FAC1601 EXAM PACK

FAC1601
EXAM PACK
1
FINANCIAL
ACCOUNTING
REPORTING
2
OCTOBER –
NOVEMBER
2017
3
SOLUTION 1: CLOSE CORPORATIONS:
CALCULATION OF PROFIT OR LOSS FOR THE
YEAR, STATEMENT OF CHANGES IN NET
INVESTMENTS OF MEMBERS & STATEMENT OF
FINANCIAL POSITION
(a) BOOMSHAKA CC
CALCULATION OF PROFIT OR LOSS FOR THE YEAR ENDED 28

FEBRUARY 2017
4
(b)
5
(c) BOOMSHAKA CC
STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2017
6
SOLUTION 2: CHANGES IN THE
OWNERSHIP STRUCTURE OF A
PARTNERSHIP – VALUATION ACCOUNT,
EQUIPMENT ACCOUNT & CALCULATION OF
GOODWILL
(a) MEHLÈMAMBA LOANS
GENERAL LEDGER
(b) MEHLÈMAMBA LOANS
GENERAL LEDGER
7
(c) CALCULATION OF GOODWILL OF MEHLÈMAMBA LOANS AS AT 30
SEPTEMBER 2017
SOLUTION 3: STATEMENT OF CASH FLOWS –

CASH FLOWS FROM INVESTING & FINANCING
ACTIVITIES SECTIONS
8
9
SOLUTION 4: COMPANIES – SHARE
TRANSACTIONS & CALCULATION OF
DIVIDENDS
10
11
MAY – JUNE
2017
SECOND
PAPER
12
SOLUTION 1: PATNERSHIPS; STATEMENT OF
PROFIT OR LOSS & OTHER COMPREHENSIVE
INCOME – APPROPRIATION ACCOUNT
MINIVANILLA CONFECTIONERIES
(a) STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME FOR

THE YEAR ENDED 28 FEBRUARY 2017
R
Revenue 651 125
Cost of Sales (520 900)
Opening Inventory 80 500

Purchases (501 000 - 500) 500 500
Insurance on purchases 900
Closing Inventory (61 000)
Gross Profit (520 900 * 20 / 80) 130 225

Other Income 2 000
2 000
Credit losses recovered
132 225
Total Income
(20 875)
Less Expenses
Administrative, Distribution & Other Expenses (16 075)
Salaries & Wages 6 500

Stationery (605 -100) 505
Depreciation [15% * (35 000 – 3 500)] 4 725
Carriage on sales 1 500
Credit Losses [300 + 5% * (53 300 – 300) – 2 105] 845
Rent 2 000
Finance Cost
Interest on long – term loan from Vanilla (12% * 40 000) (4 800)
4 800
Profit for the year
Other comprehensive income
111 350
Total Comprehensive Income
-
13
111 350
(b) APPROPRIATION ACCOUNT FOR THE YEAR ENDED 28 FEBRUARY 2017
R
Opening Balance -
Total Comprehensive Income 111 350
Interest on Capital: Mini (400 000 * 4%) (16 000)
: Vanilla (600 000 * 4%) (24 000)
Interest on Current Accounts: Mini (2 000 * 7%) 140
: Vanilla (5 000 * 7%) (350)
Managerial Salary: Vanilla (6 000)
Salary: Mini (651 125 * 4%) (26 045)
: Vanilla (26 045)
Bonus: Mini (1) ( 1 305)
Share of Profit: Mini (2) (4 698)
: Vanilla (2) (7 047)
Closing Balance -
Calculations
1. Bonus: Mini
Distributable Profit = 111 350 – 16 000 – 24 000 + 140 – 350 – 6 000 – 26 045 –
26 045 = 13 050
Bonus = 13 050 * 10% = 1 305
2. Share of Profit
Profit to be shared = 13 050 – 1 305 = 11 745
Mini = [400 000 / (400 000 + 600 000)] * 11 745 = 4 698
Vanilla = [600 000 / (400 000 + 600 000)] * 11 745 = 7 047
ALTERNATIVELY
GENERAL LEDGER
14
Date Details Amount Date Details Amount
Appropriation Account
R R
2017 2016
February 28 Interest on Capital: Mini 16 000 March 1 Balance b/d -
Interest on Capital: Vanilla 24 000 2017
Interest on Current Account: Vanilla 350 February 28 Total Comprehensive Income 111 350
Managerial Salary: Vanilla 6 000 Interest on Current Account: Mini 140
Salary: Mini 26 045
Salary: Vanilla 26 045
Bonus: Mini 1 305
Share of Profit: Mini 4 698
Share of Profit: Vanilla 7 047
111 490 111 490
SOLUTION 2: CLOSE CORPORATIONS:

CALCULATE THE TOTAL COMPREHENSIVE
INCOME; STATEMENT OF CHANGES IN NET
INVESTMENTS OF MEMBERS
JACOB CC
(a) CALCULATION OF THE TOTAL COMPREHENSIVE INCOME FOR THE YEAR

ENDED 28 FEBRUARY 2017
R
Provisional profit before tax 498 900
Server Rental (21 000 * 2 / 7) (6 000)
Insurance expense prepaid 1 600
Interest on Loan from Isaac [8% * (195 500 – 100 000) + (8% * 100 000 * 2 / 12) (8 973)
Interest on Loan to Rebecca (70 500 * 10% * 2 / 12) 1 175
Dividend Income (30 000 * 0.30) 9 000
Fair value adjustment of shares in Canan Ltd (30 000 * 20 – 450 000) 150 000
Profit before tax 645 702
Income tax expense (180 300 – 45 000 – 36 800) (98 500)
Profit after tax 547 202
Other Comprehensive Income
Revaluation Surplus (900 000 – 749 000) 151 000
15
(b) STATEMENT OF CHANGES IN NET INVESTMENTS FOR THE YEAR ENDED 28
FEBRUARY 2017
Members Retained Revaluation Loans from Loans to Total

Contributions Earnings Surplus Members Members
Balances at 1 March 2016 215 0001 472 000 - 95 5002 - 782 500
Total Comprehensive Income 547 202 151 000 698 202
Additional Loan raised 100 000 100 000
Loan granted to member (70 500) (70 500)
Interim profit distribution (45 000) (45 000)
Interest on loan from Isaac
capitalised 8 973 8 973
Final profit distribution (60 000) 30 0003 (30 000)
Interest on loan to Rebecca
capitalised (1 175) (1 175)
215 000 914 202 151 000 234 473 (71 675) 1 443 000
Non – Current Liability (60%) 140 684
Current Liability (40%) 93 789
Calculations
1 120 000 + 95 000 = 215 000

2 195 500 – 100 000 = 95 500
3 60 000 * 50% = 30 000
16
SOLUTION 3: STATEMENT OF CASH FLOWS:
CASH FLOWS FROM INVESTING AND
FINANCING ACTIVITIES SECTION
MHLA SIFIKA CC
STATEMENT OF CASH FLOWS (EXTRACT) FOR THE YEAR ENDED 30 APRIL

2017
R R
INVESTING ACTIVITIES
Investment in property, plant & equipment to expand
operating capacity
Additions to land & buildings (410 000 – 355 000) (55 000)
Investment in property, plant & equipment to maintain
operating capacity
Replacement of Equipment (1) (14 200)
Sale of vehicle (47 000 + 7 250) 54 250
Net Cash Outflow from Investing Activities (14 950)
FINANCING ACTIVITIES
Repayment of Loan from A. Palmer (45 000 / 3) (15 000)
Repayment of Long Term Loan from BEE Bank (120 000 –
100 000) (20 000)
Net Cash Outflow from Financing (35 000)
Calculations

Equipment at Carrying Amount
R R
2016 2017
May 1 Balance b/d 89 000 April 30 Depreciation 7 200
Bank (missing figure) 14 200 Disposal 2 000
Balance c/d 94 000
103 200 103 200
17
SOLUTION 4: SHORT QUESTIONS
(a) WELLBEING LTD
CALCULATION OF THE TOTAL AMOUNT OF DIVIDENDS DECLARED AND PAID

ON 31 MARCH 2016
R
Ordinary dividend 0.15 * [400 000 + (30% * 1 000 000)] 105 000
Preference dividend [(175 000 * 8%) + (275 000 * 8% * 6 /12)] 25 000
Total Dividend 130 000
(b) ICE COLD (PTY) LTD
𝑷𝒓𝒐𝒇𝒊𝒕 𝒃𝒆𝒇𝒐𝒓𝒆 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕 & 𝒕𝒂𝒙

Return on Assets = ∗ 𝟏𝟎𝟎
𝑻𝒐𝒕𝒂𝒍 𝒂𝒔𝒔𝒆𝒕𝒔
(38 400+11 025)

= (586 000+36 500+11 000+8 200) ∗ 100
= 7.70%
𝑷𝒓𝒐𝒇𝒊𝒕 𝒃𝒆𝒇𝒐𝒓𝒆 𝒕𝒂𝒙

Return on Equity = ∗ 𝟏𝟎𝟎
𝑻𝒐𝒕𝒂𝒍 𝑬𝒒𝒖𝒊𝒕𝒚
38 400
= (586 000+36 500+11 000+8 200−220 500−25 000) ∗ 100
= 9.69%
18
(c) VINTAGE FURNITURE CC
GENERAL LEDGER

Branch Inventory Account
R R
2015
April 1 Balance b/d 3 500 Branch Bank 33 750
Goods sent to branch (56 250 * 70%) 39 375 2016 Branch Debtors 20 250
Branch Adjustment (56 250 * 30%) 16 875 March 31 Branch Adjustment (Deficit) 250
Balance c/d 5 500
59 750 59 750
2016
April 1 Balance b/d 5 500
19
MAY – JUNE
2017
20
SOLUTION 1: PARTNERSHIPS – CALCULATION
OF TOTAL COMPREHENSIVE INCOME FOR THE
YEAR; STATEMENT OF CHANGES IN EQUITY &
STATEMENT OF FINANCIAL POSITION
MC ANIMAL CLINIC
(a) CALCULATION OF TOTAL COMPREHENSIVE INCOME FOR THE YEAR ENDED
29 FEBRUARY 2016
R
Provisional profit before adjustments 346 380
Interest on Loan from US Bank (850 000 * 12%) (102 000)
Commission to Dr Kwenzenjani 27 000
Depreciation: Buildings (450 000 * 5% / 12) (1 875)
Depreciation: Equipment [10% * (385 000 – 90 000) (29 500)
Depreciation: Vehicles [(285 000 – 68 000) * 20% + (68 000 * 20% * 9 / 12)] (53 600)
Loss on sale of vehicle [68 000 – 14 000 – (68 000 * 20% * 9 /12) – 28 000] (15 800)
Profit for the year 170 605
Other Comprehensive Income -
21
(b) STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 29 FEBRUARY
2016
Capitals Current Accounts Appropriation

