FAC1601/QUESTION BANK
CONTENTS
SU 2: Establishment and the financial statements of a partnership .............................3
SU 3: Changes in the ownership structure of a partnership........................................23
SU 4: The liquidation of a partnership ...........................................................................38
SU 5: Close corporations ................................................................................................48
SU 6: Introduction to companies....................................................................................67
SU 7: Statement of cash flows........................................................................................82
SU 8: Analysis and interpretation of financial statements.........................................101
SU 9: Branches .............................................................................................................115
SU 10: The time value of money...................................................................................122
2
, FAC1601/QUESTION BANK
SU 2: Establishment and the financial statements of a partnership
QUESTION 2.1 (25 marks)(30 minutes)
Amanda and Sphindile are in a partnership trading as A&S Supermarket. The following information
pertains to the partnership:
1. List of balances as at 31 December 2009
R
Capital: Amanda (1 January 2009)................................................................................ 350 000
Capital: Sphindile (1 January 2009) .............................................................................. 250 000
Current account: Amanda (1 January 2009) (cr) ........................................................... 60 000
Current account: Sphindile (1 January 2009) (dr).......................................................... 40 000
Land and buildings at cost ............................................................................................ 494 000
Vehicles at cost............................................................................................................. 198 000
Accumulated depreciation: Vehicles (1 January 2009) .................................................. 42 000
Debtors control ............................................................................................................. 145 560
Creditors control ........................................................................................................... 106 300
Bank (dr) ....................................................................................................................... 26 582
Fixed deposit: Third National Bank ............................................................................... 19 000
Drawings: Amanda........................................................................................................ 64 800
Drawings: Sphindile ...................................................................................................... 43 200
Loan to Sphindile .......................................................................................................... 40 800
Loan from Amanda ....................................................................................................... 170 000
Allowance for credit losses............................................................................................ 2 500
Sales............................................................................................................................. 650 000
Purchases..................................................................................................................... 304 000
Inventory (merchandise) (1 January 2009).................................................................... 70 800
Salaries and wages....................................................................................................... 132 960
Water and electricity ..................................................................................................... 4 700
Interest expense: Loan from Amanda ........................................................................... 5 400
Settlement discount granted ......................................................................................... 3 800
Interest income: Fixed deposit ...................................................................................... 1 710
Stationery consumed .................................................................................................... 5 000
Telephone expenses..................................................................................................... 26 208
Insurance on purchases................................................................................................ 4 500
Freight on sales ............................................................................................................ 3 200
2. Partnership agreement:
The partnership agreement stipulates the following:
2.1 The partners Amanda and Sphindile share the profits or losses in the ratio of 3:2
respectively.
2.2 Interest at 10% per annum is allowed on the opening balances of the partners’ capital
accounts.
2.3 Amanda is entitled to a 10% commission on sales.
3
, FAC1601/QUESTION BANK
QUESTION 2.1 (continued)
3. Year-end adjustments:
3.1 Inventory on hand at 31 December 2009:
R
Merchandise 83 000
Stationery (stationery purchased is recorded in the stationery consumed account) 850
3.2 On 30 September 2009, a delivery vehicle was purchased for R85 000 cash. All the
necessary entries were made in the books.
3.3 Depreciation must be provided on vehicles at 10% per annum according to the straight-line
method.
3.4 The loan from Amanda was obtained on 1 September 2007 at 5% interest per annum. The
loan will be repaid in five equal annual instalments, starting from 31 December 2010. The
interest must be paid to Amanda annually.
3.5 During the financial year Sphindile was granted an interest free loan which she agreed to
settle in full on 30 June 2010.
3.6 The water and electricity account of R400 for December 2009 was received on
10 January 2010.
3.7 A debtor owing the business R5 560 has for the past financial year defaulted on his
payments and his account must be written off as irrecoverable. The allowance for credit
losses must be adjusted to R3 200.
3.8 During the financial year R40 000 was paid to Amanda as commission on sales. These
payments were recorded in the salaries and wages account.
