FAC1602 ASSIGNMENT 2
FOR SEMESTER 1 2025
FEND TUTORIALS
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A liability is a future obligation of a reporting entity to transfer an economic resource as a result of a
past event.
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Khanyisile and Tinyiko are business partners in Ride4Yours, a partnership business based in
Malelane that manufactures specialised helmets for motorcycle riders. The business prides itself on
using eco-friendly materials, making their helmets not only durable but also safe and sustainable for
the environment.
Khanyisile is passionate about motorcycle riding, while Tinyiko is an advocate for sustainability and
green business solutions. Together, they aim to position Ride4Yours as a leading brand in the
motorcycle safety industry.
Below is the relevant information regarding the partnership’s financial activities for the year ending
30 June 2024.
Balances as at 30 June 2024:
R
Inventory 108,300
Bank (positive) 293,600
Trade receivables control 199,200
Vehicles at cost 708,200
Equipment at cost 209,300
Warehouse building at cost 575,100
Accumulated depreciation: Vehicles 41,700
Accumulated depreciation: Equipment 64,400
Allowance for credit losses 3,000
Trade payables control 119,800
Capital: Khanyisile 431,500
Capital: Tinyiko 246,700
Current account: Khanyisile (Cr: 1 July 2023) 13,500
,Current account: Tinyiko (Dr: 1 July 2023) 9,500
2. Supplementary information:
2.1 Details of the partnership agreement between the partners:
2.1.1 An annual interest rate of 6% is applied to the opening balances of the partners’ capital and
current accounts.
2.1.2 Profits and losses are shared equally between Khanyisile and Tinyiko.
2.1.3 The monthly salaries to which the partners are entitled are R15 000 and R20 000
for Khanyisile and Tinyiko respectively. As of 30 June 2024, the salaries paid to the partners were
only up to 30 April 2024.
2.2 Adjustments at the end of the year:
2.2.1 The business aimed to expand its operations by acquiring additional warehouse for new range
of helmets. On 30 June 2024, Mbombela Bank provided a loan of R468 000 to facilitate the purchase
of the warehouse. The warehouse was acquired on 2 July 2024 at the cost of R468,000. This loan is
classified as long-term, with an 8% annual interest rate, to be repaid over 6 years with equal
instalments starting from 30 June 2025. This transaction has not yet been recorded.
2.2.1 On 30 June 2023, it was decided that an outstanding debt of R21 700 owed to the business
was unlikely to be recovered and should be written off as bad debt.
REQUIRED:
Assuming that the profit available for distribution to partners amounted to R560 000. What is the
correct balance of current account for Khanyisile as at 30 June 2024?
Instructions:
1. Round off all your answers to the nearest rand (eg: 50.56 = 51)
2. Don’t use any special characters (&) and don’t use bold in your answer.
3. Do not use any abbreviations.
4. Do not use brackets () to indicate a negative amount, instead use the minus sign “–“, e.g. (50)
will be indicated as -50.
500200
Answer:
1. Opening Balance of Khanyisile’s Current Account
, The opening balance of Khanyisile’s current account on 1 July 2023 was R13,500
(credit).
2. Interest on Capital and Current Accounts
An annual interest rate of 6% is applied to the opening balances of the partners' capital
and current accounts.
Interest on Khanyisile’s Capital Account:
Capital: Khanyisile = R431500
Interest = R431,500 * 6% = R25890
Interest on Khanyisile’s Current Account:
Since Khanyisile’s current account had a credit balance of R13500, the interest is calculated on
this amount:
Interest = R13500 * 6% = R810
3. Partner’s Salary
Khanyisile’s monthly salary = R15000X12=R180000
Total salary for 10 months = R15000 * 10 = R150000
4. Share of Profit
The profit available for distribution to the partners is R560000, and profits and losses are shared
equally between the partners.
Khanyisile’s share of the profit = R = R280000
5. Bad Debt Adjustment
The business has written off a debt of R21700, which affects the profit. However, since this
amount is already factored into the calculation of profit, we don't need to adjust the current
account separately.
6. Final Calculation
Now, we calculate the balance of Khanyisile’s current account by summing all of the elements:
Opening balance = R13500 (credit)
Interest on capital = R25890
FOR SEMESTER 1 2025
FEND TUTORIALS
,Question 1
Not yet answered
Marked out of 1.50
Flag question
Question text
A liability is a future obligation of a reporting entity to transfer an economic resource as a result of a
past event.