Dr Madoda Dr Dr Madoda Dr
Kwenzenjani Kwenzenjani
Balances at 1 March 2015 438 000 325 000 (11 700) 8 380 -
Drawings K (5 800 + 27 000) (22 000) (32 800)
Interest on Capitals: M (438 000 * 5%) 21 900
: K (325 000 * 5%) 16 250 (38 150)
Interest on Current: M [(11 700) * 5%] (585)
: K (8 380 * 5%) 419 166
Commission 27 000 (27 000)
Share of Profit: M (105 621 * 3 / 5) 63 373 (105 621)
: K (105 621 * 2 / 5) 42 248
438 000 325 000 50 988 61 497 -
(c) STATEMENT OF FINANCIAL POSITION (EQUITY & LIABILITIES) FOR THE

YEAR ENDED 29 FEBRUARY 2016
EQUITY AND LIABILITIES

EQUITY 875 485
Capitals (438 000 + 325 000) 763 000
Current Accounts (50 988 + 61 497) 112 485
LIABILITIES 1 214 350

CURRENT LIABILITIES 1 214 350
Trade & other payables 262 350

Current portion of long term borrowings (850 000 + 102 000) 952 000
TOTAL EQUITY AND LIABILITIES 2 089 835
22
SOLUTION 2: CLOSE CORPORATIONS;
STATEMENT OF PROFIT OR LOSS & OTHER
COMPREHENSIVE INCOME
TOM – SAM ENTERPRISES CC
STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME FOR

R
Revenue (216 075 – 2 182 + 482) 214 375

Purchases 44 900
Carriage on purchases 899
Gross Profit 168 496

Other Income 2 000
2 000
Interest on Loan to Tom (60 000 * 8% * 5 / 12)
170 496
Total Income
(159 570)
Less Expenses
Salaries [85 000 – (2 500 * 2 * 12) 25 000

Salaries to members (2 500 * 2 * 12) 60 000
Bonus 15 000
Stationery consumed 5 300
Depreciation 31 455
Telephone expenses 4 015
Credit Losses [2 500 + (4 500 – 3 000)] 4 000
Remuneration: accounting officer 10 800
Finance Cost (4 000)

Interest on loan from Tom (5% * 80 000) 4 000

Income Tax Expense ( 7 100)
23
Revaluation Surplus (750 000 – 720 000) 30 000

CASH FLOWS FROM OPERATING ACTIVITIES
SECTION
MULTI ENTERPRISES CC
STATEMENT OF CASH FLOWS (OPERATING ACTIVITIES) FOR THE YEAR ENDED

30 APRIL 2016
R
Adjustments 21 736
Income tax expense 41 136
Interest on long – term loan 12 000
Credit Losses 3 000
Depreciation: Furniture & Equipment 4 800
Fair value adjustment: Listed investments held for trading (21 120)
Dividend Income: Listed Investments (17 280)
Profit on sale of non – current assets: Furniture & Equipment (800)
Profit after Adjustments 135 000
Movements in Working Capital 1 500
Increase in trade & other payables (28 800 – 26 340) 2 460
Increase in trade & other receivables (35 520 – 27 360) (8 160)
Decrease in accrued income 1 440
Decrease in inventory (96 000 – 90 240) 5 760
Cash generated from operations 136 500
Dividend Income: Listed Investments 17 280
Interest on long – term loan (12 000)
Tax paid (41 136 + 1 000) (42 136)
Acquisition of Listed Investments (31 680)
Distribution to members (48 000 + 20 660 – 6 880) (61 780)
Net Cash Inflow from Operating Activities 6 184
24
SOLUTION 4: SHORT QUESTIONS
1. An asset is recognised in the statement of financial position when it is probable that
the future economic benefits thereof will flow to the entity, and when the asset has a
cost or a value that can be measured reliably.
2. Goodwill acquired =
(𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧 𝐨𝐟 𝐧𝐞𝐰 𝐩𝐚𝐫𝐭𝐧𝐞𝐫 𝒎𝒖𝒍𝒕𝒊𝒑𝒍𝒊𝒆𝒅 𝐛𝐲 𝐢𝐧𝐯𝐞𝐫𝐬𝐞 𝐨𝐟 𝐧𝐞𝐰 𝐩𝐚𝐫𝐭𝐧𝐞𝐫`𝐬 𝐬𝐡𝐚𝐫𝐞 𝐢𝐧 𝐭𝐡𝐞 𝐞𝐪𝐮𝐢𝐭𝐲 (𝐧𝐞𝐭 𝐚𝐬𝐬𝐞𝐭𝐬)𝒐𝒇 𝒏𝒆𝒘 𝒑𝒂𝒓𝒕𝒏𝒆𝒓𝒔𝒉𝒊𝒑) −
𝑬𝒒𝒖𝒊𝒕𝒚 𝒐𝒇 𝒏𝒆𝒘 𝒑𝒂𝒓𝒕𝒏𝒆𝒓𝒔𝒉𝒊𝒑
= (210 000 + 90 000) ∗ 5 − 940 000

= R560 000
3. Payment from debtors = 360 000 ∗ 80% ∗ (100 − 10)%

= R259 200
𝑷𝒓𝒐𝒇𝒊𝒕 𝒃𝒆𝒇𝒐𝒓𝒆 𝒕𝒂𝒙
4. Return on Equity = ∗ 𝟏𝟎𝟎
𝑻𝒐𝒕𝒂𝒍 𝑬𝒒𝒖𝒊𝒕𝒚
320 000−112 000−83 000−14 000

= ∗ 100
505 800
= 21.95%
20
5. Branch Adjustment = 20 000 ∗ 120
= R3 333.33
25
OCTOBER –
NOVEMBER 2016
26
SOLUTION 1: PARTNERSHIPS – STATEMENT OF
PROFIT OR LOSS & OTHER COMPREHENSIVE
INCOME; STATEMENT OF CHANGES IN EQUITY
(a) VB CONSULTING

R
Incomes
Services rendered to clients 2 538 000
Expenses (1 367 750)
Administration, Distribution & Other Expenses 1 319 000
Advertising 62 000
Bank charges 4 000
Salaries & Wages (1 690 000 – 640 000 – 50 000) 1 000 000
Insurance (42 000 * 10 / 12) 35 000
Stationery (50 000 – 6 500) 43 500
Depreciation [(300 000 * 10% * 10 / 12) + (600 000 * 20% * 10 / 125 000
12)] 13 500
Credit Losses (10 000 + 3 500) 36 000
Entertainment allowance (45 000 * 8 / 10)
Finance Costs 48 750
Interest on Long term loan from Vuyo (250 000 * 15% * 6 /12) 18 750
Interest on mortgage (600 000 * 6%* 10 / 12) 30 000
Profit for the year 1 170 250
Other Comprehensive Income -
Total Comprehensive Income 1 170 250
27
(b) VB CONSULTING
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 29 FEBRUARY

2016
Capitals Current Accounts Appropriati Total

on
Vuyo Bafo Vuyo Bafo
R R R R R R
Balances at 1 March 2015 - - - - -
Additional Capital Contributions 300 000 300 000 600 000
Total Comprehensive Income 1 170 250 1 170 250
Drawings (1) (336 500) (321 000) (657 500)
Interest on Capitals (300 000 * 10% *
10 / 12) 25 000 25 000 (50 000)
Partnership Salaries (40 000 * 12) 480 000 480 000 (960 000)
Share of Profit (160 250 / 2) 80 125 80 125 (160 250)
300 000 300 000 248 625 264 125 - 1 112 750
Calculations
1. Drawings
Vuyo Bafana
R R
Drawings 2 500 1 000
Salaries paid (640 000 / 2) 320 000 320 000
Entertainment allowance [(50 000 – 45 000) + (45 000 * 2 / 10)] 14 000 -
Drawings 336 500 321 000
NB THE ASSUMPTION MADE WAS THAT INTEREST WAS PAID ON THE

CAPITAL ALTHOUGH IT WAS ONLY CONTRIBUTED AT THE BEGINNING OF
THE YEAR.
28
MAY – JUNE
2016
29
SOLUTION 1: STATEMENT OF
COMPREHENSIVE INCOME
SILVERLINE TRADERS

THE YEAR ENDED 31 AUGUST 2015
R
Revenue (536 820 – 2 000) 534 820
Purchases (302 530 – 2 400) 300 130

Delivery expenses on purchases 5 280

Other Income 3 575
3 000
Credit losses recovered
575
Profit on sale of machinery (1)
261 065
Total Income
(222 580)
Less Expenses
Salaries & Wages (123 600 – 36 000 – 38 000) 49 600

General expenses 38 720
Depreciation (2) 47 250
Property rates 17 010
Water & Electricity (41 160 – 10 400) 30 760
Advertising (10 400 * 12 / 13) 9 600

Interest on long – term loan (12% * 108 000 * 6 / 12) 6 480
Profit for the year

38 485
-
38 485
30
CALCULATIONS
Calculation 1: Profit on Sale of Machinery

R
Cost of equipment sold: 15 000
Accumulated Depreciation of machinery sold at start of year: (14 000)
Depreciation for the year 15% * (15 000 – 14 000) * 6 / 12 ( 75)
Carrying amount on disposal: 925
Trade in value on disposal 1 500
Carrying amount on disposal (925)
Profit on disposal 575
Calculation 2: Depreciation
Vehicles (20% * 144 000) 28 800
Machinery: Existing old 15% * (145 000 - 25 000) - (24 000 - 14 000) 16 500
Existing new machinery: (25 000 * 15% * 6 / 12) 1 875
Disposed Machinery: 75
Total 47 250
NOTES
1. Settlement Discount Granted
This refers to discounts granted to customers for prompt payment as per agreed
credit terms. These are supposed to be deducted from revenue because they reduce
the amount recoverable from the initial sales.
2. Settlement Discount Received

This refers to discounts granted to the business by its suppliers for prompt payment.
This reduces the amount payable on the initial purchases; as a result, these should be
deducted from purchases.
31
3. Inventory
 Before preparation of any part of the Statement of Profit or Loss and Other
Comprehensive Income, the opening inventory will be the one shown in the trial
balance and the closing inventory will be on the adjustments / additional
information.
 After the preparation of the Statement of Profit or Loss and other
Comprehensive Income, the closing inventory will now be the one appearing in
the trial balance.
4. Other Income
This includes the day to day income of the business from minor activities other than
revenue (the income from the main activities of main business of the entity). This
includes rent receivable, dividends receivable, commission earned, interest earned,
credit losses recovered, profit on sale of non-current assets e.t.c.
Credit losses recovered: this refers to customers who have previously been written
off as irrecoverable who have now turned up and paid their debts. As they had been
deducted as expenses (credit losses) when they were written off, they are now
reversed by being recorded under other income.
5. Profit on sale of Non – Current Assets

