QUESTION FOUR [25] Stan and Ben are in partnership, sharing profits and losses in the ratio of their capital account balances at the beginning of the financial year. On 30 June 2019, Stan deposited an additional R150 000 into the partnerships bank account. The introduction of Stans capital has been correctly recorded. The following is an extract of relevant accounts from the trial balance at financial year end 31 December 2019: BACHELOR OF COMMERCE YEAR 1 ACADEMIC AND ASSESSMENT CALENDAR - DISTANCE REGENT BUSINESS SCHOOL (RBS) JANUARY 2020 35 R Capital - Stan Capital - Ben Current account - Stan at 1 January 2019 credit balance Current account - Ben at 1 January 2019 debit balance Drawings - Stan Drawings Ben Profit for the year Turnover/sales for the year 450 000 300 000 37 500 12 000 48 450 32 250 937 500 1 800 000 Additional information: The partnership agreement provided for the following: Interest on capital to be allowed at 10% per year. Interest to be provided at 12% per year on current account balances at the beginning of the year. Interest on drawings to be charged at 12% per year on daily balances. This was calculated as follows: Stan R3 825; and Ben R2 775. Salaries to be allowed as follows: Stan - R22 500 per month; and Ben R15 000 per month. Stan is to be allowed a commission equal to 5% of turnover for the year. Ben is to be allowed a bonus equal to 7,5% of the net profit after allowing for interest on capital. The remaining profits are to be shared in the ratio of the partners capital accounts at the beginning of the year. Required: Prepare the following ledger accounts for the year ended 31 December 2019: 4.1 Appropriation account (15) 4.2 Current account Ben (10) BACHELOR OF COMMERCE YEAR 1 ACADEMIC AND ASSESSMENT CALENDAR - DISTANCE REGENT BUSINESS SCHOOL (RBS) JANUARY 2020 36 NB: The accounts must be properly balanced/closed. The detail column must show the contra account for each transaction. QUESTION FIVE [25] The following information was obtained from the accounting records of First Ltd: Summarised financial position for year ended 31 December ASSETS 2019 R 2018 R Land and buildings Investments Machinery at carrying amount 104 865 Nil 6 500 95 470 1 100 1 600 Cost Accumulated depreciation 8 700 (2 200) 5 400 (3 800) Inventories Trade debtors Cash at bank 12 000 10 205 13 500 9 000 30 700 Nil TOTAL ASSETS 147 070 137 870 EQUITY & LIABILITIES Equity 100 070 78 470 Ordinary share capital Retained earnings 85 000 15 070 68 000 10 470 Liabilities 47 000 59 400 Long term loan Bank overdraft Trade creditors Income tax payable Dividends payable 20 000 Nil 6 600 2 000 18 400 30 000 700 9 200 4 100 15 400 BACHELOR OF COMMERCE YEAR 1 ACADEMIC AND ASSESSMENT CALENDAR - DISTANCE REGENT BUSINESS SCHOOL (RBS) JANUARY 2020 37 TOTAL EQUITY AND LIABILITIES 147 070 137 870 Additional information: 1. The following was extracted from the statement of comprehensive income and statement of changes in equity for financial year ended 31 December 2019. Income: R Profit on sale of land and buildings 7 000 Profit on sale of machinery 300 Expenses: Depreciation 1 000 Administration expenses 29 730 Selling expenses 12 005 Loss on sale of investment 500 Interest expense 20 Taxation expense 18 000 Profit for the year 23 000 Appropriation: Dividends declared 18 400 2. The investments of the company were sold for R600 cash. 3. A portion of the land and buildings with a cost price of R11 000 was sold during the year for R18 000 cash. Additional land was purchased for R20 395 cash. 4. Machinery to the value of R6 400 was purchased for cash. Machinery with a carrying amount of R500 was sold at a profit of R300. 5. The company paid a portion of the long term liability. No further long term loans were taken. 6. The company issued new ordinary shares during the year. BACHELOR OF COMMERCE YEAR 1 ACADEMIC AND ASSESSMENT CALENDAR - DISTANCE REGENT BUSINESS SCHOOL (RBS) JANUARY 2020 38 Required: Draft the statement of cash flows for the year ended 31 December 2019 method in compliance with international financial reporting standards in as much as the given information allows. The indirect method is in use. Show all workings. (25) END OF ACCOUNTING