QUESTION 4

PARTNERSHIPS

(20)

The information given below was extracted from the accountingrecords of Salmon Traders, a partnership business with Sally andMonty as partners. The financial year ends on the last day ofFebruary each year.

REQUIRED

Prepare the following accounts in the General ledger of SalmonTraders:

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

(7)

4.2 Appropriation account (Close off theaccount.)

(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)

20 000

(DR)

Current a/c: Monty (01 March 2016)

33 000

(CR)

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 amountedto 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 thebalances in the capital accounts. Note: Sally increased his capitalby R100 000 on 01 September 2016. Monty decreased his capital byR100 000 on the same date. The capital changes have beenrecorded.

?

The partners are entitled to the following monthly salaries:

Sally

R12 000

Monty

R13 000

Note: The partners’ salaries were increased by 10% witheffect from 01 December 2016.

?

Sally and Monty share the remaining profits or losses inthe ratio of their capital balances as at the beginning of thefinancial year