When an asset is sold or disposed at a value that is greater than the carrying amount of
the asset, there is a profit on disposal, which is recorded under other income.
6. Loss on Sale of Non- Current Assets

When an asset is sold or disposed at a value that is lower than the carrying amount,
there is a loss on the disposal, which is then recoded under administrative and other
expenses.
7. Depreciation
 Depreciation is calculated on a month by month or proportional basis unless
told otherwise. Non-current assets existing from beginning up to end of year
should have a full year’s depreciation charged on them.
 Non – current assets disposed of during the year should only be depreciated
up to the date of disposal.
 Non – current assets bought during the year should have depreciation charged
against them from date of purchase.
32
8. Accruals and Prepayments.
 Financial Statements are always prepared on an accrual basis of accounting
(Matching Concept). All accruals should be added when preparing the profit
statements as they belong to the current period although not yet settled.
Accrued expenses will then be recorded under current liabilities as they are
normally due within twelve months whilst accrued incomes are current assets
as they also fall due within twelve months.
 Prepayments should be subtracted because although they have been paid, they
do not belong to this period, they belong to future periods. Prepaid income will
only become income of the business in the next financial period whilst prepaid
expenses become our expenses in the next financial period.
9. Expenditure
(a)Administrative and Other Expenses
Expenditure refers to the day to day operating expenditure such as rent, salaries
and wages, stationery, water and electricity, insurance, credit losses,
depreciation e.t.c.
All expenditure is classified under administrative and other expenses except

finance charges are classified separately. (b)Finance Charges
This refers to interest on all loans for the period, including that on the
partners loans, interests on bank loans and interest on other long term and
short term borrowings for the current financial period.
(10) Other Comprehensive Income

Other comprehensive income is those revenues, expenses, gains, and losses under
both Generally Accepted Accounting Principles and International Financial Reporting
Standards that are excluded from net income on the income statement. This means
that they are instead listed after net income on the income statement.
Revenues, expenses, gains and losses appear in other comprehensive income

when they have not yet been realized. Something has been realized when the
underlying transaction has been completed, such as when an investment is sold.
Thus, if your company has invested in bonds and the value of those bonds changes,
you recognize the difference as a gain or loss in other comprehensive income. Once
you sell the bonds, you have then realized the gain or loss associated with the
bonds, and can then shift the gain or loss out of other comprehensive income and
into a line item higher in the income statement, so that it is a part of net income.
Examples of items that may be classified in other comprehensive income are:

33
Unrealized holding gains or losses on investments that are classified as available for
sale;
Foreign currency translation gains or losses;
Pension plan gains or losses;
Pension prior service costs or credits;
It is acceptable to either report components of other comprehensive income net of

related tax effects, or before related tax effects with a single aggregate income tax
expense or benefit shown that relates to all of the other comprehensive income items.
Other comprehensive income is designed to give the reader of a company's financial

statements a more comprehensive view of the financial status of the entity, though in
practice it is possible that it introduces too much complexity to the income statement.
Total comprehensive income is the combination of profit or loss and other
comprehensive income.
This refers to income earned outside the ordinary day to day operating activities of
the business. They are incomes earned from extraordinary items such as profit from
disposal of an arm of the business that has been closed. This happen once in a long
time.
(11) Expenditure previously taken as Drawings

If a partner takes out money for personal use and later uses the money to pay business
expenses, these amounts should be deducted from drawings and added to expenses.
(12) Expenditure incurred on partners

Expenditure paid to partners for their services to the business or performance such
as salaries, bonus, commission etc, should be subtracted on the appropriation
section in the statement of changes in Equity.
Expenditure related to the business activities incurred on the partners is included

with other administrative expenses e.g. training and education of partners. Interest
on loans from partners is included under the finance charges.
34
SOLUTION 2: PARTNERSHIPS – LIQUIDATION
OF A PARTNERSHIP
BMW ENTERTAINMENT
GENERAL LEDGER-SUMMARISED IN COLUMNAR FORM
DETAILS BANK ASSETS LIABILITIE CAPITAL CAPITAL CAPITAL

S BOB MARLEY WAILER
Opening Balances (a) 15 000 367 0001 (80 000) (120 000) (106 000) (76 000)
Payment of Creditors (15 000) 15 000
8 October 2015 Insurance

Policy (b) 25 000 ( 12 500) ( 7 500) (5 000)
8 October 2015 Payment
of Creditors (25 000) 25 000
Fees received from clients

(105 000 * 80% * 90%) (c) 75 600 (84 000) 4 200 2 520 1 680
Payment of creditors (40 000) 40 000
35 600 283 000 - (128 300) (110 980) (79 320)
st
1 interim payment (35 600) - 18 160 17 440
(see below) - 283 000 - (128 300) (92 820) (61 880)
12 October 2011 Sale of
Furniture and Equipment
130 000 (130 000)
2nd Interim Payment
(see below)
(130 000) 51 800 46 920 31 280
- 153 000 - (76 500) (45 900) (30 600)
1
202 000 + 60 000 + 105 000 = 367 000
35
(a) CALCULATION OF OPENING CAPITALS
CAPITAL: BOB
Goodwill (20 000 * 5 / 10) 10 000 Balance b/d 130 000

Balance c/d 120 000
130 000 130 000
CAPITAL: MARLEY
Goodwill (20 000 * 3 / 10) 6 000 Balance b/d 100 000

Balance c/d 106 000 Loan 12 000
112 000 112 000
CAPITAL: WAILER
Goodwill (20 000 * 2 /10) 4 000 Balance b/d 80 000

Balance c/d 76 000
80 000 80 000
(b) Share of insurance policy

Bob = 25 000 * 5 / 10 = 12 500
Marley = 25 000 * 3 / 10 = 7 500
Wailer = 25 000 * 2 / 10 = 5 000
(c) Share of discount on debtors = 105 000 * 10 % * 80% = 8 400

Bob = 8 400 * 5 / 10 = 4 200
Marley = 8 400 * 3 / 10 = 2 520
Wailer = 8 400 * 2 / 10 = 1 680
36
INTERIM CASH REPAYMENT (LOSS ABSORPTION-CAPACITY METHOD)
1ST INTERIM PAYMENT
DETAILS BANK ASSETS CAPITAL CAPITAL CAPITAL

BOB MARLEY WAILER
Balances 35 600 283 000 (128 300) (110 980) (79 320)
Assets1 (283 000) 141 500 84 900 56 600
35 600 - 13 200 (26 080) (22 720)

Bob`s capital deficit2 (13 200) 7 920 5 280
1st Interim Payment
(35 600) - (18 160) ( 17 440)
1 Assets
Bob = 283 000 * 5 / 10 = 141 500
Marley = 283 000 * 3 / 10 = 84 900
Wailer = 283 000 * 2 / 10 = 56 600

2 Assets
Marley = 13 200 * 3 / 5 = 7 920
Wailer = 13 200 * 2 / 5 = 5 280
2nd INTERIM PAYMENT
DETAILS BANK ASSETS CAPITAL CAPITAL CAPITAL

BOB MARLEY WAILER
Balances 130 000 153 000 (128 300) (92 820) (61 880)
Assets1 (153 000) 76 500 45 900 30 600
2nd Interim Payment 130 000 - (51 800) (46 920) (31 280)
1 Bob = 153 000 * 5 / 10 = 96 500
Morgan = 153 000 * 3 / 10 = 57 900
Arthur = 153 000 * 2 / 10 = 38 600

37
SOLUTION 3: CLOSE CORPORATIONS –
CALCULATION OF RETAINED EARNINGS –
GARDEN OF EDEN CC
CALCULATION OF RETAINED EARNINGS AS AT 29 FEBRUARY 2016
R
Provisional Profit before tax 498 900
Credit losses [3000 + (4 700 – 5 000)] (2 700)
Interest on loan to Eve (70 500 * 10% * 2 / 12) 1 175
Income tax expense (126 500)
Interest on loan from Adam (93 800 * 8%) (7 504)
Investment income: Dividends receivable (50 000 * 0.20) 10 000
Gain on fair valuation of investments through profit or loss 50 000 * (5 – 50 000
4)
Retained profit – 1 March 2015 472 000
Distribution to members (42 000 + 44 800) (86 800)
Retained Earnings – 31 March 2016 808 571
3.1 GARDEN OF EDEN CC
STATEMENT OF FINANCIAL POSITION AS AT 29 FEBRUARY 2016
R
ASSETS
NON – CURRENT ASSETS 938 000
Property, Plant & Equipment (747 000 + 120 000 – 24 000) 843 000
Financial Assets 95 000
CURRENT ASSETS 513 335

Inventories 99 312
Trade & other receivables (35 600 – 1 500 – 3 000 – 4 700 +
10 000) 36 400
Prepaid expenses 5 048
Financial assets [(70 500 + 1 175) + (50 000 * 5)] 321 675
Cash & cash equivalents (48 100 + 2 800) 50 900
38
TOTAL ASSETS 1 451 335

EQUITY 1 023 571
Members Contributions (120 000 + 95 000) 215 000
Retained Earnings 808 571
LIABILITIES 427 764

NON – CURRENT LIABILITIES 348 200
Long – term borrowings [232 000 + 93 800 + (44 800 * 50%)] 348 200
CURRENT LIABILITIES 79 564

Trade & other payables [25 100 + (126 500 – 116 600) + 7
504 + (44 800 * 50%) 64 904
Income received in advance 14 660
NOTE: AN ASSUMPTION WAS MADE ON THE INVESTMENTS. THE QUESTION

DOES NOT STATE WHETHER THE INVESTMENTS ARE FOR SPECULATION
(INVESTMENTS THROUGH PROFIT OR LOSS) OR WHETHER THEY ARE LONG
TERM INVESTMENTS (INVESTMENTS THROUGH OTHER COMPREHENSIVE
INCOME). I HAVE ASSUMED THAT LEBANON (PTY) LTD IS THROUGH OTHER
COMPREHENSIVE INCOME (AS SUCH A NON – CURRENT ASSET) SINCE
THIS INVESTMENT CANNOT BE EASILY TRADEABLE.
39
SOLUTION 4: CLOSE CORPORATIONS -
STATEMENT OF CASH FLOWS
GRAND SLAM CC
STATEMENT OF CASH FLOWS (CASH FLOWS FROM OPERATING ACTIVITIES)

