QUESTION 4 PARTNERSHIPS (20)

The information given below was extracted from the accounting records of Salmon Traders, a partnership business with Sally and Monty as partners. The financial year ends on the last day of February each year.

REQUIRED

Prepare the following accounts in the General ledger of Salmon Traders:

4.1 Current a/c: Monty (Balance the account.) (7)

4.2 Appropriation account (Close off the account.) (13)

INFORMATION

Balances in the ledger on 28 February 2017
	R
Capital: Sally	400 000
Capital: Monty	200 000
Current a/c: Sally (01 March 2016) (DR)	20 000
Current a/c: Monty (01 March 2016) (CR)	33 000
Drawings: Sally	200 000
Drawings: Monty	180 000

The following must be taken into account:

(a) The net profit according to the Profit and Loss account amounted to R500 000 on 28 February 2017.

(b) The partnership agreement makes provision for the following:

Interest on capital must be provided at 15% per annum on the balances in the capital accounts. Note: Sally increased his capital by R100 000 on 01 September 2016. Monty decreased his capital by R100 000 on the same date.

The partners are entitled to the following monthly salaries:

Sally R12 000

Monty R13 000

Note: The partners salaries were increased by 10% with effect from 01 December 2016.

Sally and Monty share the remaining profits or losses in the ratio of their capital balances as at the beginning of the financial year.