Week 5&6 Tutorial Submission Questions

Part A
Tutorial Submission Questions
Part
Rantambore Ruminations is a bookshop in Kalk Bay. The business has a year-end of 31
August and
processes all appropriate reversals on 1 September each year. An extract of the
pre-adjustment trial
balance as at 31 August 2023 is presented below.
Rantambore Ruminations is
bookshop
processes all appropriate reversals
balance
Kalk Bay. The business has
September each year.
31 August 2023 is presented below.
Rantambore Ruminations: Pre-Adjustment Trial Balance (extract)
as at 31 August 2023
31 August 2023
|
PPE: Vehicles
PPE: Vehicles
Accumulated depreciation: vehicles
Inventory
Inventory
Cost of sales expense
Cost of sales expense
Additional information
1. Vehicles are depreciated using the straight-line basis. On 31 August 2023, the
business had two
vehicles: a delivery vehicle and a passenger vehicle. The delivery vehicle had been
purchased
for R1 million on 1 September 2021, and its estimated useful life is four years.
Rantambore
Ruminations estimates that, at the end of the vehicle’s useful life, if it spends
R15 000 (in total)
removing the company logo from the vehicle, they will be able to sell the delivery
vehicle for R400
000. The passenger vehicle was purchased for cash on 1 June 2023. Its estimated
useful life is
three years, and its residual value is 40% of its cost.
1.
Vehicles are depreciated using the straight-line basis.
31 August 2023, the business had two
vehicles:
delivery vehicle
passenger vehicle. The delivery vehicle had been purchased
for R1 million on 1 September 2021, and its estimated useful
Ruminations estimates that,
life
is four years. Rantambore
the
the vehicle’s useful life,
removing the company logo from the vehicle, they will be able
if it soends R15 000 (in total)
sell the delivery vehicle for R400
000. The passenger vehicle was purchased for cash
three years, and its residual value is 40% of its cost.
2. On 31 August 2023, a physical inventory count revealed that the business had
inventory on hand
with a cost of R160 000. Some of this inventory had been damaged by a water leak
from an
apartment above the bookshop. These books, which had been purchased for a total of
R10 000R10000
would be sold in the new financial year for an estimated R2 000, after repairs
costing R500.
31 August 2023,
physical inventory
revealed that the business had inventory on hand
with
cost of R160 000. Some of this inventory had been damaged by
apartment
would
sold
the bookshop. These books, which
the new financial year for
estimated
water leak from an
been purchased for
total
000, after repairs costing R500.
You are required to:
1. Refer to additional information point 1.
1.1. Prepare the PPE: Vehicles account as iit wouldt would appear in the general
ledger of Rantambore
Ruminations for the year ended 31 August 2023.
1.1. Prepare the PPE: Vehicles
appear in the general ledger
Ruminations for the year ended 31 August 2023.
1.2. Prepare the adjusting entry(ies) that would be prepared in the general
1.2. Prepare the adjusting entry(ies)
that would be prepared
in the
general journal
journal of
of
Rantambore Ruminations on 31 August 2023 to report depreciation correctly. Ignore
dates
and narrations.
Rantambore Ruminations
narrations.
1.3. Complete the following table. Use “DR” or “CR” to indicate a debidebitt or
credit balance. Where
there is a ninill balance in a trial balance for an account, insert a zero (“0”).
42 Complete the following table. Use “DR” or “CR” to indicate
or credit balance. Where
there is
balance in
trial balance for an account, insert a zero (“O”).
Pre-adj TB
Pre-adj TB
| oft. hicles PPE: Vehicles
Accumulated depreciation: vehicles
| ,wou. ulated depreciation: vehicles
R1 400 000 DR
R1
DR
Post-adj TB Post-closing TB
Post-adj TB | Post-closing TB
31 August 2023
report depreciation correctly. Ignore dates
Rantambore
You are required to:
1. Refer to additional information point 1.
1
June 2023. Its estimated useful life is
Additional information
R180 000
R180
R900 000R900000
Accumulated depreciation: vehicles
DR
R1 400 000
R1 400
?
|
CR
|
Rantambore Ruminations: Pre-Adjustment Trial Balance (extract)
year-end
31 August
extract
the pre-adjustment trial
Week

Depreciation expense
1.4. What is a negative asset account? Explain your answer by showing how how the
vehicles
would be presented in the statement of financial position of Rantambore Ruminations
as at
31 August 2023.
2. Refer to additional information point 2.
2.1. Show how inventory would be presented in the statement of financial position
of Rantambore
Ruminations as at 31 August 2023.
2.2. Prepare the adjusting entry(ies) that would be prepared in the general journal
of
Rantambore Ruminations on 31 August 2023 to report inventory correctly. Ignore
dates and
narrations.
2.3. Why is the term “cost of sales” misleading?
PART B
Before attempting this part, you need to watch the following Learn Accounting Video
(Understanding Mark-ups): https://learnaccounting.uct.ac.za/mod/video/view.php?
id=7010
Ignore VAT
Speedy Gonzales is a motorcycle shop that sells a range of accessories. On 10 March
2023, Speedy
Gonzales ordered 20 biker jackets from a supplier in Johannesburg which normally
sells the jackets
for R1 750 each. The supplier offered Speedy Gonzales a trade discount of 8%. The
jackets were
sent FOB shipping point on 14 March 2023, and arrived on 18 March 2023. By 31 March
2023,
Speedy Gonzales had not yet paid the supplier the amount owing for the jackets, but
the business
had paid the following amounts relating to the jackets:
• transport inwards, paid to a courier business: R3 910 total
• packaging materials, paid to a packaging materials supply store: R46 per jacket
• transport outwards, paid to a courier business: R667 total
• sales assistant commissions: 5% of the selling price of items sold
By 31 March 2023, Speedy Gonzales had sold 15 of the jackets, using a mark-up of
60% on cost.
All sales were for cash.
On 31 March, a physical inventory count found four jackets on hand. One of these
had been
damaged, and would be sold in February for a discount of 10% on cost.
You are required to:
1. Calculate the cost that Speedy Gonzales should use to measure one jacket.
2. Show how all of the above information would be reported in Speedy Gonzales’
statement of
comprehensive income for the month ended 31 March 2023. You should show each line-
item
affected, and the amount of the effect. You do not need to show subtotals and
totals like gross
profit or profit.
3. Calculate the carrying amount at which the jackets would be measured in the
statement of
financial position of Speedy Gonzales as at 31 March 2023.