QUESTION 2 (60 marks) Arnold Spider and Taylor Man were in partnership as jewelers in Bloemfontein. They design, make and sell jewelry for men and women. The partnership had been operational for several years and has built up a good reputation. To expand business they decided to convert to a company during the 2022 financial year (FY2022]. The financial year end is 31 December for both the partnership and the company. This question essentially addresses 2 key aspects: PART A PART B Determining the gross profit from manufacturing operations from a trial balance that still requires final adjustments for the year ended 31 December 2021. Drafting sections of the partnership accounts: relating to the financial position thereof at 31 December 2021; the accounting recording required to close off the partnership accounts upon conversion to a private company on 30 June 2022; and the statements of the private company immediately after conversion PART A The following is a preliminary trial balance for the Spider and Man partnership at 31 December 2021: Inventory at 1 January 2021 Raw materials Work in progress Finished goods Purchases of raw material Salaries and wages Rent and rates Heating and lighting Insurance Carriage inwards Carriage outwards Motor vehicle expenses General administration expenses Sales Buildings at cost Accumulated depreciation - Buildings Machinery and Equipment at cost Accumulated depreciation - Machinery and Equipment Motor Vehicles at cost Accumulated depreciation - Motor Vehicles Debtors R 217 500 87 000 580 000 899 000 1 206 135 116 000 26 970 14 500 17 735 23 009 29 000 24 252 2 320 000

261 000 203 000 120 350 R 3 584 400 928 000 50 750 144 600

Additional information to be considered for finalisation of the trial balance provided above: 1 Annual depreciation (for the partnership and the company) on fixed assets is provided as follows: 2 Expenditure has always been apportioned as follows: The nartnorchin acreament makes provision for the following: Expenditure and other items at 31 December 2021 Electricity owing Salaries and wages owing Rates paid in advance Insurance paid in advance 311820865217504350 \begin{tabular}{|l|l|c|} \hline \multicolumn{2}{|l|}{ REQUIRED } & MARKS \\ \hline (a) & \begin{tabular}{l} Compile the Manufacturing and Trading Account (reflecting the gross profit) \\ for Spider and Man at 31 December 2021 from the trial balance provided and \\ after incorporating the additional information provided above; \end{tabular} & 23 \\ \hline (b) & \begin{tabular}{l} You may assume that the Profit and Loss for the year ended \\ 31 December 2021 for the partnership of Spider and Man amounted to \\ R745 465 after accounting for Man's salary of R58 000. \end{tabular} & \\ \begin{tabular}{l} Compile the current account for each partner for the year ended \\ 31 December 2021, inclusive of the summarized transactions for each, to \\ reflect the overall movement in their current accounts for the year. Set out the \\ accounts in tabular form. \end{tabular} & \\ \hline \end{tabular}