Question 1

The following extracts were made from the books and records of Sandy Dandy for the year ended 31 December 2022:

1. Cash book summary

2. Extracts from ledger balances

3. Additional information

• Office furniture and equipment is to be depreciated at 10% p.a. (reducing balance method).
• Additions during the year are depreciated at half the annual rate.
• Debts totalling R1 725 are considered to be bad and are to be written off.
• Sandy agreed to provide a bonus of R770 for the bookkeeper.

Required

(a) Income statement for the year ended 31 December 2022.

(b) Balance sheet at 31 December 2022.

Question 2

The following analysis of the cash transactions for the year was gathered from the incomplete records of N. Carroll, a merchant:

Additional information:

Provision must be made for:

1. Depreciation:

10% p.a. on plant and machinery (straight-line) 5% p.a. on furniture and fittings (straight-line)

2. Bad debts provision:

5% p.a. on sundry debtors

Required

(a) Draw up the income statement of N. Carroll for the year ended 31 December 2022.

(b) Prepare the balance sheet of N. Carroll at 31 December 2022. [20]

Question 3

Ms Sade is a trader operating under the name of ‘SA Traders’. She informs you that she consistently adds 33 1 % to the cost of all goods which she sells in order to arrive at selling
prices. She presents you with the following financial statements for the years ended 31 March 2021 and 2022.

• No fixed assets were sold during this year.
• Additional furniture costing R5 000 was purchased 1 April 2021.
• The motor vehicles were purchased on 1 April 2021.

The loan of R100 000 which bears interest at the rate of 5% p.a. payable in arrear was obtained on 1 April 2021.

Required

A cash flow statement for the year ended 31 March 2022. [20]

Question 4

Joytoys Manufacturers had a policy of transferring factory production to the sales department at a profit of 10% on total cost of production of finished goods. The following particulars related to the records of the firm for the period 1 January 2022 to 31 December 2022.

Further information
1. R
Balances 31 December: Raw materials 30 000
Work in process 24 000
Electricity due 600
Direct wages due 960
Finished goods ?

Stock of finished goods had not been taken at 31 December 2022, but the business works on a gross profit mark-up percentage of 50% on turnover. This calculation is based on the price at which manufactured goods are delivered to the sales department by the factory.

2. Depreciation to be provided:
Factory equipment at 10% per annum on cost. Office furniture at 5% per annum on cost.
Motor vehicles at 20% per annum on cost.

Required

Draw up the production cost statement and income statement of the business for the year ended 31 December 2022.

Question 5 [20]

The Swift Company has just completed its operations for September 2005. The company’s accountant resigned two weeks ago, subsequently a very inexperienced clerk has prepared the following income statement of the month’s activities:

INCOME STATEMENT FOR THE MONTH ENDED 30 SEPTEMBER 2022

You have been asked to check the statement and make corrections as needed. You have discovered the following additional information.

i. The Swift Company is a manufacturing firm.

ii. Some 60% of the electricity and water and 75% of the insurance apply to factory operations, the remaining amounts apply to selling and administrative activities.

iii. Balances in the stock accounts at the beginning and end of the month were:

iv. Only 80% of the rent applies to factory operations.

Required

(a) Prepare a schedule for cost of goods manufactured, in good form, for September 2022.

(b) Prepare a corrected income statement for the month.

Answers on Financial Accounting Assignment

Answer 1: The preparation of income statement for the year ended 31 December 2022 for Sandy Dandy is performed as follows:

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