QUESTION 3 (20 Marks)

REQUIRED

Use the information provided below to prepare the Statement of Changes in Equity of Richmond Traders for

the year ended 29 February 2020. Use the following format:

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 29 FEBRUARY 2020

Capital Accounts Richie Mondli Total

Balance at 28 February 2019 ? ? ?

Changes in capital ? ? ?

Balance at 29 February 2020 ? ? ?

Current Accounts Richie Mondli Total

Balance at 28 February 2019 ? ? ?

Net profit for the year ? ? ?

Interest on capital ? ? ?

Salaries ? ? ?

Bonus ? ? ?

Profit Share ? ? ?

Drawings ? ? ?

Balance at 29 February 2020 ? ? ?

INFORMATION

Extract from the ledger of Richmond Traders as at 29 February 2020

Debit Credit

R R

Capital: Richie 300 000

Capital: Mondli 200 000

Current a/c: Richie (01 March 2019) 50 000

Current a/c: Mondli (01 March 2019) 30 000

Drawings: Richie 250 000

Drawings: Mondli 350 000

The following must be taken into account:

(a) On 29 February 2020 the Profit and Loss account reflected a net profit of R700 000.

(b) The partners are entitled to interest at 15% p.a. on their capital balances.

Note: Mondli decreased his capital contribution by R100 000 on 31 August 2019. This capital change

has been recorded.

(c) Partners are entitled to the following monthly salaries:

Richie R13 000

Mondli R11 000

(d) Mondli is entitled to a bonus equal to 10% of the net profit before any of the above appropriations have

been taken into account.

(e) The remaining profit/shortfall must be shared between Richie and Mondli in the ratio 3:2 respectively.