial position on 31 July 2021 ASSETS Non-current assets Property, plant and equipment (land and building) Current assets Inventory Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity Capital: Beef Capital: Steak Current account: Beef Current account: Steak General reserve Non-current liabilities 10 % Long term loan N$ 1 000 000 220 000 44 000 1264 000 400 000 200 000 350 000 150 000 100 000 Total equity and liabilities 64 000 1 264 000 1. On 1 August 2021 Mouton obtained a one third (1/3) in interest in the partnership by depositing N$450 000 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 Mouton. 3. The partnership agreement states the following: 3.1 Each partner is entitled to salary of N$5 000 per month. 3.2 Partners are entitled to interest on capital of 10% of the opening balance of their capital accounts. Newly admitted partners earn 10% of their contribution apportioned for the number of months that they served as partners. 4. Sales for the year amounted to N$3 000 000. All sales were made in cash. Page 12 of 22 FACULTY OF COMMERCE, MANAGEMENT AND LAW OLD CURRICULUM MODULES 5. Inventory purchases for the year amounted to N$2 500 000. All purchases were made in cash. 6. Inventory on hand at 31 July 2022 amounted to N$320 000. 7. Operating expenses of N$160 000 was incurred and paid in cash during the year. 8. Cash withdrawals by the partners during the year were as follows: Beef Steak Mouton Total REQUIRED: N$ 65 000 30 000 75 000 170 000 1. Calculate the new profit share ratio after the admission of Mouton on 1 August 2021. (2 marks) 2. Provide the journal entries to record the admission of Mouton on 1 August 2021. Journal narrations are not required. (8 marks) 3. Prepare the statement of financial position of the partnership on 31 July 2022. Comparative figures are not required. (15 marks)