Question Shumba and Shula are in partnership. The terms of their partnership agreement are as follows: 1. Interest is to be calculated on the opening balances of both the capital and current accounts at the rates of 7.5% and 10% p.a. respectively. 2. Shula is entitled to a monthly salary of K1250 3. Profit/losses are to be shared equally. 4. Interest on drawings, as per partners' decision. The information below relates to the business activities of the partnership for the year ended 28 February 2002. Balances as at 28 February 2002 iii. Interest on drawings in respect of the current financial year, the interest amounted to K5000 for Shumba and K1000 for Shula. An investigation indicated that credit losses could be K4000 during the next financial period and the allowance for credit losses must be adjusted accordingly. Prepare: a) An income statement for the year ended 28 February 2002; b) Statement showing changes in the equity of the partnership for the year ended 28 February 2002. NB: Show all calculations. K'000 Inventory Debtors control Bank (Dr) 135 82 98 Motor vehicles at cost 99 Land and buildings at cost 100 Accumulated depreciation: Motor vehicles (1 March 2001) 49 Trading account (gross profit for the year) 200 Allowances for credit losses (1 March 2001) 1 Administration expenses 80 Capitals: Shumba (fixed) 240 Shula (fixed) 160 Current accounts: Shumba (Cr. 1 March 2001) 50 Shula (Dr. 1 March 2001) 40 Drawings: Shumba 55 Shula 11 Additional information: i. ii. Credit losses should amount to K2000 Depreciation on motor vehicles. Provide for 30% p.a. according to the diminishing-balance method.