Question

All questions need to be answered please. From questions 1 to question 5.

ASSIGNMENT 7: FINANCIAL ACCOUNTING Note: 1. Value Added Tax (VAT) must be ignored 2. Use the formats contained in your study guide to answer questions 2 to 5 (20) QUESTION 1 REQUIRED For each of the following questions, write down only the letter of the correct answer e.g. 1.6 C. Do not shovw any calculations. 1.1 he following information relates to an item of inventory sold by RK Suppliers during May 2018 UNITS 15 000 30 000 38 000 2 000 42 000 PRICE PER UNIT R18 R20 R22 R22 MAY 01 Opening inventory Purchases 25 Purchases 26 Return to supplier 31 Sales for Ma The value of closing inventory on 31 May 2018 using the first-in-first-out method (FIFO) is A B C D R856 000 R852 000 R750 000 none of the above 1.2 Rent expense according to the Pre-adjustment Trial Balance of JKM Stores on 28 February 2018 (end of the financial year) amounted to R73 980. Rent was paid in advance for March 2018. Note that the rental was increased by 10% with effect from 01 September 2017 will be entered in the Statement of Comprehensive Income for the year ended 28 A B C D February 2018 for rent expense. R68 040 R5 940 R68 289.23 none of the above 1.3 The following information was extracted from the ledger of Sasol Traders on 30 June 2018, the end of the financial year Opening inventory Closing inventory Purchases Carriage on purchases Carriage on sales Sales Sales returns 200 000 160 000 480 000 20 000 40 000 1 300 000 100 000 8. bank statement revealed the following debits: Service fees Cash deposit fees Credit card commission Interest on overdraft R480 R320 R1 200 R200 9. A chequefor R3 800 from a debtor,J. Peters, was returned by the bank because there were insufficient 10. A deposit made by Dunkirk Wholesalers, R2 400, was credited on the bank statement of Dunkirk 11. A deposit made by Dunkirk Traders on 31 March 2018, R9 600, did not appear in the bank statement 12. The following cheques issued during March 2018 were still not presented to the bank for payment funds in his account. Traders in error for March. Cheque no.184, R2 800, issued to PL Suppliers for consumable stores. Cheque no.186, R3 280, issued to Palm Wholesalers for merchandise. No entry was made for a cheque, dated 25 April 2018, that was received from a debtor in settlement of her account, R5 000. 13. QUESTION 3 3.1 20 The information given below was extracted from the accounting records of Ngonyama Traders REQUIRED Calculate the profit or loss on the equipment sold. Complete the extract of the following note to the financial statements as at 28 February 2018, the end of the accounting period Property, plant and equipment Use the following format: 3.1.1 3.1.2 (10) lant and Carrying value at beginning of year Cost Accumulated depreciation Additions at cost Disposals at carrying value Depreciation for the year Carrying value at end of year Cost Accumulated depreciation 1. On 01 March 2017, the following balances appeared, amongst others, in the books of Ngonyama Traders: Equipment Accumulated depreciation on equipment A computer, cost price R15 000, was purchased on 01 June 2017 On 30 November 2017, old equipment that cost R50 000 was sold on credit to S. Peters for R5 000. The accumulated depreciation on the equipment sold amounted to R40 000 on 01 March 2017 Depreciation is calculated at 10% p.a. using the diminishing balance method. The financial year ends on 28 February 2018. R200 000 R80 000 2. 3. 3.2 REQUIRED Show the effect of the following transactions of Xpanda Stores on the Accounting equation. Use"+"to denote an increase,to denote a decrease and "O" to denote no change to the elements of the equation. Assume that the bank balance is favourable at all times. Follow the example given. Example: Paid for electricity by cheque, R900 No. Assets Liabilities R900 -R900 TRANSACTIONS 3.2.1 Purchased stationery on credit from PQ Stationers, R500. 3.2.2 nvested R50 000 in a fixed deposit investment) account at Sen Bank. 3.2.3 nterest on credit balance according to the bank statement from Sen Bank amounted to R100. 3.2.4 Received a cheque from Sen Bank for a long-term loan that was negotiated, R200 000. 