Exam code:4AC1
Statement of financial position for partnerships
What is the layout of the statement of financial position of a partnership?
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The statement of financial position of a partnership is the same as that of a sole trader with the exception of the equity section
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It first states the total assets
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Non-current assets
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Current assets
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And then the total equity and liabilities
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Equity
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Non-current liabilities
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Current liabilities
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The equity section of the statement of financial position shows the balances of each partner from their capital accounts and current accounts separately
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If the current account has a debit balance then:
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Put brackets around the balance on the statement of financial position
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Treat the number like a negative number
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Worked Example
Below is the capital and current account of Adi and Bilal at 31 December 2023. Prepare an extract of the statement of financial position at 31 December 2023 showing the equity section.
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Adi and Bilal Capital Accounts |
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Adi |
Bilal |
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Adi |
Bilal |
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Date |
Details |
$ |
$ |
Date |
Details |
$ |
$ |
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2023 Jan 1 |
Bal b/d |
20 000 |
12 000 |
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Adi and Bilal Current Accounts |
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Adi |
Bilal |
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Adi |
Bilal |
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Date |
Details |
$ |
$ |
Date |
Details |
$ |
$ |
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2023 |
Drawings |
3 000 |
6 000 |
2023 |
Balance b/d |
5 000 |
1 000 |
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Dec 31 |
Interest on drawings |
300 |
600 |
Dec 31 |
Interest on capital |
1 000 |
600 |
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Dec 31 |
Salaries |
2 000 |
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Dec 31 |
Share of profit |
6 000 |
4 000 |
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Answer
Balance the current accounts.
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Adi and Bilal Current Accounts |
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Adi |
Bilal |
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Adi |
Bilal |
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$ |
$ |
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$ |
$ |
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2023 |
Drawings |
3 000 |
6 000 |
2023 |
Balance b/d |
5 000 |
1 000 |
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Dec 31 |
Interest on drawings |
300 |
600 |
Dec 31 |
Interest on capital |
1 000 |
600 |
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Dec 31 |
Balance c/d |
10 700 |
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Dec 31 |
Salaries |
2 000 |
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Dec 31 |
Share of profit |
6 000 |
4 000 |
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Dec 31 |
Balance c/d |
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1 000 |
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14 000 |
6 600 |
14 000 |
6 600 |
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2024 Jan 1 |
Balance b/d |
1 000 |
2024 Jan 1 |
Balance b/d |
10 700 |
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Enter the balances into the statement of financial position. Notice that Bilal has a debit balance in his current account, therefore this will be a negative value.
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Adi and Bilal Statement of Financial Position (extract) at 31 December 2023 |
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$ |
$ |
$ |
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Equity |
Adi |
Bilal |
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Responses