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8 marksChanges in Ownership and Capital Structure

CAPE Accounting Unit 1 · 2006 · Paper 2 · Question 2(i)

Bravo and Rampaul trade in partnership as B & R Distributors. An adjusted trial balance at December 31, 2005 is provided. Physical inventory at year end is $38,200. Partners receive 10% interest on beginning invested capital, and residual net income/bonuses are shared equally.

Prepare the income statement for B & R Distributors for the year ending December 31, 2005, including the appropriation of profits between the partners.

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Other parts of this question

  1. 2(ii)Prepare a statement of changes in the partners' capital for the current year.[3 marks]
  2. 2(iii)Compute the bonus attributable to Bravo and Rampaul upon the admission of Zandolie to the partnership.[8 marks]
  3. 2(iv)Prepare a balance sheet for the partnership immediately following the admission of Zandolie.[12 marks]
  4. 2(v)Briefly discuss TWO advantages and TWO disadvantages that would accrue to B & R Distributors if they changed from a partnership to a public company.[4 marks]

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