True
False
Question 2
Not yet answered
Marked out of 7.00
Flag question
Question text
Khanyisile and Tinyiko are business partners in Ride4Yours, a partnership business based in
Malelane that manufactures specialised helmets for motorcycle riders. The business prides itself on
using eco-friendly materials, making their helmets not only durable but also safe and sustainable for
the environment.
Khanyisile is passionate about motorcycle riding, while Tinyiko is an advocate for sustainability and
green business solutions. Together, they aim to position Ride4Yours as a leading brand in the
motorcycle safety industry.
Below is the relevant information regarding the partnership’s financial activities for the year ending
30 June 2024.
Balances as at 30 June 2024:
R
Inventory 108,300
Bank (positive) 293,600
Trade receivables control 199,200
Vehicles at cost 708,200
Equipment at cost 209,300
Warehouse building at cost 575,100
Accumulated depreciation: Vehicles 41,700
Accumulated depreciation: Equipment 64,400
Allowance for credit losses 3,000
Trade payables control 119,800
Capital: Khanyisile 431,500
Capital: Tinyiko 246,700
Current account: Khanyisile (Cr: 1 July 2023) 13,500
,Current account: Tinyiko (Dr: 1 July 2023) 9,500
2. Supplementary information:
2.1 Details of the partnership agreement between the partners:
2.1.1 An annual interest rate of 6% is applied to the opening balances of the partners’ capital and
current accounts.
2.1.2 Profits and losses are shared equally between Khanyisile and Tinyiko.
2.1.3 The monthly salaries to which the partners are entitled are R15 000 and R20 000
for Khanyisile and Tinyiko respectively. As of 30 June 2024, the salaries paid to the partners were
only up to 30 April 2024.
2.2 Adjustments at the end of the year:
2.2.1 The business aimed to expand its operations by acquiring additional warehouse for new range
of helmets. On 30 June 2024, Mbombela Bank provided a loan of R468 000 to facilitate the purchase
of the warehouse. The warehouse was acquired on 2 July 2024 at the cost of R468,000. This loan is
classified as long-term, with an 8% annual interest rate, to be repaid over 6 years with equal
instalments starting from 30 June 2025. This transaction has not yet been recorded.
2.2.1 On 30 June 2023, it was decided that an outstanding debt of R21 700 owed to the business
was unlikely to be recovered and should be written off as bad debt.
REQUIRED:
Assuming that the profit available for distribution to partners amounted to R560 000. What is the
correct balance of current account for Khanyisile as at 30 June 2024?
Instructions:
1. Round off all your answers to the nearest rand (eg: 50.56 = 51)
2. Don’t use any special characters (&) and don’t use bold in your answer.
3. Do not use any abbreviations.
4. Do not use brackets () to indicate a negative amount, instead use the minus sign “–“, e.g. (50)
will be indicated as -50.
500200
Answer:
1. Opening Balance of Khanyisile’s Current Account
, The opening balance of Khanyisile’s current account on 1 July 2023 was R13,500
(credit).
2. Interest on Capital and Current Accounts
An annual interest rate of 6% is applied to the opening balances of the partners' capital
and current accounts.
Interest on Khanyisile’s Capital Account:
Capital: Khanyisile = R431500
Interest = R431,500 * 6% = R25890
Interest on Khanyisile’s Current Account:
Since Khanyisile’s current account had a credit balance of R13500, the interest is calculated on
this amount:
Interest = R13500 * 6% = R810
3. Partner’s Salary
Khanyisile’s monthly salary = R15000X12=R180000
Total salary for 10 months = R15000 * 10 = R150000
4. Share of Profit
The profit available for distribution to the partners is R560000, and profits and losses are shared
equally between the partners.
Khanyisile’s share of the profit = R = R280000
5. Bad Debt Adjustment
The business has written off a debt of R21700, which affects the profit. However, since this
amount is already factored into the calculation of profit, we don't need to adjust the current
account separately.
6. Final Calculation
Now, we calculate the balance of Khanyisile’s current account by summing all of the elements:
Opening balance = R13500 (credit)
Interest on capital = R25890