3.9 The fixed deposit at Third National Bank was made on 1 January 2008 for a period of 5 years
at 9% interest per annum. The interest is receivable at the end of each borrowing year.
REQUIRED:
2.1.1 Prepare the statement of profit or loss and other comprehensive income of A&S
Supermarket for the year ended 31 December 2009. Your answer must comply
with the requirements of International Financial Reporting Standards (IFRS)
appropriate to the business of the partnership (notes and comparative figures are (20)
not required).
2.1.2 Prepare the current account of Amanda in the general ledger of A&S Supermarket
for the year ended 31 December 2009. The profit/loss for the year need not be
appropriated and do not balance the account. Each entry must disclose the
correct contra ledger account. (5)
[25]
NB: Show all calculations.
4
, FAC1601/QUESTION BANK
SOLUTION 2.1 (25 marks)(30 minutes)
2.1.1
A&S SUPERMARKET
STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2009
R
Revenue R(650 000 - 3 800) 646 200
Cost of sales (296 300)
Inventory – 1 January 2009 70 800
Purchases 304 000
Insurance on purchases 4 500
379 300
Inventory – 31 December 2009 (83 000)
Gross profit 349 900
Other income 1710
Interest income: Loans and receivables: Fixed deposit 1710
351 610
Distribution, administrative and other expenses (151 303)
Depreciation 13 425
Water and electricity R(4 700 + 400) 5 100
Credit losses R(5 560 + 700) 6 260
Salaries and wages R(132 960 – 40 000) 92 960
Stationery consumed R(5 000 – 850) 4 150
Telephone expense 26 208
Freight on sales 3 200
200 307
Finance costs (8 500)
Interest on loan (R170 000 x 5%) 8 500
Profit for the year 191 807
Other comprehensive income for the year -
Total comprehensive income for the year 191807
Calculation : Depreciation on vehicles
R(11 300 + 2 125 ) = R13 425
In possession for the whole year
R(198 000 – 85 000) = R113 000 x 10% = R11 300
Purchased during the year
R(85 000 x 10%) x 3/12 = R2 125
5
CONTENTS
SU 2: Establishment and the financial statements of a partnership .............................3
SU 3: Changes in the ownership structure of a partnership........................................23
SU 4: The liquidation of a partnership ...........................................................................38
SU 5: Close corporations ................................................................................................48
SU 6: Introduction to companies....................................................................................67
SU 7: Statement of cash flows........................................................................................82
SU 8: Analysis and interpretation of financial statements.........................................101
SU 9: Branches .............................................................................................................115
SU 10: The time value of money...................................................................................122
2
, FAC1601/QUESTION BANK
SU 2: Establishment and the financial statements of a partnership
QUESTION 2.1 (25 marks)(30 minutes)
Amanda and Sphindile are in a partnership trading as A&S Supermarket. The following information
pertains to the partnership:
1. List of balances as at 31 December 2009
R
Capital: Amanda (1 January 2009)................................................................................ 350 000
Capital: Sphindile (1 January 2009) .............................................................................. 250 000
Current account: Amanda (1 January 2009) (cr) ........................................................... 60 000
Current account: Sphindile (1 January 2009) (dr).......................................................... 40 000
Land and buildings at cost ............................................................................................ 494 000
Vehicles at cost............................................................................................................. 198 000
Accumulated depreciation: Vehicles (1 January 2009) .................................................. 42 000
Debtors control ............................................................................................................. 145 560
Creditors control ........................................................................................................... 106 300
Bank (dr) ....................................................................................................................... 26 582
Fixed deposit: Third National Bank ............................................................................... 19 000
Drawings: Amanda........................................................................................................ 64 800
Drawings: Sphindile ...................................................................................................... 43 200
Loan to Sphindile .......................................................................................................... 40 800
Loan from Amanda ....................................................................................................... 170 000
Allowance for credit losses............................................................................................ 2 500
Sales............................................................................................................................. 650 000
Purchases..................................................................................................................... 304 000
Inventory (merchandise) (1 January 2009).................................................................... 70 800
Salaries and wages....................................................................................................... 132 960
Water and electricity ..................................................................................................... 4 700
Interest expense: Loan from Amanda ........................................................................... 5 400
Settlement discount granted ......................................................................................... 3 800
Interest income: Fixed deposit ...................................................................................... 1 710
Stationery consumed .................................................................................................... 5 000
Telephone expenses..................................................................................................... 26 208
Insurance on purchases................................................................................................ 4 500
Freight on sales ............................................................................................................ 3 200
2. Partnership agreement:
The partnership agreement stipulates the following:
2.1 The partners Amanda and Sphindile share the profits or losses in the ratio of 3:2
respectively.