FOR THE YEAR ENDED 30 JUNE 2015
R
Cash received from customers (1) 600 924
Cash paid to suppliers and employees (2) (269 414)
Interest paid (8 500)
Income tax paid (136 816 + 27 200 – 40 800) (123 216)
Loans to members repaid (49 500 – 35 000) 14 500
Distribution paid to members (73 400 – 51 000) (22 400)
Dividends received 10 200
Acquisition of Financial assets at fair value through profit or loss:
Held for trading (60 000)
Calculations
1. Cash Received from customers
R
Revenue 599 760
Debtors` Control – 2014 62 500
2015 (63 136)
Credit Losses [5700 – (3 700 – 3 000)] (5 000)
Cash Received from debtors 594 124
Rental Income (13 600 – 6 800) 6 800
Cash received from customers 600 924
NOTE: AN ASSUMPTION WAS MADE ON THE INVESTMENTS. THE QUESTION

DOES NOT STATE WHETHER THE FIXED DEPOSIT IS A DAY TO DAY
INVESTMENT OR A LONG TERM INVESTMENT. I HAVE ASSUMED THAT THE
INVESTMENT IN MIDRAND LTD IS A DAY TO DAY INVESTMENT (AS SUCH A
PART OF OPERATING ACTIVITIES) OTHERWISE THEY CAN BE CLASSIFIED
UNDER INVESTING ACTIVITIES.
40
2. Cash paid to suppliers & employees
R
Cost of Sales 280 500
Inventory – 2014 (20 320)
2015 34 260
Creditors control – 2014 45 520
2015 (90 080)
Cash paid to creditors (trade) 249 880
Water & Electricity (34 334 – 10 400 – 4 400) 19 534
Cash paid to suppliers & employees 269 414
 Cash generated from operations represents the cash that has been generated from
the day to day operating activities of the business such as inflows from clients,
outflows to suppliers and employees, interests received and interests paid, dividends
received and dividends paid and tax paid.
 Cash flows from investing activities represent inflows and outflows from the buying
and selling of non-current assets and investments.
 Cash flow from financing represents cash inflows and outflows from equity and loans.
SOLUTION 5: MULTIPLE CHOICE QUESTIONS
1. A
The Conceptual Framework is not an IFRS (International Financial Reporting
Standard) and hence defines standards for any particular measurement or disclosure
issue.
2. B
Chris = 2 / 5 + (1 / 2 * 1 / 2 * 1 / 5) = 9 / 20
Brown = 2 / 5 + (1 / 2 * 1 / 2 * 1 / 5) = 9 / 20
Candice = 1 / 2 * 1 / 5 = 1 / 10 = 2 / 20
3. B
Ordinary dividend = 180 000 * R0.25 =R45 000
Preference dividend = R200 000 * 10% = R20 000
Total dividend = R45 000 + R20 000 = R65 000
41
4. A
The return on equity is used to measure how profitable the investment of capital is
for the owners of the entity.
The financial leverage ratio and financial leverage effect are measures of the extent
to which an entity benefits from of the use of debt in contrast to equity.
Usually the reasonably and acceptably longer the trade payables period, the better
for the entity.
5. A
Where inventory to the branch is invoiced at cost price, the gross profit of the branch
must be recorded on the debit side of the branch inventory account.
Where inventory to the branch is invoiced at cost price, a mark down of inventory
below the cost price will not be recorded.
Where inventory to the branch is invoiced at selling price, petty cash stolen at the
branch will not affect the branch inventory account.
42
OCTOBER –
NOVEMBER 2015
43
FINANCIAL POSITION
TLHOGS TRADERS
STATEMENT OF FINANCIAL POSITION (EQUITY & LIABILITIES) AS AT 30

JUNE 2015

EQUITY 262 425
Capitals (75 000 + 75 000) 150 000
Current Accounts (54 358 + 35 567) 89 925
Other components of equity 22 500
LIABILITIES 123 250

Long – term borrowings [(75 000 * 9 / 10) + 20 000] 87 500

Trade & other payables [(15 000 + (20 000 * 15% * 2 / 12)] 15 500
Current Portion of long term borrowings (75 000 / 10) 7 500
Other Financial liabilities (6 750 +6 000) 12 750
TOTAL EQUITY AND LIABILITIES 385 675
44
Calculations
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015
Capitals Current Accounts Asset Appropriation

Replacement
Reserve
Moshe Mary Moshe Mary
R R R R R R
Balances at 1 July 2014 75 000 75 000 5 550 (4 350) 22 500 -
Total Comprehensive
Income 223 1251
Drawings (2) (63 250) (71 150)
Interest on Capital (3) 7 500 7 500 (15 000)
Interest on Current
accounts (4) 555 (435) (120)
Partnership Salaries 35 000 35 000 (70 000)
Share of Profit 69 003 69 002 (138 005)
Balances at 30 June
2015 75 000 75 000 54 358 35 567 22 500 -
1 Total Comprehensive Income = 168 625 + (27 500 * 2) – (20 000 * 15% * 2 / 12)
= 223 125
2 Drawings
Moshe = 35 750 + 27 500 = 63 250
Mary = 43 650 + 27 500 = 71 150
3 Interest on Capital
Moshe = 75 000 * 10% = 7 500
Mary = 75 000 * 10% = 7 500
4 Interest on Current Accounts

Moshe = 5 550 * 10% = 555
Mary = (4 350) * 10% = (435)
45
SOLUTION 2: CLOSE CORPORATIONS – STATEMENT OF PROFIT OR
LOSS & OTHER COMPREHENSIVE INCOME
1.1 SANTAMARIA CC
THE YEAR ENDED 30 SEPTEMBER 2015
R
Revenue (1 080 000 – 38 000) 1 042 000

Purchases (398 000 – 8 300) 389 700

Other Income 10 900
10 900
Rental Income
737 200
Total Income
(593 400)
Less Expenses
Administrative, Distribution & Other Expenses 549 800
Delivery expenses 9 840

Salaries to members (10 000 * 12 * 2) 240 000
Insurance (7 800 - 600) 7 200
Depreciation 8 640
Credit losses [ 6 000 + (7 000 – 4 000)] 9 000
Salaries & Wages (472 820 -240 000) 232 820
Stationery Consumed 6 600
Water & Electricity 14 300
Advertising 8 600
Finance Cost 43 600

Interest on Loan from member (10% * 100 000) 10 000
Interest on long – term loan (15% * 224 000) 33 600
46
Other comprehensive income -

SECTION (DIRECT METHOD)
SUPER BOWL CC

28 FEBRUARY 2015
R
Interest paid (4 996 -1 249) (3 747)
Income tax paid (19 791 + 4 600 – 5027) (19 364)
Distribution paid to members (22 000 + 1 400 – 4 400) (19 000)
Dividends received 11 100
47
Calculations
R
Revenue 462 500
2015 (320 000)
Credit Losses (3 000 – 1 000) (2 000)
Cash Received from customers 438 500
R
Administrative expenses 40 000
Rental expense (14 560 – 2 800) 11 760
Water & Electricity (9 400 – 1 300 + 3 700) 11 800
Salaries & Wages 190 000

TRANSACTIONS
(a) Price of shares issued to incorporators of the company = R20 000 / 10 000 shares
= R2/share
Price of shares issued to the general public = R2 + 20%

= R2.40/share
Total value of shares issued to the public = 6000 * 100 / 4

= R150 000
Number of shares issued to the public = R150 000 / R2.40

= 62 500 shares
48
(b) BOIMA LTD
GENERAL JOURNAL
Date Details Debit Credit

R R
2015
February 1 Underwriter`s commission 6 000
Doomsday Bank 6 000
4% underwriter` commission due on R150
000 in terms of the underwriting agreement.
2015
May 28 Bank [150 000 – (36 000 + 6 000) 108 000
Application & Allotment: Ordinary Shares 108 000
2015
May 28 Application & Allotment: Ordinary Shares 108 000
Doomsday Bank (36 000 + 6 000) 42 000
Share Capital: Ordinary Shares 150 000
Allotment of 62 500 ordinary shares
2015
June 1 Bank 36 000
Doomsday Bank 36 000
Receipt of final settlement for issued shares
from Doomsday Bank
2015
June 1 Retained Earnings 136 800
Capitalisation issue of 3 for every 5 ordinary
shares held
49
MAY – JUNE
2015
50
SOLUTION 1: PARTNERSHIP – STATEMENT OF
CHANGES IN EQUITY
(a) LUKLAY TRADERS
CALCULATION OF THE PROFIT FOR THE YEAR ENDED 30 APRIL 2015
R
Provisional loss for the year (363 350)
Salaries to partners (40 000 + 60 000) 100 000
Prepaid rent (30 000 * 4 / 12) 10 000
Depreciation (22 000)
Loss for the year (275 350)
(b) STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 APRIL 2015
Capitals Current Accounts Appropria Total

tion
Luk Lay Luk Lay
R R R R R R
Balances at 1 May 2014 (1) 350 000 380 000 (47 070) (33 780) - 716 710
Additional Capital
Contribution 50 000 40 000 90 000
Total Comprehensive Loss (275 350) (275 350)
Drawings (2) (84 520) (98 500) (183 020)
Interest on Current accounts
(4) (3 766) 1 689 2 077
Share of Loss (283 512) (283 512) 567 023
Balances at 30 June 2015
400 000 420 000 (293 451) (178 210) - 348 340
1 Balances at 1 May 2014

Luk = 400 000 – 50 000 = 350 000
Lay = 420 000 – 40 000 = 380 000
2 Drawings
Luk = 44 520 + 40 000 = 84 520
51
Lay = 38 500 + 60 000 = 98 500
3 Interest on Capital
Luk = (10% * 350 000) + (50 000 * 10% * 1 / 12) = 35 417
Lay = (10% * 380 000) + (40 000 * 10% * 1 / 12) = 38 333
4 Interest on Current Accounts

Luk = (47 070) * 8% = (3 766)
Lay = 33 780 * 5% = 1 689
SOLUTION 2: THE LIQUIDATION OF A

PARTNERSHIP
T & D TOYS
GENERAL LEDGER SUMMARISED IN COLUMNAR FORMAT
Bank Assets Creditor Capitals

s
Tom Dick
R R R R R
Balances opening (1) 10 000 713 800 (53 800) (465 000) (205 000)
2 March 2015 Sale of Furniture &
Equipment (2) 18 000 (22 400) 2 200 2 200
10 March 2015 Furniture &
Equipment taken over (30 600) 30 600
10 March 2015 Sale of inventory (3) 25 000 (35 000) 5 000 5 000
10 March 2015 - Payment of
creditors (53 800 – 12%) (4) (47 344) 53 800 (3 228) (3 228)
10 March 2015 - 1st Interim
Repayment (5) (5 656) 5 656
Calculations
1. Opening Balances
Assets = 603 800 + 150 000 – 75 000 + 35 000 = 713 800
52
Date Details Folio Amount Date Details Folio Amount
R R
Capital: Tom Account
2015 2015
March Goodwill (20 000/ 2) GJ 10 000 March Balance b/d 350 000
1 Balance c/d 465 000 1 Current Account GJ 125 000
475 000 475 000

