QUESTION ONE (40 MARKS)
Provide a comprehensive discussion on each of the following terms with applicable examples. (40)
QUESTION TWO (50 MARKS)
You are provided with information relating to SS Ltd for the year ended 31 December 2023.
|Trial balance as at 31 December 2023||Debit||Credit|
|Capital||4 720 340|
|Land and buildings||3 200 000|
|Vehicles||1 600 000|
|Accumulated depreciation on vehicles||200 000|
|Stock||1 534 000|
|Accounts receivable||521 900|
|Allowance for credit losses||22 000|
|Accounts payable||786 800|
|Loan: C Bank @ 12% p.a.||630 000|
|Fixed deposit @ 6% p.a.||450 000|
|Sales||10 000 000|
|Cost of sales||5 200 000|
|Salaries and wages||788 000|
|Directors’ fees||1 840 000|
|Audit fees||88 000|
|Employer’s contribution (Pension and UIF)||68 000|
|Bank charges||31 000|
|Sundry expenses||90 000|
|Credit losses||12 000|
|Rent income||69 160|
|Interest on fixed deposit||27 000|
|Interest on overdraft||13 000|
|Interest on loan||70 000|
|Repairs and maintenance||125 000|
|Packing material||35 000|
|16 455 300||16 455 300|
1. Packing material to the value of R31 000 was used for the year ended 31 December 2023.
2. The allowance for credit losses must be adjusted to 4% of outstanding debtors.
3. Aldridge Builders was paid R105 000 for:
• The construction of a storeroom: R80 000
• Repairs to paving: R25 000
The entire amount was debited to Land and buildings in error.
4. Rent income with an amount of R5 720 for January 2024 has already been received.
5. Interest on a loan of R5 600 is yet to be paid for the 2023 financial year.
• Depreciation on vehicles is at 10% per annum on diminishing balance.
Note: A new vehicle was acquired at a cost of R600 000 on 2 June 2023. This purchase has already been recorded.
You are required to:
a) Prepare the Statement of profit or loss and other comprehensive income of SS Ltd for the year ended 31 December 2023. (25)
b) Prepare the Statement of financial position of SS Ltd as at 31 December 2023. (25)
– Notes are required
Answers to Above Questions on Business and Management Sciences
Answer 1: Assets are defined as the resources owned by an organisation. They can be tangible or intangible such as building, machinery, goodwill etc.
Equity is defined as the ownership interest in an organisation. It is the residual interest in the assets of an entity after deducting its liabilities.
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