QUESTION ONE [45]
Peter and Pan are partners in Captain Hook Stationers. The list of balances as at 31 December 2022, before additional information was considered, is as follows:
| Description | Amount |
| Office furniture and equipment | 525 000 |
| Accumulated depreciation on office furniture and equipment | 65 000 |
| Inventory | 84 560 |
| Bank | 675 895 |
| Debtors control | 65 875 |
| Allowance for credit losses | 2 675 |
| Long-term loan | 432 500 |
| Creditors control | 45 632 |
| Capital: Peter | 120 000 |
| Capital: Pan | 150 000 |
| Current account: Peter | 4 500 |
| Current account: Pan | 12 000 |
| Drawings: Peter | 35 000 |
| Drawings: Pan | 65 000 |
| Profit for the year | 628 023 |
Additional information:
1. On 1 January 2022 Peter increased his capital to R150 000. The increase was charged to the payables account in error.
2. Peter earns a salary of R8 000 per month while Pan earns R4 500 per month.
The total salaries paid to Pan was incorrectly recorded in the debtors control account. The salaries paid to Peter was correctly accounted.
3. Interest of 15% per year must be provided for on the capital.
4. Interest on current accounts must be provided at 7.5 % per year on the opening balances.
5. Interest of 5% is charged on the drawings.
6. The partners share profits and losses in the ratio of capital contributed at the start of the financial year.
7. Office furniture and equipment depreciates at 10% per year on the straight-line method. Depreciation was not yet considered.
Required:
Prepare the current account of Peter as at 31 December 2022 (15)
Prepare the statement of changes in equity as at 31 December 2022 (30)
QUESTION TWO [35]
Calculate Ltd was incorporated on 31 January 2020 with authorised capital as: 950 000 ordinary shares
440 000 10% preference shares
On 1 February 2020, a motion was passed by the incorporators to take up 200 000 ordinary shares at R1 each and 40 000 10% preference shares at R10 each
On 1 March 2020 an underwriter’s negotiation was entered offering 350 000 ordinary shares at R1 each and 45 000 10% preference shares at R10 each.
On 30 April 2020 applications received were: 285 000 ordinary shares were applied for.
38 000 preference shares were applied for.
Share issue costs of R17 500 were paid on 16 May 2020.
Required:
2. Record the transactions in the general journal of Calculate Ltd. [35]
QUESTION THREE [20]
Motivated is a retailer selling inspirational books. The following information was provided by the bookkeeper for the year ended 28 February 2022:
Statement of comprehensive income of Motivated for the year ended 28 February 2022
| R | |
| Sales income | 122 000 |
| Cost of sales expense | – 43 000 |
| Gross profit | 79 000 |
| Net operating costs | – 44 000 |
| Operating profit | 35 000 |
| Interest expense | – 4 200 |
| Profit before tax | 30 800 |
| Taxation expense | – 12 300 |
| Net profit for year | 18 500 |
Statement of financial position of Motivated as at 28 February 2022
| 2022 | 2021 | |
| Non-current assets: | ||
| Equipment | R 53 000 | R 27 000 |
|
Current assets: |
||
| Inventory | R 4 000 | R 3 800 |
| Bank | R 21 300 | R 12 300 |
| R 25 300 | R 16 100 | |
| Total assets | R 78 300 | R 43 100 |
| Equity: | ||
| Share capital: class A | R 33 000 | R 25 000 |
| Retained earnings | R 22 500 | R 4 000 |
| R 55 500 | R 29 000 | |
| Non-current liabilities: | ||
| Long-term loans | R 15 500 | R 4 000 |
| Current liabilities: | ||
| SARS (income tax) | R 3 000 | R 2 100 |
| Income received in advance | R 2 200 | R 1 600 |
| Trade payables | R 2 100 | R 6 400 |
| R 7 300 | R 10 100 | |
| Total equity and liabilities | R 78 300 | R 43 100 |
Additional information
1. Dividends were not declared during the year ended 28 February 2022.
2. Equipment with a book value of R20 000 was sold during the year.
3. The company raised loans of R14 000 during the year ended 28 February 2022.
4. The operating costs included in the statement of comprehensive income for the year ended 28 February 2022 included the following items:
| Bad debts expense | 2 000 |
| Wages expense | 24 000 |
| Rent expense | 10 000 |
| Depreciation expense | 4 000 |
| Profit on disposal of equipment | 3 000 |
5. 20 000 Class A shares were issued for 50c each during the year and share issue costs of R2 000 were paid in this transaction.
Required:
3. Prepare the cash flow statement of Motivated for the year ended 28 February 2022, using the indirect method. [20]
Answers to Above Questions on Accounting
Answer 1: The current account of Peter as at 31 December 2022 is calculated as follows:
Get completed answers on the questions above on accounting from the best accounting assignment help South Africa experts of Student Life Saviour.
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