2.2 Interest at 10% per annum is allowed on the opening balances of the partners’ capital
accounts.
2.3 Amanda is entitled to a 10% commission on sales.
3
, FAC1601/QUESTION BANK
QUESTION 2.1 (continued)
3. Year-end adjustments:
3.1 Inventory on hand at 31 December 2009:
R
Merchandise 83 000
Stationery (stationery purchased is recorded in the stationery consumed account) 850
3.2 On 30 September 2009, a delivery vehicle was purchased for R85 000 cash. All the
necessary entries were made in the books.
3.3 Depreciation must be provided on vehicles at 10% per annum according to the straight-line
method.
3.4 The loan from Amanda was obtained on 1 September 2007 at 5% interest per annum. The
loan will be repaid in five equal annual instalments, starting from 31 December 2010. The
interest must be paid to Amanda annually.
3.5 During the financial year Sphindile was granted an interest free loan which she agreed to
settle in full on 30 June 2010.
3.6 The water and electricity account of R400 for December 2009 was received on
10 January 2010.
3.7 A debtor owing the business R5 560 has for the past financial year defaulted on his
payments and his account must be written off as irrecoverable. The allowance for credit
losses must be adjusted to R3 200.
3.8 During the financial year R40 000 was paid to Amanda as commission on sales. These
payments were recorded in the salaries and wages account.
3.9 The fixed deposit at Third National Bank was made on 1 January 2008 for a period of 5 years
at 9% interest per annum. The interest is receivable at the end of each borrowing year.
REQUIRED:
2.1.1 Prepare the statement of profit or loss and other comprehensive income of A&S
Supermarket for the year ended 31 December 2009. Your answer must comply
with the requirements of International Financial Reporting Standards (IFRS)
appropriate to the business of the partnership (notes and comparative figures are (20)
not required).
2.1.2 Prepare the current account of Amanda in the general ledger of A&S Supermarket
for the year ended 31 December 2009. The profit/loss for the year need not be
appropriated and do not balance the account. Each entry must disclose the
correct contra ledger account. (5)
[25]
NB: Show all calculations.
4
, FAC1601/QUESTION BANK
SOLUTION 2.1 (25 marks)(30 minutes)
2.1.1
A&S SUPERMARKET
STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2009
R
Revenue R(650 000 - 3 800) 646 200
Cost of sales (296 300)
Inventory – 1 January 2009 70 800
Purchases 304 000
Insurance on purchases 4 500
379 300
Inventory – 31 December 2009 (83 000)
Gross profit 349 900
Other income 1710
Interest income: Loans and receivables: Fixed deposit 1710
351 610
Distribution, administrative and other expenses (151 303)
Depreciation 13 425
Water and electricity R(4 700 + 400) 5 100
Credit losses R(5 560 + 700) 6 260
Salaries and wages R(132 960 – 40 000) 92 960
Stationery consumed R(5 000 – 850) 4 150
Telephone expense 26 208
Freight on sales 3 200
200 307
Finance costs (8 500)
Interest on loan (R170 000 x 5%) 8 500
Profit for the year 191 807
Other comprehensive income for the year -
Total comprehensive income for the year 191807
Calculation : Depreciation on vehicles
R(11 300 + 2 125 ) = R13 425
In possession for the whole year
R(198 000 – 85 000) = R113 000 x 10% = R11 300
Purchased during the year
R(85 000 x 10%) x 3/12 = R2 125
5
