Question 1:

THE FOLLOWING INFORMATION WAS EXTRACTED FROM THE RECORDS OF UNITY SUPPLIERS 28 FEBRUARY 2020

Additional information:

1. On 28 February 2020 the inventory on hand amounted to R65 000
2. Included in the amount of inventory on hand is consumables and stationery amounting to R2 080 and R800
3. The owner took some of the stock bought for R3 800 as a gift for his aunt.
4. Unity Supplies were offered a discount of 10% on an amount of R9 500 owing to a supplier provided the supplier is paid before 28 February 2020. Unity Supplies intends taking the advantage of the discount offered.
5. Unity maintains a mark-up on sales (margin) of 40%.
6. The balance of the allowance for settlement discount granted account on 1 Jan 2020 must be written back since the trade debtor to whom the discount offering pertained did not settle his account as required. On 31 December 2020, a trade debtor who owes R34 000 was offered a 5% settlement discount, on condition that she settles her account before 15 January 2021 . This offering must still be provided for.

Required

Determine the Revenue Amount for the year ended 28 February 2020.

Question 2:

Partnership agreement:
The partnership agreement stipulates the following:
a. The partners Amanda and Sphindile share the profits or losses in the ratio of 3:2 respectively.
b. Interest at 10% per annum is allowed on the opening balances of the partners’ capital accounts.
c. Amanda is entitled to a 10% commission on sales.

Year-end adjustments:
1. Inventory on hand at 31 December 2009:
R
Merchandise
83 000
Stationery (stationery purchased is recorded in the stationery consumed account) 850
2. On 30 September 2009, a delivery vehicle was purchased for R85 000 cash. All the necessary entries were made in the books.
3. Depreciation must be provided on vehicles at 10% per annum according to the straight-line method

4. The loan from Amanda was obtained on 1 September 2007 at 5% interest per annum. The loan will be repaid in five equal annual instalments, starting from 31 December 2010. The interest must be paid to Amanda annually
5. During the financial year Sphindile was granted an interest free loan which she agreed to settle in full on 30 June 2010.
6. The water and electricity account of R400 for December 2009 was received on 10 January 2010.
7. A debtor owing the business R5 560 has for the past financial year defaulted on his payments and his account must be written off as irrecoverable. The allowance for credit losses must be adjusted to R3 200.
8. During the financial year R40 000 was paid to Amanda as commission on sales. These payments were recorded in the salaries and wages account
9. The fixed deposit at Third National Bank was made on 1 January 2008 for a period of 5 years at 9% interest per annum. The interest is receivable at the end of each borrowing year.

REQUIRED:

Prepare the statement of profit or loss and other comprehensive income of A&S Supermarket for the year ended 31 December 2009. Your answer must comply with the requirements of International Financial Reporting Standards (IFRS) appropriate to the business of the partnership (notes and comparative figures are not required).

Question 3:

The following information was obtained from the accounting records of T Super and B Man, Trading as Superman Traders:

Balances as at 28 February 2011:

Additional information:
a. Land and buildings consists of:
Land – Erf 529 Midrand, bought on 1 March 2008 for R900 000.
Building – The building was erected during the year at a total cost of R600 000 and was only occupied on 1 January 2011.
b. On 30 November 2010 equipment with a cost price of R35 000 was sold at a loss of R3 000. At that date, the accumulated depreciation on the equipment sold amounted to R12 060. All the transactions regarding the sale were recorded correctly.
c. Depreciation must still be provided for as follows:
Buildings: 2% per annum on the straight line method. Equipment: 10% per annum on the diminished balance method. Vehicles: 20% per annum according to the straight line method.
d. Inventories consist of:
Merchandise, R830 000
Stationery, R5 600

REQUIRED:
Prepare ONLY the note in respect of property, plant and equipment. The total column can be omitted.

The following information relates to Richfield Distributors:
Pre-adjustment trial balance of Richfield Distributors as at 31 December 20.1

Question 4:

The following adjustment must still be accounted for:
1. Packaging material on hand at 31 December 20.1 to the value of R980.
2. The long-term borrowing was entered into on 1 October 20.1. according to the agreement, interest is payable bi-annually at a rate of 18%vper annum.
3. Advertisements includes an amount of R400 paid for January 20.2
4. Rental income includes an amount in respect of January 20.2.
5. Interest on fixed deposit has not yet been received for the last two months of the financial year. Interest is calculated at a rate of 12% per annum.
6. Insurance includes an amount of R750 paid for the period 1 November 20.1 to 31 October 20.2.
7. The telephone account of R165 for December 20.1 has not yet been paid.
8. Equipment of R2 000 (cost price) was [purchased on 1 July 20.1.
9. Depreciation must be provided as follows:
a. Vehicle: 20% per annum on the diminishing balance method
b. Equipment: 10% per annum on the diminishing balance method
10. The account of Loose-Ends Ltd, a debtor who owes the entity R200, must still be written off as irrecoverable.
11. It was determined that on 31 December 20.1 the allowance for credit losses should amount to R250.

Required
Prepare the journal entries with narration of the above additional information or adjustments given.

Question 5:

The following information was extracted from the financial statements of Thabo CC for the financial year ended 28 February 2010:

Statement of profit or loss and other comprehensive income information for the year ended 28 February 2010:

Statement of financial position information as at 28 February:

Additional information:
50% of all purchases for the year ended 28 February 2010 were on credit.

REQUIRED
Calculate the following ratios on 28 February 2010 for Thabo CC. Assume 365 days in a year
1. Profit margin
2. Acid test ratio
3. Trade payables payment (settlement) period
4. Inventory turnover rate
5. Cash ratio

Answers on Questions Above on Financial Management

Answer 1: The Revenue Amount for the year ended 28 February 2020 is prepared as follows:

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