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Prepare a statement of changes in equity for the year ended 31 December 2019, and the partners capital and current accounts.

Accounting

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Answer

b
8690
15310

Step-by-step solution

4 steps

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Part a· 2 steps

Statement of Changes in Equity (Appropriation Account)

  1. Calculate the profit appropriation items.

    • Interest on Capital:
      • Tinoda: $25000 \times 0.02 = 500
      • Anotida: $10000 \times 0.02 = 200
      • Total Interest on Capital = 500+500 + 200 = 700
    • Interest on Drawings:
      • Tinoda: $7000 \times 0.05 = 350
      • Anotida: $4000 \times 0.05 = 200
      • Total Interest on Drawings = 350+350 + 200 = 550
    • Anotida's Salary: 3000

  2. Prepare the Appropriation Account.

    Partnership Appropriation Account for the year ended 31 December 2019$Net Profit for the year22000Add: Interest on DrawingsTinoda350Anotida200Total Interest on Drawings550Total Profit available for appropriation22550Less: Interest on CapitalTinoda(500)Anotida(200)Total Interest on Capital(700)Less: Anotida’s Salary(3000)Profit available for distribution18850Distributed as:Share of Profit - Tinoda (25×18850)7540Share of Profit - Anotida (35×18850)11310Total Distributed Profit18850\begin{array}{|l|r|} \hline \textbf{Partnership Appropriation Account for the year ended 31 December 2019} & \textbf{\$} \\ \hline \text{Net Profit for the year} & 22000 \\ \text{Add: Interest on Drawings} & \\ \quad \text{Tinoda} & 350 \\ \quad \text{Anotida} & 200 \\ \quad \textbf{Total Interest on Drawings} & \textbf{550} \\ \textbf{Total Profit available for appropriation} & \textbf{22550} \\ \text{Less: Interest on Capital} & \\ \quad \text{Tinoda} & (500) \\ \quad \text{Anotida} & (200) \\ \quad \textbf{Total Interest on Capital} & \textbf{(700)} \\ \text{Less: Anotida's Salary} & \textbf{(3000)} \\ \textbf{Profit available for distribution} & \textbf{18850} \\ \text{Distributed as:} & \\ \quad \text{Share of Profit - Tinoda } (\frac{2}{5} \times 18850) & 7540 \\ \quad \text{Share of Profit - Anotida } (\frac{3}{5} \times 18850) & 11310 \\ \quad \textbf{Total Distributed Profit} & \textbf{18850} \\ \hline \end{array}

Part b8690

The partners' capital and current accounts

  1. Prepare the Partners' Capital Accounts.

    Since separate current accounts are maintained, the capital accounts are fixed and remain unchanged unless there are permanent capital injections or withdrawals, which are not mentioned.

    Partners’ Capital AccountsTinoda ($)Anotida ($)Partners’ Capital AccountsTinoda ($)Anotida ($)Balance c/d2500010000Balance b/d2500010000Total2500010000Total2500010000\begin{array}{|l|r|r|l|r|r|} \hline \textbf{Partners' Capital Accounts} & \textbf{Tinoda (\$)} & \textbf{Anotida (\$)} & \textbf{Partners' Capital Accounts} & \textbf{Tinoda (\$)} & \textbf{Anotida (\$)} \\ \hline \text{Balance c/d} & 25000 & 10000 & \text{Balance b/d} & 25000 & 10000 \\ \hline \textbf{Total} & \textbf{25000} & \textbf{10000} & \textbf{Total} & \textbf{25000} & \textbf{10000} \\ \hline \end{array}

  2. Prepare the Partners' Current Accounts.

    Partners’ Current AccountsTinoda ($)Anotida ($)Partners’ Current AccountsTinoda ($)Anotida ($)Drawings70004000Balance b/d80005000Interest on Drawings350200Interest on Capital500200Balance c/d869015310Salary−3000Share of Profit754011310Total1604019510Total1604019510\begin{array}{|l|r|r|l|r|r|} \hline \textbf{Partners' Current Accounts} & \textbf{Tinoda (\$)} & \textbf{Anotida (\$)} & \textbf{Partners' Current Accounts} & \textbf{Tinoda (\$)} & \textbf{Anotida (\$)} \\ \hline \text{Drawings} & 7000 & 4000 & \text{Balance b/d} & 8000 & 5000 \\ \text{Interest on Drawings} & 350 & 200 & \text{Interest on Capital} & 500 & 200 \\ \text{Balance c/d} & 8690 & 15310 & \text{Salary} & - & 3000 \\ & & & \text{Share of Profit} & 7540 & 11310 \\ \hline \textbf{Total} & \textbf{16040} & \textbf{19510} & \textbf{Total} & \textbf{16040} & \textbf{19510} \\ \hline \end{array}

    The closing balances for the current accounts are:

    • Tinoda: 8000+500+7540−7000−350=86908000 + 500 + 7540 - 7000 - 350 = \boxed{8690}
    • Anotida: 5000+200+3000+11310−4000−200=153105000 + 200 + 3000 + 11310 - 4000 - 200 = \boxed{15310}
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