R R
Capital: Dick Account
2015 2015
March Current Account GJ 80 000 March Balance b/d 295 000
1 Goodwill (20 000/ 2) GJ 10 000 1
Balance c/d 205 000
295 000 295 000
2. Loss on sale of furniture & Equipment = (22 400 – 18 000) / 2 = 2 200
3. Loss on sale of inventory = (35 000 – 25 000) / 2 = 5 000
4. Settlement discount received on creditors = (53 800 * 12% / 2 = 3 228
5. 1st Interim Repayment
Bank Assets Capitals

Tom Dick
R R R R
Balances before repayment 5 656 625 800 (430 428) (201 028)
Assets (625 800 / 2) (625 800) 312 900 312 900
Capital: Dick 111 872 (111 872)
5 656 5 656
NOTE: THE CALCULATION OF THE AMOUNT PAYABLE TO PARTNERS IS NOT

REQUIRED
53
(a) HLONG`S CONFECTIONERY CC
CALCULATION OF RETAINED EARNINGS AS AT 30 SEPTEMBER 2014
R
Provisional Profit before tax 794 600
Credit losses recovered 1 935
Increase in allowance for credit losses (1 300)
Interest on loan [(110 000 * 8%) + (164 300 – 110 000) * 8% * 5 / (10 610)
12)]
Retained loss – 1 October 2013 (216 000)
Distribution to members (42 000 + 33 220) (75 220)
Retained Earnings – 30 September 2014 (263 305)
54
(b) HLONG`S CONFECTIONERY CC
STATEMENT OF FINANCIAL POSITION (EQUITY & LIABILITIES) AS AT 30

SEPTEMBER 2014

EQUITY 478 305
Members Contribution 215 000
Retained Earnings (a) 263 305
LIABILITIES 123 250

Long – term borrowings [(164 300 + 10 610 + (332 000 * 9 /

10) + (33 220* 50%)] 490 320

Trade & other payables [(22 300 – 1 600) + (230 100 – 221
200) + (33 220 * 50%)] 46 210
Income received in advance 14 600
Current Portion of long term borrowings (332 000 / 10) 33 200
Other Financial liabilities 58 200
55
(c) HLONG`S CONFECTIONERY CC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30

SEPTEMBER 2014
LOANS TO MEMBERS
R
Balance at 1 October 2013 110 000
Advances during year (164 300 – 110 000) 54 300
Interest Capitalised 10 610
Distribution to member transferred to loan (33 220 * 50%) 16 610
Repayments during the year -
Balance at 30 September 2014 191 520
Current portion -
Non – current portion 191 520
56
CLOSE CORPORATIONS
EZOMOYA CC
STATEMENT OF CASH FLOWS (INVESTING & FINANCING ACTIVITIES) FOR

R R
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property, plant & equipment to expand operating
capacity
Acquisition of building (644 700 - 436 000 – 73 200) (135 500)
Investment to maintain operating capacity
Replacement of damaged vehicle (404 000 – 360 040 + 111 810) (155 770)
Purchase of machinery (1 537 770 – 1 227 950 + 134 000) (443 820)
Proceeds from the sale of machinery [134 000 – 32 160 – (134 000
* 12% * 7 / 12) + 10 000] 102 460
Proceeds from sale of vehicle (111 810 – 91 028) 20 782
Net Cash Outflow from Investing Activities (611 848)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from members contributions (150 000 – 95 000 – 32 300) 22 700
Proceeds from loans from members (152 400 -89 000) 63 400
Repayments of long - term borrowings (83 080 – 58 640) (24 440)
Net Cash inflow from Financing 61 660
NB: The specialised software can be deducted from the acquisition of

machinery if it is assumed that the specialized software is capitalized to
machinery as it was contributed by a member rather than purchased. It is a
non – cash flow item.
57
OCTOBER –
NOVEMBER 2014
SOLUTION 1: PARTNERSHIP – STATEMENT

OF PROFIT OR LOSS & OTHER
58
COMPREHENSIVE INCOME – CURRENT
ACCOUNT
EXTENSA PANEL BEATERS
(a) STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 AUGUST 2014
R
INCOMES 525 030
Revenue 514 980
Profit on sale of non – current assets (c1) 1 000
Credit losses recovered 6 000
Interest income (c2) 3 050
EXPENSES
Administration, Distribution & Other Costs
(588 610)
Salaries and Wages
Depreciation (c3) 247 200
General Expenses [R141 340 – (R66 150 (C3) 66 150
– R2 250)] 77 440
Water and Electricity (R82 320 – R20
800) 61 520
Cleaning Expenses 15 000
Telephone Expenses 46 320
Property Rates 33 820
Insurance 1200
Advertising (R20 800 * 12/13) 19 200
Credit Losses [R19 360 + (R6 400 – R5
000) 20 760
Finance Costs (18 240)

Interest on long – term loan (c4) 18 240
PROFIT FOR THE YEAR (81 820)

OTHER COMPREHENSIVE INCOME -
TOTAL COMPREHENSIVE INCOME (81 820)
59
CALCULATIONS
C1: Profit on sale of non – current assets
R
Trade – in value 3 000
Less Carrying Amount (2 000)
Cost 30 000
Less Accumulated Depreciation (R25 750 + R2 250) (28 000)
Profit on sale of non – current assets 1 000
C2: INTEREST INCOME
R
Interest received on current account 2 610
Interest received on Fixed Deposit (R44 000 * 6% * 2/12) 440
Total interest income 3 050
C3: Depreciation
R
Vehicles (b) 26 400
Machinery and Equipment (a) 39 750
Total Depreciation 66 150
60
(a)
Accumulated Depreciation: Machinery & Equipment
Account
2014 R 2013 R
Feb 28 Disposals GJ 28 000 Sept 1 Balance b/d 48 000
Aug 31 Balance c/d 59 750 2014
Aug 31 Depreciation
(missing
figure) GJ 39 750
87 750 87 750
Sept 1 Balance b/d 59 750
(b)
Accumulated Depreciation: Vehicles Account
2014 R 2013 R
Aug 31 Balance c/d 50 400 Sept 1 Balance b/d 24 000
2014
Aug 31 Depreciation
(missing
figure) GJ 26 400
50 400 50 400
Sept 1 Balance b/d 50 400
C4: Interest on long – term loan
[(R240 000 * 8% * 6/12) + (R216 000 * 8% * 6/12)]

= R18 240
61
(b)
Current Account: Etienne
Bank CPJ 72 000 Balance (R28 000 + R72
Share of Loss (C1) GJ 155 128 000) b/d 100 000
Balance c/d 67 872 Interest on Current a/c
(R100 000 * 15%) 15 000
Salary (R10 000 * 12) 120 000
Bonus (R120 000 * 50%) 60 000
295 000 295 000

Balance 67 872
C1: Statement of Changes in Equity (extract) for the year ended 31 August2014
Current Accounts Appropriation

Etienne Zane
R R R
Total Comprehensive Loss (81 820)
Interest on Current a/c
Etienne [(R28 000 +
R72 000) * 15%] 15 000 (15 000)
Zane [(R136 000) + 76
000) * 15%] (9 000) 9 000
Partnership salary (R10
000 * 12) 120 000 120 000 (240 000)
Bonus(50% * 120 000) 60 000 (60 000)
Balance of Losses
(387 820)
Etienne`s share of Loss = R387 820 * 2/5

= R155 128
62
SOLUTION 2: CLOSE CORPORATION – NOTE
TO PROPERTY, PLANT & EQUIPMENT &
STATEMENT OF CHANGES IN NET
INVESTMENT OF MEMBERS
(a) FAST LINE CC
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31

DECEMBER 2013
Aircrafts Vehicles Furniture Total

&
Equipment
R R R R
Carrying amount at 1 2 800 000 1 560 000 39 375 4 399 375
January 2013
Cost 3 500 000 1 800 000 45 000 5 345 000
Accumulated
Depreciation (700 000) (240 000) (5 625) (945 625)
Additions
1 550 000 - - 1 550 000
Depreciation (654 167)1 (360 000)2 (5 906)3 (1 020 073)
Disposal (1 225 000)4
Carrying amount at 31 - - (1 225 000)
December 2013 Cost 2 470 833 1 200 000 33 469 3 704 302
Accumulated 3 300 0005 1 800 000 45 000 5 145 000
Depreciation
(829 167)6 (600 000)7 (11 531)8 (1 440 698)
Calculations
C1 Depreciation: Aircraft
[20% * R1 750 000 + (20% * 1 750 000 * 6/12) + (20% * 1 550 000 * 5/12)
= R654 167
C2 Depreciation: Vehicles
20% * R1 800 000
= R360 000
63
C3 Depreciation: Furniture & Equipment
15% * R39 375
= R5 906
C4 Disposal of Aircraft
[R1 750 000 – (R1 750 000 * 20% * 18/12)]

= R1 225 000
C5 Cost of aircraft at the end of the year

(R1 750 000 + R1 550 000)
= R 3 300 000
C6 Accumulated Depreciation at the end of the year: Aircrafts

[R700 000 + 654 167 (C1) + R525 000 (C4)]
= R829 167
C7 Accumulated Depreciation at the end of the year: Vehicles

[R240 000 + R360 000 (C2)]
= R600 000
C8 Accumulated Depreciation at the end of the year: Furniture and Equipment

[R5 625 + R5 906 (C3)]
= R11 531
64
(b) FAST LINES CC
STATEMENT OF CHANGES IN NET INVESTMENTS FOR THE YEAR ENDED 31

DECEMBER 2013
Member Retained Loans Loans to Total

s` Earnings from members
Contrib members
utions
Tom Dick
R R R R R
Balances at 1 January 2013 (1) 200 502 335 - - 502 535
Additional Capital Contribution (150
100 – 100) * 2 300 000 300 000
Total Comprehensive Income (2) 915 927 915 927
Distribution to members (80 000 * 2) (160 000) 160 000
Loans to members (40 000) (40 000)
Interest capitalised on loans to
members (40 000 * 12 * 6 / 12) (2 400) (2 400)
300 200 1 258 262 160 000 (42 400) 1 676 062
Calculations
1. Balance of members contributions at 1 January 2013

100 * 2 = 200
2. Calculation of Total Comprehensive Income
R
Provisional profit before tax 2 300 000
Depreciation (a) (1 020 073)
Profit before tax 1 279 927
915 927
65
TRANSACTIONS – DIVIDENDS
BELLA SWAN LTD
GENERAL JOURNAL
Debit Credit
R R
(a) 2013
Sept 30 Retained Earnings (R100 000
+R120 000) 220 000
Ordinary Share Capital 100 000
Preference Share Capital 120 000
(b) 2014
April 30 Ordinary Dividend: Final (C1) 107 500
Dividend Payable 107 500
Preference Dividend (C2) 36 900

