QUESTION 1 (66 marks)

Computerworld (Pty) Ltd is a wholesaler and distributor of laptops to local stores. The company has a December financial year-end.

The following inventory transactions took place during November 2023. All purchases and sales are of the Proline V1 laptop:

Note 1: Opening inventory and cost per laptop
• There were 115 laptops on hand on 1 November 2023 with a purchase price of R1 255 each, including VAT, before any discounts and additional costs. The cost price of the 115 laptops was paid for within 10 days of delivery and therefore re- ceived a 2% settlement discount (refer to note 2).
• Additional costs are incurred by the company with each laptop purchased for resale These additional costs include:

Note 2: Settlement terms
• The supplier of the laptops offers Computerworld (Pty) Ltd a 2% settlement dis- count if payment is made within 10 days of delivery. The normal credit terms with the supplier are 30 days.
• Computerworld (Pty) Ltd has a payment history of paying the supplier within three days of the laptops being delivered. All purchases made during November 2023 were paid for within 10 days of delivery, except the purchases made on the 15th and 21st of November 2023.
• The purchase made on the 15th of November 2023 is payable on 15th of June 2024. The prevailing interest rate on similar debt is 10% per annum. The purchase made on the 21st of November 2023 was paid for on the 3rd of December 2023.

Note 3: Additional information:
• Value-added Tax (VAT) is applied at a rate of 15%.
• A stock count was conducted on the 30th of November 2023 and revealed the fol- lowing stock items were on hand:
Laptop model Units
Pro-line V1 315
• Computerworld (Pty) Ltd uses the perpetual system to record inventory movements according to the first-in-first-out method.

REQUIRED:

Calculate the revenue generated from the laptops sold during November 2023.(4 marks)

Discuss and calculate in terms of IAS 2 Inventories what the additional cost per laptop will be. Reasons to support your inclusion or exclusion of an amount should be provided.(6 marks)

Calculate the cost price of the laptops sold on the 10th of November 2023.(15 marks)

Calculate the cost price of the laptops sold on the 17th of November 2023.(10 marks)

Prepare the general journal entries to account for all the laptops sold during the month of November 2023. Note: All the calculations performed in 1.1,1.3 and 1.4 will be used in your response.
Journal dates and narrations are not required.(6 marks)

Prepare the general journal entries to account for the purchase of laptops made on the 15th of November 2023. Only general journal entries relating to the month of November 2023 are required.
Journal dates and narrations are not required.(15 marks)

Due to a newer model of the Pro-line laptop being released on the 15th of December 2023, the current Pro-line V1 is being replaced by the V2. The Pro- line V1 can currently be sold, during November 2023, at R1 250 (excluding VAT) per unit with selling costs amounting to R150 (excluding VAT) per unit.

Calculate the closing stock value of laptops to be disclosed in the Statement of Financial Position of Computerworld (Pty) Ltd on the 30th of November 2023. Note: You are not required to prepare the Statement of Financial Position.(10 marks)

Note:
• All amounts should be rounded to the nearest Rand.
• Show all calculations clearly.
• Your answer must comply with International Financial Reporting Standards (IFRS).

QUESTION 2 (14 marks)

Play Palace (Pty) Ltd is a newly incorporated company with a 31 December 2023 financial year end.
• The entity has 150 000 authorised ordinary shares with no par value.
• On the 2nd of February 2023, legal fees, relating to the start-up of the company were paid in cash amounting to R25 000.
• The 2 directors of Play Palace (Pty) Ltd each bought 3 000 ordinary shares at the initial issue price of R8 per share. The share issue took place on the 4th of February 2023. Share issue costs with regard to the initial issue amounted to R1 500.
• On the 1st of May 2023, the directors published a prospectus to the public with an invitation to apply for shares in Play Palace (Pty) Ltd. This invitation offered 60 000 ordinary shares at R10 per share and expired on the 30th of June 2023. An excess of 10 000 shares of the original offer was received by the 30th of June 2023.The full value per share application was received into a trust account which was then transferred to Play Palace (Pty) Ltd on the 4th of July 2023.
• The board of directors then decided to curtail the number of share allotments to the original offer of 60 000 ordinary shares and refunded the surplus cash received. The share allotment and refund occurred on the 5th of July 2023. Share issue costs with regard to the share allotment amounted to R5 500 and were paid on the 5th of July 2023.

REQUIRED:

Prepare the journal entries to account for the share transactions in the records of Play Palace (Pty) Ltd for the financial year ended 31 December 2023.
Dates and narrations are not required.(14 marks)
Note:
• All amounts should be rounded to the nearest Rand.
• Show all calculations clearly.
• Your answer must comply with International Financial Reporting Standards (IFRS).

QUESTION 3 (20 marks)

Cleanex (Pty) Ltd is a household cleaning brand who manufactures and sells a range of products, including soap, dishwashing liquids, handwashing liquids, and fabric sof- teners.

The financial accountant is preparing the statement of cash flows, using the indirect method for the financial year-end 31 December 2023.

An extract from the trial balance is as follows:

The financial accountant has extracted the following information from the notes to the 31 December 2023 annual financial statements:

Cleanex (Pty) Ltd reports interest paid as a cash flow from operating activities.

REQUIRED:

Discuss why the operating activities section in the statement of cash flows is important to the users of the financial statement and provide three examples of operating activities.(4 marks)

Prepare only the operating activities section of the statement of cash flows of Cleanex (Pty) Ltd for the financial year end 31 December 2023, using the indi- rect method in accordance with IAS 7, Statement of Cash Flows.(16 marks)

Note:
• All amounts should be rounded to the nearest Rand.
• Show all calculations clearly.

Answers to Above Questions on Financial Accounting

Answer 1: The revenue generated from the laptops sold during November 2023 is calculated as follows:

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