Two hospitality management graduates: P. Pringle and R. Mokone are business partners. The capital contributed at the beginning of the year (01 March 2011) is as follows:

P. Pringle R450, 000

R. Mokone R550, 000

(a) On the 01 June 2011: P. Pringle increased his capital by R50, 000

(b) Profit as per income statement at the end of the financial year is R600, 000 and on the same day, the balances of the partners drawings (current account) were as follows:

P. Pringle R65, 000

R. Mokone R50, 000

(c) All partners had a balance of R20, 000 in their current accounts at the beginning of the financial year. The partners agreement stipulates the following:

i. Salaries to be paid annually: Pringle R160, 000 and Mokone R180, 000.

ii. Interest on capital of 15% annually

(a) Remaining profit should be distributed based on the ratio of capital invested at the beginning of the year (01 March 2011).

INSTRUCTIONS

Prepare the capital account (note 7) and current account (note 8) to the balance sheet of the partnership.

Use Annexure A provided.

QUESTION 6 30 Marks

6.1 The financial year of the Melrose Restaurant, with partners Henny and Mollo, ends 28 February 2012. Show the Note for Capital and current accounts (Use Annexure B provided) for the year ended 28 February 2012.

Some of the balances and totals on the 28 February 2012.

Debit Credit

Capital: Henny R300, 000

Capital: Mollo R200, 000

Drawings: Henny R129, 400

Drawings: Mollo R115, 600

Current account: Henny (01 March 2011) R2, 456

Current account: Mollo (01 March 2011) R1, 602

Profit and loss R245, 665

Additional information:

(a) Partner Henny decreased his capital on 01 June 2011 by R50, 000.

(b) Partner Mollo increased his capital by R50, 000 on 01 December 2011.

(c) Interest on capital is earned at 10% per year.

(d) Each partner earns a salary of R96, 000 per year

(e) Remaining profits/losses are shared in the ratio of capital as at the end of the year.