Dividend Payable 36 900
May 20 Dividends Payable (R107 500 +

R36 900) 144 400
Bank 144 400
Calculations
C1 Final Ordinary Dividend
Ordinary Shares in issue (1 May 2013) 250 000

Capitalisation issue – 30 September 2013: (2/5 * 250 000) 100 000
Issued 1 November 2013 80 000
Shares in issue on dividend declaration date 430 000
Total Dividend = (R430 00 * R0.25)

= R107 500
66
C2 Preference Dividend
R
Dividend on shares in issue: 1 May 2013 (R200 000 * 12%) 24 000
Dividend on Capitalisation shares (R120 000 * 12% * 7/12) 8 400
Dividends on shares issued 1 November 2013 (R75 000 * 12% * 6 / 12)
4 500
Total Preference Dividend 36 900
SOLUTION 4: PARTNERSHIP – STATEMENT

OF CASH FLOWS
CHILLY BILLY CATERERS
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2014
R R
Operating Activities
Cash received from customers (C1) 536 000
Cash paid to suppliers and employees
(C2) (389 200)
Interest paid (R10 000 – R5 000) (5 000)
Drawings [R113 500 + R128 000 (C3)] (241 500)
Cash used in operations (99 700)
Investing Activities
Proceeds from Sale of land & Buildings (R880
000 – R750 000 + R20 000) 150 000
Purchase of Furniture & Equipment (C4) (250 000)
Purchase of investments (75 000)
Cash from investing activities
Financing Activities 50 000
Further Capital Contributions (R500 000 –
R450 000) 50 000
Net Cash Flow from financing activities
50 000
Net increase in cash 300

Cash & cash equivalents at 1 July 2013 85 000
Cash & cash equivalents at 30 June 2014 85 300
67
Calculations
1. Cash received from customers
Customers Account
R R
Balance b/d (debtors) 101 000 Bank (balancing figure) 516 000
Revenue 600 000 Balance c/d 185 000
701 000 701 000
Balance b/d 185 000
Rent Income Account

R R
Profit & Loss Account 24 000 Bank (balancing figure) 20 000 4
Balance c/d 000
24 000 24 000
Balance b/d 185 000
Cash received from customers = R516 000 + R20 000

= R536 000
C2 Cash paid to suppliers and Employees
Suppliers and Employees Account

R R
Balance b/d (inventory) 20 000 Balance b/d (creditors) 62 000
Bank (balancing figure) 389 200 Accrued Expenses 5 500
Balance c/d (creditors) 45 000 Cost of sales 300 000
Profit &Loss(Travel) 25 000
Profit & Loss (Telephone) 33 000
Prepaid expenses 3 700
Balance c/d (inventory) 25 000
454 200 454 200
Balance b/d (inventory) Balance b/d (creditors)
25 000 45 000
68
C3 Current Accounts
Current Accounts
Chilly Billy Chilly Billy
R R R R
Drawings Balances b/d 10 000 8 500
(balancing figure) Interest on
Balances c/d 113 500 128 000 Current Accounts 4 500 5 000
24 250 8 750 Salaries 100 000 100 000
Share of Profit 23 250 23 250
137 750 136 750 137 750 136 750
Balances b/d
24 250 8 750
C4 FURNITURE & EQUIPMENT
Furniture & Equipment Account

R R
Balance b/d 50 000 Depreciation 20 000
Bank (balancing figure) 25 000 Balance c/d 55 000
75 000 701 000
Balance b/d 55 000
SOLUTION 5: BRANCHES – BRANCH INVENTORY ACCOUNT
Branch Inventory Account

R R
Balance b/d 66 000 Branch expenses
Inventory to branch (R173 (damaged inventory) 5 000
500 * 100/ 125) 138 800 Branch adjustment (R5
Branch Adjustment 000 * 25%) 1 250
(R173 500 * 25/125) 34 700 Branch Debtors 315 800
Branch adjustment Branch Adjustment [mark
(inventory surplus) 146 464 down on sales: (R75 714 –
R60 571) 15 143
Branch adjustment [mark
down on cost (R60 571 – 53
000)
7 571
Balance c/d
41 200
385 964 385 964

Balance b/d
41 200
69
Calculation Mark down
R
Actual selling price (after discount provision) = 53 000
Original selling price (100 / 70 * R53 000) = 75 714
Original cost price (100 / 125 * 75 714) = 60 571
70
MAY – JUNE
2014
71
SOLUTION 1: PARTNERSHIPS – STATEMENT
OF FINANCIAL POSITION & NOTE –
FINANCIAL LIABILITIES
(a) GROSTAMINO TRADERS
STATEMENT OF FINANCIAL POSITION (EQUITY SECTION AS AT 28

FEBRUARY 2014)
EQUITY R
Capital (R225 000 + R525 000) 750 000
Current Accounts C2: (R126 345) + (R79 405) (205 750)
TOTAL EQUITY 544 250
CALCULATIONS
1 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28

FEBRUARY 2014
Capital Accounts Current Accounts Appropri Total

ation
Grove Steenka Grove Steenk
mp amp
R R R R R R
Balance – 1 March 2013 225 000 525 000 (60 000) 80 000 - 770 000
Total Comprehensive Income (2) (135 750) (135 750)
Interest on Current Account (3) (4 200) 5 600 (1 400)
Salaries 60 000 60 000 (120 000)
Drawings (45 000) (45 000) (90 000)
Share of Loss (4) (77 145) (180 005) 257 150
225 000 525 000 (126 345) (79 405) - 544 250
72
2 TOTAL COMPREHENSIVE INCOME
R
Provisional profit for the year 15 500
Interest on long – term loan from ABA Bank (1 500 000 * 12% * 8 / (120 000)
12) (6 250)
Interest on loan from Grove (250 000* 15% * 2 / 12) (25 000)
Additional Purchases
Loss for the year (135 750)
3 INTEREST ON CURRENT ACCOUNT
Grove = (R60 000) * 7%

= (R4 200)
Steenkamp = R80 000 * 7%

= R5 600
4 SHARE OF LOSS
Grove = R225 000 / (R225 000 +R525 000) * (R257 150)

= R77 145
Steenkamp = R257 150 – R77 145

= R180 005
73
GROSTAMINO TRADERS
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY

2014
FINANCIAL LIABILITIES
Non - current financial liabilities at armortised cost 1 600 000

Long - term borrowings – Mortgage
The mortgage was acquired from ABA Bank on 1 July 2013 at an
interest rate of 12% per annum payable on 30 June every year.
The loan is repayable in equal annual instalments of R150 000 (1
500 000 / 10) each payable on 30 June of each year and the final
payment is due on 30 June 2023. This loan is secured by a first
mortgage over land and buildings.
Mortgage 1 500 000
Current portion (150 000)
Non – current Portion 1 350 000
Long-term loan: Grove: The loan is unsecured and was granted on
1 January 2014 at an interest rate of 15% per annum payable on
31 December of every year. The loan will be repaid in full on 31
December 2018.
Mortgage 250 000
Current portion -
Non – current Portion 250 000
Current financial liabilities
Trade and other payables
Creditors control (85 000 + 25 000) 110 000
Accrued expenses 137 750
Interest on loan 6 250
Insurance 11 500
Interest on mortgage 120 000
Current portion of long-term borrowings at amortised costs 150 000
Bank overdraft 110 000
74
SOLUTION 2: PARTNERSHIPS – CHANGES IN
OWNERSHIP STRUCTURE OF PARTNERSHIPS
DMOSS TRADERS
GENERAL JOURNAL
Dr Cr
2013 R R
September 30 Valuation (R5 000 + R5 3000) 10 300
Inventory 10 300
Recording of shortage of inventory by R5 000 and other
inventory overvalued by R5 300
September 30 Current Account: Douglas 21 125

: Moses 21 175
Capital Account: Douglas 21 125
: Moses 21 175
Transfer of current account balances to capital accounts.
September 30 Land and Buildings (R300 000 – R283 000) 17 000

Valuation 17 000
Revaluation of land recorded at R283 000 but revalued by a
sworn appraiser at R300 000)
September 30 Valuation ( R17 000 – R10 300) 6 700

Capital: Douglas (5/8 * R6 700) 4187.50
: Moses (3/8 * R6 700) 2512.50
Share of Valuation Profit
September 30 Goodwill 55 500

Capital: Douglas (5/8 * R55 500) 34 687.50
: Moses (3/8 * R55 500) 20 812.50
Recording of goodwill in preparation for the admission of Phil.
September 30 Transferral Account 494 500

Land and buildings 300 000
Inventories (54 300 – 10 300) 44 000
Debtors` Control 42 000
Bank 53 000
Goodwill 55 500
Closing off the balances of the asset accounts to
the transferral account to record the dissolution of
the partnership
75
Capital: Douglas (177 000 + 21 125 + 4187.5 + 34 687.5) 237 000
Capital: Moses (160 000 + 21 175 + 2 512.5 + 20 812.5) 204 500
Creditors` Control 16 000
Long – term loan 37 000
Transferral Account 494 500
Closing off the balances of the equity and liability
accounts to the transferral account to record the
dissolution of the partnership
DMP TRADERS
GENERAL JOURNAL
2013 R R
October 1 Goodwill (55 500 * 237 000 / (237 000 + 204 500) 29 793
Land & Buildings (300 000 * 237 000 / (237 000 + 204 500) 161 042
Inventories (44 000 * 237 000 / (237 000 + 204 500) 23 619
Debtors` Control (42 000 * 237 000 / (237 000 + 204 500) 22 546
28 451
Bank(53 000 * 237 000 / (237 000 + 204 500)
Long – term loan (37 000 * 237 000 / (237 000 + 204 500) 19 862
Creditors` control (16 000 * 237 000 / (237 000 + 204 500) 8 589
Capital: Douglas (balancing figure) 237 000
Recording the capital contribution of Douglas
October 1 Goodwill (55 500 * 204 500 / (237 000 + 204 500) 25 707
Land & Buildings (300 000 * 204 500 / (237 000 + 204 500) 138 958
Inventories (44 000 * 204 500 / (237 000 + 204 500) 20 381
19 454
Debtors` Control (42 000 * 204 500 / (237 000 + 204 500)
24 549
Bank(53 000 * 237 000 / (204 500 + 204 500)
Long – term loan (37 000 * 204 500 / (237 000 + 204 500) 17 138
Creditors` control (16 000 * 204 500 / (237 000 + 204 500) 7 411
Capital: Douglas (balancing figure) 204 500
Recording the capital contribution of Moses
October 1 Bank 60 000

