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# PRINT AND BRING THIS

## DEPARTMENT OF FINANCIAL ACCOUNTING

FAC1601: FINANCIAL ACCOUNTING REPORTING 1 (MODULE 2)
MEMORANDUM TO EXAMINATION PAPER: OCTOBER 2011

Mr MT Hlongoane
Mrs FM Osman
Mr A Eysele
Mr RN Ngcobo
Mrs B Ntoyanto-Ceki
Module Telephone Number: 012 429 4176
fac1601@unisa.ac.za

## QUESTION 1 (24 marks)

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 AUGUST 2011^
R
Revenue^ R(536 820^ 2 000^)
534 820
Cost of sales ^
(277 330)
Purchases R(302 530^ 2 400^)
300 130
Delivery expenses on purchases
5 280
305 410
Inventory (31 August 2011)
(28 080)
Gross profit^
257 490
Other income
3 575
Credit losses recovered
3 000
Profit on sale of equipment R1 500^ R[15 000^ (14 000^ + 75^)]
575
( 213 850)
Salaries and wages R[123 600^ (36 000^ + 38 000^)]
^49 600
Depreciation R(14 250^ + 1 875^+ 75^^ + 28 800)
(6) 45 000
Water and electricity R(41 160^ 10 400^)
30 760
Advertising expenses R10 400^ R(10 400^ 13 months^)
^9 600
Property rates
^17 010
General expenses
^38 720
Telephone expenses
^23 160
Finance costs
(6 480)
Interest on long-term loan R(108 000^ x 12%^) x 6/12^
^6 480
Profit for the year^
40 735
Other comprehensive income for the year^
Total comprehensive income for the year^
40 735
Calculations:

Depreciation:
Equipment:
Old equipment:
New equipment:
Disposed equipment:
Vehicles:

## R[(130 000^ 25 000^) (24 000^ 14 000^)] x 15%^ = R14 250

R25 000^ x 15%^ x 6/12^ = R1 875
R75^^ Given
R144 000^ x 20%^ = R28 800

## QUESTION 2 (18 marks)

ZIMBABWE CHARTERED ACCOUNTANTS
GENERAL LEDGER (SUMMARISED IN COLUMNAR FORMAT)
Assets

## Balance at the commencement of liquidation:

Loan: Morgan
Insurance policy
Sale of furniture and equipment
Settlement of liabilities

R
^407 000

(84 000)
^(130 000)
193 000

## R(202 000^ + 100 000^ + 105 000^) = R407 000

R(80 000^ + 12 000^) = R92 000
R[130 000^ + R(20 000^ x 5/10^)] = R140 000
R[100 000^ + R(20 000^ x 3/10^)] = R106 000
R[80 000^ + R(20 000^ x 2/10^)] = R84 000
R(105 000^ x 80%^) = R84 000
R(84 000^ x 90^%) = R75 600

Bank

Liabilities

Capital:
Bob

Capital
Morgan

Capital:
Arthur

R
R
R
R
R
^15 000 (92 000) ^ (140 000) ^(106 000) ^ (84 000)
^12 000
^(12 000)
(12 500)
(7 500)
(5 000)
^25 000
4 200
2 520
1 680
75 600
^130 000
^ (80 000)
^80 000
165 600
(148 300)
(122 980)
(87 320)

3.1

## Retained earnings as at 28 February 2011:

Other income:
Dividend income R0,20^ x 50 000^ shares
Gain on financial assets at fair value through profit or loss: Held for trading:
Interest income: Loans and receivables: Loans to member R(70 500^ x 10%^ x 2/12^)
Expenses:
Credit losses
Interest on loan from member
Profit before tax
Income tax expense
Total comprehensive income for the year
Distribution to members R(42 000^ + 44 800^)
Retained earnings for the year
Retained earnings 1 March 2010
Retained earnings 28 February 2011

R
498 900
61 175
10 000
50 000
^ 1 175
(10 204)
2 700
7 504
549 871
(126 500)
423 371
(86 800)
336 571
^ 472 000
808 571
(8)

3.2
EFFICIENCY CONSULTANTS CC ^
STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2011 ^
R
ASSETS
Non-current assets
Property, plant and equipment R(747 000^ + 120 000^ 24 000^)
Financial assets
Current assets
Inventories
R[(35 600 ^ 3 000 ^ - 4 700 ^^ 1 500 ^) + 10 000 ^
Other financial assets R(250 000 ^^ + 70 500 ^ + 1 175 ^^)
Prepayments
Cash and cash equivalents R(48 100 ^ + 2 800 ^)
Total assets ^
EQUITY AND LIABILITIES
Total equity
Members contributions R(120 000 ^ + 95 000 ^)
Retained earnings
Total liabilities
Non-current liabilities
Long-term borrowings R[232 000^ + R(44 800^^ x 50%^)]
Current liabilities
Trade and other payables R(25 100 ^ + 7 504 ^)
Distribution to members payable R(44 800 ^ x 50% ^)
Current portion of loans from members
Current tax payable R(126 500 ^ 116 600 ^)
Total equity and liabilities ^

938 000
^843 000
95 000
513 335
99 312
36 400
^321 675
5 048
50 900
1 451 335

1 023 571
215 000
^808 571
427 764
254 400
254 400
173 364
^14 660
32 604
22 400
93 800
9 900
1 451 335
(21)
[29]

## QUESTION 4 (20 marks)

FLEETWOOD CC ^
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 AUGUST 2011 ^
R
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipt from customers R594 124 + R(13 600 ^ 6 800 ^)
Cash paid to suppliers and employees
Interest expense
Income tax paid R(27 200 ^ + 136 816 ^ 40 800 ^)
Distribution to members paid R(73 400 ^ 51 000 ^)
Acquisition of financial asset at fair value through profit or loss: Held for
Repayment of loans and receivables: Loan to member R(49 500 ^ 35 000^)
Net cash from operating activities ^
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in property, plant and equipment to expand operating capacity
Improvement of land and buildings R(665 000 450 500)
Acquisition of loans and receivables: Fixed deposit
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from members contributions R(833 000 45 000) R730 400
Proceeds from long-term borrowing

600 924
(269 414)
331 510
10 200
(8 500)
(123 216)
(22 400)

R
(4)
(4)

(60 000) ^
14 500 ^
142 094

(214 500)
(33 020)
(58 000)
(305 520)
57 600
51 000
108 600
(54 826)
170 000
115 174

## Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year
Cash and cash equivalent at end of year
Calculations:

R[(62 500 ^ + 599 760 ^ 63 126 ^) (3 000 ^ + 5 700 ^ 3 700 ^)] = R594 124
R[(45 520 ^ + 294 440 ^ 90 080 ^) + R(34 334 ^ 10 400 ^ 4 400 ^)] = R269 414
R(280 500 ^ 20 320 ^ + 34 260 ^) = R294 440

QUESTION 5 (9 marks)

5.1

5.2

## Future value of investment:

Factor as per table:

8% ^^ 4 ^ = 2%
2% ^ over 16 ^ periods
1.373

## Present value of an annuity:

R(35 700 ^ 13 730 ^) = R21 970
Factor as per table:

12% ^ 2 ^ = 6%
6% over 8 ^ periods
9.897

## Present value of the annuity:

R21 970 ^ 9.897 ^ = R2 219.86
Amount to be invested monthly: R2 219.86 6 months^
R369.98