Question

1 Given information for questions 1, 2, 3, 4, 5 and 6: The following information pertains to YBlue ended 31 July 2020: Close Corporation for the financial year 1. EXTRACT of balances at 31 July 2020 R Member's contribution: Y Yellow 270 000 Member's contribution: B Blue 110 000 Retained earnings (31 July 2019) 24 950 Revaluation reserve 34 000 Loan from Y Yellow 85 000 Loan to B Blue 60 000 Interim profit distribution to members 48 000 Allowance for credit losses 1 170 Land and buildings at cost. 300 000 Equipment at cost ....... 208 000 Investment (fixed deposit at Blond Bank). 90 000 Inventory: merchandise 101 980 3460 Inventory: consumables Long-term loan 48 000 Bills receivable 11 510 Bills payable 8 910 38 880 Accumulated depreciation: Equipment 4 320 Accrued expenses.. 1 935 Prepaid expenses. 820 Bank (cr) 435 Petty cash 1 080 Interest on loan.. 33 680 Debtors control 9 690 Creditors control 40 500 SARS (income tax) (dr). 311 480 Profit before tax (before any applicable adjustments). 2. Additional Information 2.1 In addition to the interim profit distribution the following needs to be paid to members: Y Yellow: Members distribution R27 000 B Blue: Members distribution R52 500 1.2 SA normal tax for the financial year amounted to R37 150. 2.3 The long-term loan was acquired from Pretty Bank on 1 May 2018 at 12% interest per annum, payable at the end of the year. A further loan of R R12 000 was received from Pretty Bank on 01 October 2019. The full loan must be repaid in 6 annual instalments with the first instalment due on 1 March 2021. The loan is unsecured. The interest on loan has not yet been taken into account in arriving at the profit before tax. 33

Answer 1

Question 1

Profit before tax and adjustment = 311480

Less: Tax = 37150

Profit after tax but before adjustments = 274330

Less: Interset on Loan = 1080

Add: Interim profit distributed to members :48000

Less: Interst on loan (Adjustments) ;25490

Profit to be shown = 295760

Quetion 2

Question 3

non Current Asset

Land and Building = 300000

Add: Equipment = 208000

Less: Accumulated Depreciation on Equipment = 38880

Add: investment = 90000

Total Non Current Assets = 559120

Question 4

Current Assets

Cash = 435

Prepaid Expenses = 1935

Income Tax = 40500

Debtors = 33680

Bills Receivable = 11510

Inventory (101980+3460) = 105440

Loan to Blue = 60000

Bank = -820

Interest Receivable from blue at 8% = 4860

Total Current Assets = 257540

Question 5

Bills Payable = 8910

Accrued Expense = 4320

Creditors Control = 9690

Total Current Liabilities = 22920

Question 6

Retained earnings = 24950

Other Component of Equity = 24950