Capital: Phill 60 000
Recording the cash capital contribution of Phill
76
SOLUTION 3: CLOSE CORPORATIONS – STATEMENT OF PROFIT OR LOSS &
OTHER COMPREHENSIVE INCOME
EYETHU CC

R
Revenue (R575 000 – 28 500) 546 500
Purchases (R189 000 – R6 225) 182 775
Gross Profit
400 725
Other Income 8 100
8 100
Rental income
Total Income 408 825

Expenses
Administration, distribution & Other Expenses (315 885)
Delivery expenses 7 300

Salaries and Wages [R257 600 – (R5 300 * 2 * 12] 130 400
Salaries to members (R5 300 * 2 * 12) 127 200
Stationery consumed 4 950
Water and Electricity 10 725
Insurance [R6 300 – (R450 * 2)] 5 400
Advertising 6 450
Credit losses [R2 900 + (R3 800 – R2 200)] 4 500
Depreciation [(20% * (R64 000 – R14 000 – R10
200) + 20% * 14 000 * 6/12) 9 360

Interest on loan from members 21600

Other Comprehensive Income for the year -
Total Comprehensive Income for the year 37 875
77
SOLUTION 4: STATEMENT OF CASH FLOWS:
SECTION
(a) CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2014 (OPERATING
ACTIVITIES – SECTION)
R
75 475
Adjustments for:
Profit on sale of non – current assets: Furniture (5 000)
Dividend Income (525)
Depreciation 72 500
Loss on sale of non – current assets: Vehicle 500
Interest expense 8 000
235 000
Movements in working capital: (5 925)
Increase in trade creditors (R42 500 – R35 000) 7 500
Decrease in debtors (R52 500 – R42 500) 10 000
Increase in prepaid expenses (R5 000 – R3 600) (1 400)
Increase in inventory (R74 025 – R52 000) (22 025)

Interest paid (R8 000 – R4 000) (4 000)
Distribution paid to members [R10 000 + R26 800 – R30 000] (6 800)
Tax paid (R70 000 + 45 900 – R30 000) (85 900)
Dividend received 525
NB: ASSUMPTION; The distribution to members was R26 800 and we assumed that it was R26
800 in total.
78
(b) CALCULATION OF PROCEEDS FROM THE SALE OF A VEHICLE
R
Cost 60 000
Accumulated Depreciation – 1 January 2013 (50 000)
Depreciation (1 January 2013 – 31 October 2013: [10% *
(R60 000 – R50 000) * 10 / 12] (833)
Carrying amount – 31 October 2013
9 167
Loss on sale of vehicle
Proceeds from the sale of vehicle (500)
8 667
NB There was an error on the question paper. Additional information should read
as, on 31 October 2013, a vehicle with a cost price of R60 00 and accumulated
depreciation of R50 000, (on 1 January 2013 instead of 2014) was sold for cash.
The asset could not be depreciated up to 2014 when it was sold on 1 October
2013.
SOLUTION 5: ANALYSIS & INTERPRETATION OF

FINANCIAL STATEMENTS – LIQUIDITY RATIOS
CHAKALAKA & SONS
(a) Current Ratio
Current Ratio = Current Assets

Current Liabilities
= R122 000 + R171 500

R119 000 + R40 000
= 1.85 : 1
79
(b) Trade Receivables Collection Period
Trade Receivables Collection Period = Average Trade Receivables * 365

Credit Sales
= (R171 500 + R79 000) / 2 * 365

R310 000
= 147.47 days
(c) Trade Payables Settlement Period
Trade Payables Settlement Period = Average Trade Payables * 365

Credit Purchases
= (R119 000 + R58 000) / 2 * 365

R318 000
= 101.58 days
Opening Inventory + Purchases – Closing Inventory = Cost of Sales

R46 000 + Purchases – R122 000 = R242 000
Purchases = R242 000 – R46 000 + R122 000
= R318 000
(d) Inventory Holding Period
Inventory holding period = Average Inventory * 365

Cost of sales
= (R122 000 + R46 000) / 2 * 365

R242 000
= 126.69days
80
(e) Long – term Loan
Debt – Equity Ratio = Total Debt * 100

Total Equity
50 = R119 000 + R40 000 + X *100

R400 000
X (Long – term loan) = 50 * R400 000 – R119 000 – R40 000

100
= R41 000
81
OCTOBER –
NOVEMBER 2O13
82
CHANGES IN EQUITY
EZDEZ TRADERS
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013
Capitals Current Accounts Appropri Asset

ation Replace
ment
Reserve
Ez Dez Ez Dez
Lewinsk Montreal Lewinsk Montreal
y y
R R R R R R
Balances at 1 July 2012 (1) 120 000 180 000 (51 120) 35 280 - 34 000
Additional capital Contribution 60 000
Total Comprehensive Income(2) 505 920
Drawings (3) (143 040) (103 980)
Interest on Current accounts (5) (5 112) 3 528 1 584
Interest on Drawings (6) (2 277) (1 449) 3 726
Transfer to asset replacement
reserve (15% * 505 920) (75 888) 75 888
Share of Profit (7) (184 842 / 2) 92 421 92 421 (184 842)
Balances at 30 June 2015
180 000 180 000 3 372 163 800 - 109 888
Calculations
1. Balances at 1 July 2012

Ez Lewinsky = 180 000 – 60 000 = 120 000
83
2. Calculation of Total Comprehensive Income
R
Profit for the year (before year – end adjustments) 354 888
Salaries paid to partners (97 500 + 75 0000) 172 500
Rent outstanding (15 000)
Interest on bank overdraft (2 787)
Interest on loan from partner (73 620 * 10% * 6 /12) (3 681)
3. Drawings
Ez Lewinsky = 45 540 + 97 500 = 143 040
Dez Montreal = 28 980 + 75 000 = 103 980
4. Interest on Capital
Ez Lewinsky = (120 000 * 10%) + (60 000 * 10% * 6 / 12) = 15 000
Dez Montreal = 180 000 * 10% = 18 000
5. Interest on Current Accounts

Ez Lewinsky = 10% * (51 120) = (5 112)
Dez Montreal = 10% * 35 280 = 3 528
6. Interest on Drawings
Ez Lewinsky = 5% * 45 540 = 2 277
Dez Montreal = 5% * 28 980 = 1 449
84
SOLUTION 2: PARTNERSHIP – SIMULTANEOUS
LIQUIDATION – LIQUIDATION ACCOUNT –
CAPITAL ACCOUNT
BAKER STREET TRADERS
GENERAL LEDGER
1.

R
R
Liquidation Account
2013 2013
September 30 Land & Buildings GJ 520 000 September 30 Bank (sale of vehicle) – (30 000 – 10
Vehicles (90 000 – 60 000) GJ 30 000 000) CRJ 20 000
Inventory GJ 50 000 Bank – sale of land & buildings (520
Bank (Long – term loan) CPJ 100 000 000 + 80 000) CRJ 600 000
Debtors` Control GJ 55 000 Creditors` Control GJ 35 000
Bank – creditors` control (35 000 Long – term Loan GJ 100 000
* 95%) CPJ 33 250 Bank – debtors` control (55 000 *
Liquidation costs – farewell 95%) CRJ 52 250
function (80% * 25 000) CPJ 20 000 Capital – Holmes (Inventory) (50 000 –
Capital : Holmes (3 / 5 * 19 000) GJ 11 400 30 000) GJ 20 000
Watson (2 / 5 * 19 000) GJ 7 600
827 250 827 250
2.

R
R
Capital - Holmes Account
2013 2013
September 30 Goodwill (10 000 * 3 / 5) GJ 6 000 September 30 Balance b/d 300 000
Current Account GJ 12 500 Liquidation (Realisation profit) GJ 11 400
Liquidation (Inventory) GJ 20 000 Asset replacement reserve (45 000 * 3
Bank (balancing figure) CPJ 299 900 / 5) GJ 27 000
338 400 338 400
85
STATEMENT OF PROFIT OR LOSS & OTHER
COMPREHENSIVE INCOME – STATEMENT OF
FINANCIAL POSITION (ASSET SECTION)
1. WONDERLAND CC

R
Revenue (R13 120 500 – 27 570 + 4 500) 13 097 430
Cost of Sales (4 775 520)
Purchases (R4 500 000 – 7 875) 4 492 125
Carriage on purchases 153 750
Gross Profit 8 322 180
Other Income 496 875

196 875
Interest on loans to members (1 312 500 * 15%)
Gain on fair valuation of investments (1 800 000 – 1 500
300 000
000)
Total Income 8 819 055

Expenses
Administration, distribution & Other Expenses (4 617 045)
General expenses 250 305

Salaries (employees) 2 250 000
Salaries (members) 1 350 000
Remuneration: Accounting Officer 262 500
Credit losses [R58 125 + 23 295 – (37 500 – 23
445)] 67 365
Carriage on sales 168 750
Depreciation [20% * (R1 781 250 – 281 250 – 300
000) + (20% * 281 250 * 6 / 12)] 268 125

Interest on loan from member (20% * 562 500) 112 500
86
Profit before tax 4 089 510
Income tax expense (1 005 630)
Profit for the year 3 083 880
Total Comprehensive Income for the year 3 083 880
(2) WONDERLAND CC
STATEMENT OF FINANCIAL POSITION (ASSETS SECTION) AS AT 28

FEBRUARY 2013
R
ASSETS
NON – CURRENT ASSETS 9 463 125
Property, Plant & Equipment (8 250 000 + 1 781 250 – 300
000 – 268 125) 9 463 125
CURRENT ASSETS 4 024 830

Inventories 189 375
Trade & other receivables (492 195 - 23 295 – 23 445) 445 455
Other financial assets (1 800 000 + 1 312 500 + 196 875) 3 309 375
Cash & cash equivalents 80 625
TOTAL ASSETS 13 487 955
87
PARTNERSHIPS – CASH FLOWS FROM
OPERATING ACTIVITIES & CASH FLOWS FROM
MONTSHOBLUE TRADERS
STATEMENT OF CASH FLOWS (OPERATING & FINANCING ACTIVITIES SECTIONS) FOR

R R
OPERATING ACTIVITIES
Profit before tax (750 900 – 294 540 + 7 200 + 15 000 – 105
000 – 1 800 – 9 000) 362 760
(4 200)
Adjustments for:
Profit on sale of non – current assets: Land & buildings
(15 000)
Depreciation
Interest expense 1 800
9 000
358 560
Movements in working capital: 28 800
Increase in creditors` control (168 600 -145 800) 22 800
Increase in debtors control (210 900 – 50% * (615 000
– 435 000 + 15 000) – 111 000) (2 400)
Increase in accrued expenses (1 800 - 600) 1 200
Decrease in inventory (150 600 – 144 000) 6 600
Decrease in accrued income (1 200 – 600) 600

