Question One
The following information relates to Stimulus Traders:
| Balance at 31 December 2012 | R |
| Trading inventories on 01 January 2012 | 15 000 |
| Trading inventories on 31 December 2012 | 12 000 |
| Inventory of stationary on 31 December 2012 | 1 500 |
| Sales | 166 000 |
| Purchase | 90 000 |
| Sales Returns | 3 000 |
| Purchases Returns | 5 500 |
| Freight on purchases | 3 000 |
| Freight on sales | 10 000 |
| Import duty | 1 000 |
Additional information:
The owner took goods worth R2 500 for personal use. This transaction had not been recorded.
Required:
Calculate Cost of Sales.
Calculate Gross Profit.
Question 2:
The following information relates to ABC Pty Ltd, a business that manufactures electric products operating in Pretoria.
Statement of Financial Position Information as at 31 December 2015 and 2016
| 2015 (R) | 2016 (R) | |
| Ordinary Shares Capital (R1) | 400 000 | 500 000 |
| Preference Share Capital (R0.50) | 100 000 | 100 000 |
| Share Premium | 15 000 | 17 500 |
| Retained Earning | 25 000 | 115 000 |
| Long Term Loan from AB bank | 90 000 | 60 000 |
| Land and Buildings at cost | 300 000 | 320 000 |
| Machinery and Equipment at cost | 130 000 | 80 000 |
| Machinery and Equipment: Accumulated Depreciation | 43 000 | 49 000 |
| Fixed Deposits (at Standard bank) | 35 000 | 50 000 |
| Inventory | 31 000 | 50 000 |
| Trade Debtors | 40 000 | 35 000 |
| Bank (Dr) | 115 000 | – |
| Petty Cash | 5 000 | 5 000 |
| Cash in Hand | – | 4 500 |
| Trade Creditors | 18 000 | 25 000 |
| Bank Overdraft | – | 2 000 |
| Income tax payable | 15 000 | 13 000 |
| Shareholders for dividends | 15 000 | 25 000 |
| Interest Payable | 5 000 | 6 000 |
Extract of items disclosed in the Statement of Comprehensive Income for the year ended 31 December 2016:
| Item | Amount (R) |
| Interest Income from fixed deposits | 13 000 |
| Depreciation Charge for the year | 29 000 |
| Loss of sale of machinery and equipment | 1 500 |
| Interest on long term loan | 14 000 |
| Income tax expense | 47 000 |
| Profit for the year | 90 500 |
| Ordinary dividends | 20 000 |
| Preference dividends | 6 000 |
Additional Information:
1) No machinery and equipment were purchasing during the financial year. Machinery and equipment were sold for R85 500 of which R45 500 was on still outstanding.
2) The new property which was acquired is situated at Site 100 Thabo Sehume, Pretoria. The company plans to use it as its warehousing sites.
3) Inventory is recorded at cost.
4) The shares issued in March 2016.
Required:
Prepare the Statement of Cash Flows for ABC Pty Ltd for the year ended 31 December 2016 in compliance with the requirements of GAAP as stipulated in IAS 7.
NB: Use the Indirect method. Comparative figures and notes are not required.
Question Three
The following information was extracted from the book of XY Ltd for the year 30 September 2016.
Extract of a Trial Balance as 30 September 2016
| NOMIMAL SECTION | Debit (R) | Credit (R) |
| Sales | 1 312 500 | |
| Cost of Sales | 475 120 | |
| Commission | 19 00 | |
| Rent | 70 000 | |
| Salaries | 130 400 | |
| Carriage on Sales | 50 000 | |
| Carriage on Purchases | 40 000 | |
| Bad debts | 20 000 | |
| Electricity | 46 500 | |
| Stationary | 102 400 | |
| BALANCE SHEET SECTION | ||
| Land and Building | 700 000 | |
| Shares on JSE | 17 050 | |
| Debtors | 180 636 | |
| Provision of bad debts | 20 000 | |
| Bank | 8 000 | |
| Petty Cash | 450 | |
| Ordinary Share Capital | 400 000 | |
| Share Premium | 50 000 | |
| Retained Earnings- 1 October 2015 | 60 391 | |
| Long term loan | 144 000 | |
| Creditors | 103 026 |
Additional information:
1) An annual stock count at 30 September showed that the business had stock worth R15 150.
2) Write off a further R3 500 as bad debts.
3) Adjust the provision of bad debts to R23 500.
4) Profit for the year was R84 193.
5) Income tax was provided for as R52 576. It is a business for tax to be paid on the 1st of October each year.
6) Dividends declared were R5 000.
Required:
Prepare a Statement of Financial Position as at 30 September 2016.
Answers to Above Questions on Accounting
Answer 1: The calculation of cost of sales and gross profit of Stimulus Traders is performed as follows:
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