0. QUESTION 5 PARTNERSHIPS (20 Marks)

   The following information was extracted from the accounting records of H.A.Distributors, a partnership owned by partners, HANDY and ANDY.

   Required: Prepare the Statement of changes in Equity for the year ended 28 February 2017. Use the format given below. Copy in your answer book.

   INFORMATION. 1.

   Balances on 28 February 2017 Capital : Handy Capital : Andy Current Account : Handy [ 01 March 2016 ] Current Account : Andy [ 01 March 2016 ] Drawings : Handy

   Drawings : Andy

   2. On 28 February the Statement of Comprehensive Income reflected a Profit for the year of R 378 000.

   3. Partners are entitled to the following monthly salary :Handy, R9 750

      Andy, R9 000

   4. Partners are entitled to interest on their capital at 15% per annum.NB : The following changes were made to their capital during the year.

      • Handy increased his capital by R50 000 on 01 July 2016.

      • Andy decreased his capital by R30 000 on 01 November 2016.

   5. Andy is entitled to a bonus under the following conditions :

      • Bonus of R50 000 if the profit for the year is above R400 000.

      • Bonus of R30 000 if the profit for the year is below R400 000.

   6. The bookkeeper has calculated the following interest on drawings to be charged to the partners on their respective drawings during the year :

      • Handy, R7 400

      • Andy, R5 200

   7. Partners have agreed to share the remaining profit / loss in the ratio of their capitals at the end of the year.

R

200 000

150 000

4500 DR

3500 DR

181 034

184 522

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7

Format to copy

HA DISTRIBUTORS
Statement of Changes in Equity for the year ended 29 February 2017.
CAPITAL ACCOUNTS	Handy		Andy		Total
Balance on 01 March 2016
Changes in capital
Balance on 28 February 2017
CURRENT ACCOUNTS	Handy		Andy		Total
Balances on 01 March 2016
Net profit for the year
Interest on capital
Salaries
Bonus
Interest on drawing
Share of remaining profit / loss
Drawings
Balances on 28 February 2017

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