Drawings (201 600 + 175 800) (377 400)
Net Cash Inflow from operating activities 9 960
FINANCING ACTIVITIES 78 600

Proceeds from capital contributions (330 000 – 290 700) * 2
Net cash inflow from financing 78 600
88
SOLUTION 5: FINANCIAL STATEMENTS
ANALYSIS & INTERPRETATION –
CALCULATION OF CURRENT & DEBT – EQUITY
RATIOS
5.1 CURRENT RATIO = Current Assets

Current Liabilities
= 60 000 + 40 000 + 60 000 – 2 000 – 5 000+ 33 000 + 6 000 + 55 000

50 000 + 80 000 + 8 000
= 1.79
5.2 DEBT – EQUITY RATIO = Total Debt * 100

Total Equity
= (268 000+ 50 000+ 80 000+ 8 000) * 100

150 000 + 190 000 + 20 000 + 255 000 + 390 000 - 60 500 - 80 000 - 50 000
= 49.85%
89
MAY –
JUNE 2013
90
SOLUTION 1: PARTNERSHIPS – PREPARATION
OF THE STATEMENT OF PROFIT OR LOSS &
OTHER COMPREHENSIVE INCOME
WILLISTON TRADERS

R
Revenue (R649 000 – 3 800) 645 200
Purchases 320 000
Gross Profit
319 700
Other Income 13 140
10 890
Interest on loans to Busie (11% * 99 000)
Profit on sale of non – current assets – Equipment [12 000
– [24 000 – 14 000 - (10% * (24 000 – 14 000) * 3 / 12] 2 250
Total Income 332 840

Expenses
Administration, distribution & Other Expenses (69 318)
Loss on fair valuation of investments (100 000 – 88

000) 12 000
Water & Electricity 4 700
Stationary 5 000
Insurance 8 000
Freight on sales 3 200
Depreciation (1) 30 210

Interest on loan from Bettie (98 000 * 15% * 2 / 12) 2 450

Total Comprehensive Income for the year 261 072
91
Calculations
1. Depreciation
R
Equipment: Sold 10% * (24 000 – 14 000) * 3 / 12 250
Existing 10% * [(94 000 – 24 000) – (29 400 – 14 5 460
000) 24 500
Vehicles (25% * 98 000)
SOLUTION 2: CLOSE CORPORATION – STATEMENT OF

FINANCIAL POSITION – NOTES ON PROPERTY, PLANT &
EQUIPMENT & NOTES ON FINANCIAL ASSETS
(a) A ADAM GENERAL DEALER
STATEMENT OF FINANCIAL POSITION AS AT 31 OCTOBER 2014
R
ASSETS
NON – CURRENT ASSETS 265 681
Property, Plant & Equipment (100 000 + 89 000 + 108 000 – 265 681
24 119 – 7 200)
CURRENT ASSETS 300 320

Inventories 38 520
Trade & other receivables 35 800
Prepaid expenses (6 000 * 6 /12) 3 000
Financial assets [38 000 + (37 000 * 5)] 223 000
TOTAL ASSETS 566 001

EQUITY 302 587
Members Contributions (122 000 * 2) 244 000
Retained Earnings [(28 760) + 92 807 – 25 460 – 15 000 + 38
000 – (6 000 * 6 / 12) 58 587
92
LIABILITIES 263 414
Long – term borrowings (50 000 – 8 000) 42 000

Trade & other payables [20 054 + (25 460 – 10 400)] 35 114
Current portion of long – term borrowings 8 000
Other Financial liabilities [12 700 – 6 000 – (37 000 * 5)] 178 300
TOTAL EQUITY AND LIABILITIES 566 001
SOLUTION 3: INTRODUCTION TO COMPANIES – GENERAL JOURNAL

ENTRIES FOR SHARE ISSUES & THE CALCULATION OF PREFERENCE
DIVIDENDS
3.2 ALIZWA LTD
GENERAL JOURNAL

R R
2013
January 2 Underwriter`s commission (1.5% * 100 000) 1 500
Monique Financial Services 1 500
1.5% underwriter` commission due on R100
000 in terms of the underwriting agreement.
2013
January 2 Bank 100 000
Application & Allotment: Ordinary Shares 100 000
Receipt of application money from the public
2013
January 2 Application & Allotment: Ordinary Shares 100 000
Allotment of 50 000 (250 000 - 200 000)
ordinary shares
2013
January 2 Monique Financial Services 1 500
93
Bank 1 500
Payment of underwriter`s commission
3.3 ALIZWA LTD
GENERAL JOURNAL

R R
2013
July 31 Retained Earnings 156 250
Capitalisation issue of 1 for every 4 ordinary
shares held
2013
July 31 Preference Dividend (40 000 * 8%) + (120
000 * 8% * 6 /12) 8 000
Dividends payable 8 000
Declaration of preference dividend
94
SOLUTION 4: PREPARATION OF STATEMENT
OF CASH FLOWS – PARTNERSHIPS
MONACO TRADERS

31 DECEMBER 2011
R
OPERATING ACTIVITIES
Interest paid [30 750 – 6 600 – (12% * 150 000)] (6 150)
Interest income received 15 300
Proceeds from the repayment of loans (74 250 – 52 500) 21 750
Drawings (77 000)
INVESTING ACTIVITIES
Investments in property, plant and equipment to expand
operating capacity
Additions to property, plant & equipment – buildings (1 147 500 –
567 905 – 40 000) (539 595)
Proceeds from the sale of machinery (600 030 – 91035 – 482 145) 26 850
Acquisition of investments – fixed deposit (100 000 – 62 000) (38 000)
Net Cash Outflow from Financing Activities (550 745)
Profit from capital contributions (1 249 500 – 1 131 635) 117 865
Proceeds from loans [(249 750 + 27 750) – 201 000) 76 500
Net Cash Inflow from Financing 194 365
Net decrease in cash & cash equivalents (222 239)

Cash & cash equivalents at the beginning of the year 405 000
Cash & cash equivalents at the end of the year 182 761
95
Calculations
R
Revenue (420 750 + 478 890) 899 640
2011 (94 704)
Credit Losses [8 550 – (5 550 – 4 500)] (7 500)
Rental income (20 400 – 10 200) 10 200
R
Distribution expenses 226 804
Administration& other expenses (155 521 – 15 600) 139 921
SOLUTION 5: TIME VALUE OF MONEY –

PARTNERSHIPS CHANGES IN OWNERSHIP
STRUCTURE
SECTION A
1. Calculation of new profit sharing ratio
Salom = 1 / 2 – (3 / 4 * 1 / 5) = 7 / 20
Papiki = 1 / 2 – (1 / 4 * 1 / 5) = 9 / 20
Dineo =1/5*4/4 = 4 / 20
96
2. Calculation of goodwill
R
Value of business (25 000 + 43 000) * 3 204 000
Capitals (158 000)
Dineo (25 000 + 43 000) 68 000

Salom & Papiki (42 000 + 42 000 + 20 000 – 14 000) 90 000
Goodwill 46 000
SECTION B
1. PMT = FV * FVIFA(i,n)
FV = 60 000
i = 12 / 12 = 1%
n = 2 * 12 = 24
FVIFA(1,24) = 26.973
PMT = 60 000 / 26.973
= 2 224.45
Amount to be deducted from employees salaries = R2 224.45 * 60%

= R1 334.67
2. PV = FV * PVIF(i,n)
FV = 700 000
i = 12
n = 10
PVIF(12,10) = 0.322
PV = 700 000 * 0.322
= R225 400
97

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FAC1601

CALCULATION OF PROFIT OR LOSS FOR THE YEAR ENDED 28

STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2017

(a) MEHL`EMAMBA LOANS

(b) MEHL`EMAMBA LOANS

SOLUTION 3: STATEMENT OF CASH FLOWS –

(a) STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME FOR

Opening Inventory 80 500

Gross Profit (520 900 * 20 / 80) 130 225

Administrative, Distribution & Other Expenses (16 075)

Salaries & Wages 6 500

(b) APPROPRIATION ACCOUNT FOR THE YEAR ENDED 28 FEBRUARY 2017

SOLUTION 2: CLOSE CORPORATIONS:

(a) CALCULATION OF THE TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Members Retained Revaluation Loans from Loans to Total

1 120 000 + 95 000 = 215 000

STATEMENT OF CASH FLOWS (EXTRACT) FOR THE YEAR ENDED 30 APRIL

Date Details Amount Date Details Amount

CALCULATION OF THE TOTAL AMOUNT OF DIVIDENDS DECLARED AND PAID

(b) ICE COLD (PTY) LTD

𝑷𝒓𝒐𝒇𝒊𝒕 𝒃𝒆𝒇𝒐𝒓𝒆 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕 & 𝒕𝒂𝒙

(38 400+11 025)

𝑷𝒓𝒐𝒇𝒊𝒕 𝒃𝒆𝒇𝒐𝒓𝒆 𝒕𝒂𝒙

Date Details Amount Date Details Amount

Capitals Current Accounts Appropriation

(c) STATEMENT OF FINANCIAL POSITION (EQUITY & LIABILITIES) FOR THE

EQUITY AND LIABILITIES

LIABILITIES 1 214 350

Trade & other payables 262 350

TOTAL EQUITY AND LIABILITIES 2 089 835

STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME FOR

Opening Inventory 8 950

Gross Profit 168 496

Administrative, Distribution & Other Expenses (155 570)

Salaries [85 000 – (2 500 * 2 * 12) 25 000

Finance Cost (4 000)

Profit before tax 10 926

SOLUTION 3: STATEMENT OF CASH FLOWS –

STATEMENT OF CASH FLOWS (OPERATING ACTIVITIES) FOR THE YEAR ENDED

= (210 000 + 90 000) ∗ 5 − 940 000

3. Payment from debtors = 360 000 ∗ 80% ∗ (100 − 10)%

320 000−112 000−83 000−14 000

STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME FOR

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 29 FEBRUARY

Capitals Current Accounts Appropriati Total

NB THE ASSUMPTION MADE WAS THAT INTEREST WAS PAID ON THE

STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME FOR

Purchases (302 530 – 2 400) 300 130

Gross Profit 257 490

Administrative, Distribution & Other Expenses (216 100)

Salaries & Wages (123 600 – 36 000 – 38 000) 49 600

Finance Cost (6 480)

Profit for the year

Calculation 1: Profit on Sale of Machinery

Accumulated Depreciation of machinery sold at start of year: (14 000)

Depreciation for the year 15% * (15 000 – 14 000) * 6 / 12 ( 75)

Carrying amount on disposal: 925

Trade in value on disposal 1 500

Carrying amount on disposal (925)

Profit on disposal 575

Existing new machinery: (25 000 * 15% * 6 / 12) 1 875

2. Settlement Discount Received

5. Profit on sale of Non – Current Assets