Question

The information given below was extracted from the accounting records of Sunray Traders, a partnership business with Sunny and Raymond as partners.
Extract from the ledger of Sunray Traders as at 28 February 2022
Capital: Sunny
Capital: Raymond
Current a/c: Sunny (01 March 2021) Current a/c: Raymond (01 March 2021) Drawings: Sunny
Drawings: Raymond
The following must be taken into account:
DEBIT
R
CREDIT
R
1 000 000 600 000
40 000
60 000
300 000 400 000
(a) The Statement of Comprehensive Income reflected a net profit of R900 000 for the year ended 28 February 2022.
(b) The partnership agreement provided for interest on capital at 12% p.a. on the balances on the capital accounts. Note: Sunny increased his capital contribution by R200 000 on 01 June 2021 whilst Raymond decreased his capital contribution by R200 000 on 01 September 2021. The capital changes have been recorded.
(c) The partners are entitled to the following monthly salaries from 01 March 2021 to 30 November 2021:

Answer 1

The preparation of the Profit and Loss Appropriation Account for the year ended February 28, 2022, is as follows:

What is the Profit and Loss Appropriation Account?

A profit and loss appropriation account is a special account prepared for the distribution of the partnership's profit and loss for the period.

For Sunray Traders Partnership, the profit and loss appropriation account is detailed below.

Profit and Loss Appropriation Account

For the year ended February 28, 2022

                                        Sunny      Raymond       Total

Net Profit for the year                                         R900,000

Interest on capital       R84,000      R24,000    (R108,000)

Annual Salaries         R307,500    R246,000   (R553,500)

Share of profits         R119,250     R119,250  (R238,500)

Question Completion:

(c) The partners are entitled to the following monthly salaries from 01 March 2021 to 30 November 2021:

Sunny R25 000 Raymond R20 000

Note: The salaries of the partners were increased by 10% with effect from 01 December 2021.

d) The balance of the profit and loss must be shared equally between Sunny and Raymond.

Prepare the Profit and Loss Appropriation Account for the year ended February 28m 2022.

Data and Calculations:

                                              DEBIT        CREDIT

Capital: Sunny                                   R1 000 000

Capital: Raymond                                  600 000

Current a/c: Sunny (01 March 2021)       40 000

Current a/c: Raymond (01 March 2021) 60 000

Drawings: Sunny             R300 000

Drawings: Raymond         400 000

Net profit = R900 000

Sunny's Salaries = R307,500 (R25,000 x 9 + R25,000 x 1.1 x 3)

Raymond Salaries = R246,000 (R20,000 x 9 + R20,000 x 1.1 x 3)

Capital Accounts Balances:

                                        Sunny      Raymond       Total

Capital accounts      R1 000 000  R600 000   R1 600 000

Drawings accounts       300 000    400 000        700 000

Net Capital accounts R700 000  R200 000     R900 000

Interest on capital       R 84 000    R24 000       R108 000

Thus, the profit and loss of Sunray Traders Partnership are shared equally as agreed.

Learn more about partnership accounts at brainly.com/question/22693552

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