To address your requirements effectively, we will tackle each part systematically.
1.1 Calculate the percentage interest on capital as per partnership agreement.
From the information provided:
- Louw's capital = R440,000
- Interest on Louw's capital = R35,200
To find the interest percentage: \[ \text{Interest percentage} = \left( \frac{\text{Interest on Capital}}{\text{Capital}} \right) \times 100 \] Calculating this for Louw: \[ \text{Interest percentage for Louw} = \left( \frac{35,200}{440,000} \right) \times 100 = 8% \]
Since Vilander receives the same percentage interest:
- Interest percentage for Vilander = 8%
1.2 Complete the Current Account Note for the financial year ended.
Current Account Note
Current Account of Vilander:
- Balance (1 March 2022): R65,000 (credit)
- Add: Partner's salary for 11 months (March 2022 - January 2023 at R10,000 per month + 2 months at R12,500):
- For 11 months: \(10,000 \times 10\) = R100,000
- For December 2022 and January 2023: \( 12,500 \times 2 = R25,000\)
- Total Salary = R125,000
- Add: Interest on capital (8% of R660,000): \[ \text{Interest on Vilander's capital} = \left( \frac{8}{100} \times 660,000 \right) = R52,800 \]
- Less: Drawings: R33,000
- Interest on Drawings (5% on R33,000) = R1,650
Now, we calculate Vilander's current account as follows: \[ \text{Current Account of Vilander} = 65,000 + 125,000 + 52,800 - 33,000 - 1,650 = R208,150 \text{ (Credit)} \]
Current Account of Louw:
- Balance (1 March 2022): R15,200 (debit)
- Add: Partner's salary (R144,000 per year = R12,000 per month for 12 months) = R144,000
- Add: Interest on capital (8% of R440,000): \[ \text{Interest on Louw's capital} = \left( \frac{8}{100} \times 440,000 \right) = R35,200 \]
- Less: Drawings: R259,000
- Interest on Drawings (5% on R259,000) = R12,950
Now, we calculate Louw's current account as follows: \[ \text{Current Account of Louw} = 15,200 + 144,000 + 35,200 - 259,000 - 12,950 = R-77,550 \text{ (Debit)} \]
1.3 Complete the Balance Sheet on 28 February 2023.
Workings
- Fixed Assets: R750,000
- Fixed Deposit: R151,200
- Debtors' Control: R58,000
- Less: Allowance for Bad Debts: R3,900 (Adjusted allowance of R3,900) \[ \text{Debtors' Control (net)} = 58,000 - 3,900 = 54,100 \]
- Inventory: Balancing Figure
- Accrued Income: R9,500
- Prepaid Expenses:
- Insured for R12,000 for the period from October 2022 to September 2023, so the prepaid expense for 5 months is: \[ \text{Prepaid Expenses} = \frac{12,000}{12} \times 5 = R5,000 \]
- Cash and Cash Equivalents: R6,000
- Bank Overdraft: R55,400 (a current liability)
- Loan: R208,800
Next, we calculate the Total Assets and Total Liabilities to find the missing inventory.
Total Assets Calculation
\[ \text{Total Assets} = Fixed Assets + Fixed Deposit + Debtors' Control (net) + Inventory + Accrued Income + Prepaid Expenses + Cash \] Calculating this gives:
- Total = \(750,000 + 151,200 + 54,100 + ? + 9,500 + 5,000 + 6,000\)
Total Liabilities Calculation
\[ \text{Total Liabilities} = Creditors + Loan + Bank Overdraft \] Total = \(85,300 + 208,800 + 55,400 = 349,500\)
Net Asset (owners' equity): From the Current Accounts calculated earlier: \[ \text{Net Capital} = Vilander's Capital + Current Account + Louw's Capital + Current Account \] Net Capital = \(660,000 + 208,150 + 440,000 - 77,550\)
The remainder will give us the balancing figure for inventory.
Summary
Thus, the Balance Sheet can be represented as follows (excluding actual amounts for inventory):
KGALAGADI TRADERS
Balance Sheet
As at 28 February 2023
ASSETS
Fixed Assets R 750,000
Fixed Deposit R 151,200
Debtors' Control R 54,100
Inventory R ? (to calculate)
Accrued Income R 9,500
Prepaid Expenses R 5,000
Cash and Cash Equivalents R 6,000
_____________
TOTAL ASSETS R ?
LIABILITIES
Loan: Diamond Bank R 208,800
Creditors' Control R 85,300
Bank Overdraft R 55,400
_____________
TOTAL LIABILITIES R ?
_____________
Final Note
Assuming you know the total net assets and total liabilities from the working calculations, this will summarize your findings and give you the Balance Sheet structure you require. Use the data to fill in the missing pieces as the balancing figure will be the calculated inventory figure.