3.2.5 A creditor charged Xpanda Stores R50 interest on overdue account. (20) QUESTION 4 The information given below was extracted from the accounting records of Jennifer Traders, a partnership business with Jen and Fern as partners. REQUIRED Prepare the Statement of Changes in Equity for the year ended 28 February 2018 INFORMATION Extract from the ledger of Jennifer Traders as at 28 February 2018 Debit Credit Capital: Jen Capital: Fern Current afc: Jen (01 March 2017) Current afc: Fern (01 March 2017) Drawings: Jen Drawings: Fern 300 000 200 000 10 000 15 000 250 000 200 000 The following must be taken into account: On 28 February 2018, the end of the financial year, the Profit and loss a/c reflected a net profit of R600 000 (a) (b) Fern is entitled to a special bonus equal to 10% of the net profit in excess of R400 000 (c) The partners are entitled to the following monthly salaries Jen Fern The partners are entitled to interest at 15% p.a. on their capital balances. Note: On 01 June 2017 Jen increased her capital balance by R100 000 whilst Fern decreased her capital balance by R100 000. These capital changes have been recorded The remaining profit/loss must be shared between Jen and Fern in the ratio of the capital balances at the beginning of the financial year R9 000 R8 000 (d) (e) (f On 28 February 2018 Fern, by agreement with Jen, took a vehicle of the business at carrying value for her own use. The cost price of the vehicle was R200 000 and the accumulated depreciation on it was R150 000 on 28 February 2018. No entry has been made for this. (20) QUESTION 5 The following information was extracted from the accounting records of Moducare Traders on 28 February 2018, the end of the financial year REQUIRED Prepare the Statement of Financial Position of Moducare Traders as at 28 February 2018. (The notes to the financial statements are NOT required MODUCARE TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2018 Debit (R) Credit (R) Balance sheet accounts section Capital Drawings Land and buildin Vehicles at cost Equipment at cost Accumulated depreciation on vehicles Accumulated depreciation on equipment Fixed deposit: Redd Bank (1296 p.a Trading inventor Debtors control Provision for bad debts Bank Cash float Creditors control Mortgage loan: Redd Bank (20% pa. Nominal accounts section Sales Cost of sales Sales returns Salaries and wages Bad debts Statione Rates and taxes Motor expenses Advertisin Telephone Electricity and water Bank charges Insurance Interest on Interest on fixed deposit Rent income 826 769 54 744 627 000 462 000 264 000 184 000 99 000 77 000 5 000 58 000 4 000 91 000 165 000 1 038 000 393 000 6 000 293 000 9 000 15 000 29 000 16 000 11 000 22 000 33 000 4 000 6 000 30 250 gage loan 7 425 85 800 2 666 994 2 666 994 Adjustments and additional information According to the Statement of Comprehensive Income, the net profit for the year ended 28 February 2018 was R172 980 after taking the following adjustments and omissions into account: On 26 February 2018, trading goods costing R3 000 were used as prizes in an advertising campaign. No entry has been made for this transaction. Physical stocktaking on 28 February 2018 revealed the following inventories on hand: Trading inventory Stationery A debtor, J. Ritter, was declared insolvent. His account of R4 000 must be written off. The provision for bad debts must be decreased to R4 400. The telephone account for February 2018 was due to be paid on 01 March 2018, R2 100. No entry was made for the tyres that were purchased on credit to replace the ones on the delivery vehicle, RS 000. No entry was made for the bank charges that appeared on the bank statement for February 2018, R400. The insurance account includes an annual premium of R1 200 that was paid for the period 01 December 2017 to 30 November 2018. Part of the building has been leased to a tenant at R6 600 per month since 01 March 2017. Make the necessary adjustment. Provide for outstanding interest on loan, R2 750. Monthly repayments are expected to reduce the loan balance by R35 000 during the financial year ended 28 February 2019. The investment in fixed deposit at Redd Bank was made on 01 March 2017 and matures on 31 August 2018. Provide for the interest due to Moducare Traders. Provide for depreciation as follows: On vehicles, at 20% per annum on the diminishing balance. On equipment at 10% per annum on cost. 1. 2. R73 000 R500 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 12.1 12.2

Answer 1

1.1 Correct answer is: R 852000
Explanation:
Closing inventory
	Units (A)	Rate (B)	Total cost (A*B)
Purchase on 11th may	3000(30000-27000)	R20	60000
Purchase on 25th may	38000	R22	836000
Less: return	2000	R22	-44000
		Value of closing stock	852000
Sales unit calculation
Opening Inventory	15000
Purchases on 11th may	27000
sales of units	42000
Under FIFO method units that entered first shall be sold first.