FAC1601/102/3/2019
ANNEXURE B: ASSIGNMENT 03 (Not to be submitted)
COMPLETE BY:
SEMESTER 1: 08 APRIL 2019
SEMESTER 2: 09 SEPTEMBER 2019
Please take note that this assignment must NOT be submitted. The solution to the assignment is
included in this tutorial letter to enable you to mark it yourself.
This section of the work must under no circumstances be regarded as less important for examination
purposes.
This assignment covers study units 1 to 6.
The assignment is compiled as follows:
Time
Question Subject
(minutes)
Partnership: Statement of profit or loss and other comprehensive
1 36
income
2 Partnership: Journal entries Change in ownership structure 52
3 Close corporation: Financial statements 54
4 Company: Journal entries Issue of shares 50
192
6
, FAC1601/102/3/2019
QUESTION 1 (36 minutes)
The following information pertains to a partnership, trading as Do Di Traders:
1. Balances as at 31 March 2019:
R
Capital: D Do (1 April 2018).......................................................................................... 300 000
Capital: D Di (1 April 2018) ........................................................................................... 250 000
Current account: D Do (Dr) (1 April 2018) .................................................................... 27 500
Current account: D Di (Cr) (1 April 2018) ..................................................................... 15 000
Drawings: D Do (cash) ................................................................................................. 65 000
Drawings: D Di (cash) .................................................................................................. 55 000
Office furniture at cost .................................................................................................. 190 000
Vehicles at cost ............................................................................................................ 200 000
Accumulated depreciation: Office furniture (30 September 2018) ................................. 73 200
Accumulated depreciation: Vehicles (31 March 2018) .................................................. 10 800
Long-term loan (unsecured) ......................................................................................... 125 000
Trade receivables control ............................................................................................. 100 000
Trade payables control ................................................................................................. 74 000
Bank (overdraft) ........................................................................................................... 9 800
Allowance for credit losses ........................................................................................... 2 550
Stationery inventory (31 March 2018)........................................................................... 3 250
Sales ............................................................................................................................ 462 800
Inventory (31 March 2018) ........................................................................................... 42 500
Profit on sale of office furniture ..................................................................................... 3 480
Delivery expenses (in respect of sales) ........................................................................ 3 450
Settlement discount granted ......................................................................................... 5 620
Purchases .................................................................................................................... 391 643
Delivery expenses (in respect of purchases) ................................................................ 6 500
Sales returns ................................................................................................................ 7 000
Purchases returns ........................................................................................................ 2 585
Settlement discount received ....................................................................................... 1 523
Rent expense ............................................................................................................... 27 000
Bank charges ............................................................................................................... 1 475
Depreciation (office furniture) ....................................................................................... 1 280
Interest expense (paid on long-term loan) .................................................................... 21 250
Salaries and wages ...................................................................................................... 155 000
Telephone expenses .................................................................................................... 3 620
Maintenance and repairs (office furniture) .................................................................... 1 250
Fuel and sundry vehicle expenses ............................................................................... 14 400
Stationery (purchased) ................................................................................................. 2 540
Marketing fees ............................................................................................................. 5 460
2. Additional information
2.1 Stationery on hand at 31 March 2019 - R450.
2.2 Inventory on hand at 31 March 2019 - R39 700.
2.3 On 30 September 2018 office furniture with a cost price of R20 000 was sold for R15 000.
On the same date office furniture to the amount of R40 000 was purchased on credit, in order
to replace furniture that was sold. All the necessary accounting entries in respect of these
transactions were done correctly.
2.4 The following (outstanding) amounts have not yet been provided for:
2.4.1 Depreciation
On the office furniture at 20% per annum on the diminishing balance method.
7
, FAC1601/102/3/2019
QUESTION 1 (continued)
On the vehicles according to the straight-line method. The expected lifespan of each
vehicle is estimated to be 10 years. The residual value thereof is estimated at R20 000.
No vehicles were acquired or disposed of during the year.
The long-term loan was acquired from ABA Bank on 1 April 2018 at 18% interest per
annum. The loan is unsecured and is repayable in 10 equal annual instalments from
1 April 2019.
2.4 Credit losses of R5 000 must be written off. The closing balance of the allowance for credit
losses account must be increased with R2 200.
2.5 The partnership agreement stipulates that:
2.5.1 The partnership must create separate drawings and current accounts for each partner.
2.5.2 Interest on capital must be calculated at 8,5% per annum on the opening balances of the
capital accounts.
2.5.3 Interest on current accounts must be calculated at 15% per annum on the opening balances
of the current accounts.
2.5.4 A salary of R15 000 per annum must be paid to D Di. The salary has been paid and is included
in the salaries and wages account.
2.6 Drawings still to be accounted for:
D Do trading inventory, R2 500
D Di stationery inventory, R235
2.7 At the end of each financial year the drawings accounts must be closed off against the
applicable current accounts.
REQUIRED:
Prepare the statement of profit or loss and other comprehensive income of Do Di Traders for the
year ended 31 March 2019 in compliance with International Financial Reporting Standards (IFRS),
appropriate to the business of the partnership.
Notes and comparative figures are NOT required.
8
, FAC1601/102/3/2019
QUESTION 2 (52 minutes)
John and Shoes were in a partnership and traded as JS Traders. John and Shoes shared in the
profits or losses of JS Traders in the ratio of 5:3 respectively. John and Shoes decided to admit
Mosheu to the partnership. Before any valuation-adjustments and goodwill were recorded. The
following statement of financial position was prepared (in preparation of the change in the ownership
structure) at 28 February 2019, the financial year-end of JS Traders:
Balances as at 28 February 2019:
R
Capital: John ............................................................................................................... 87 500
Capital: Shoe............................................................................................................... 52 500
Furniture and equipment ............................................................................................. 80 000
Inventories................................................................................................................... 30 000
Trade receivables control ............................................................................................ 20 000
Trade payables control ................................................................................................ 15 000
Bank (Dr) ..................................................................................................................... 25 000
In the preparation of the change in the ownership structure of JS Traders, John and Shoes obtained
the following appraisals on 28 February 2019:
1. Trade receivables control - R19 000. (Create an allowance for credit losses to the amount of
R1 000.)
2. Inventories - R35 000.
3. Furniture and equipment at market (fair) value - R100 000.
After the valuation adjustments and goodwill were recorded, Mosheu was admitted to the partnership
on 1 March 2019. The new partnership trades as JSM Traders and the profit sharing ratio between
John, Shoes and Mosheu is 5:3:2 respectively. On 1 March 2019, Mosheu paid R50 000 into the
bank account of the partnership for a 20% interest in the net assets (equity) of the new partnership.
REQUIRED:
2.1 Prepare the journal entries in the general journal of JSM Traders on 28 February 2019 to
prepare for the admission of Mosheu as a partner, and to record the dissolution of the
partnership. Apply the accounting procedure which is based on the legal perspective.
Narrations are NOT required.
2.2 Prepare the journal entries in the general journal of JSM Traders on 1 March 2019 to record
its formation. Apply the accounting procedure which is based on the legal perspective.
Narrations are NOT required.
9
ANNEXURE B: ASSIGNMENT 03 (Not to be submitted)
COMPLETE BY:
SEMESTER 1: 08 APRIL 2019
SEMESTER 2: 09 SEPTEMBER 2019
Please take note that this assignment must NOT be submitted. The solution to the assignment is
included in this tutorial letter to enable you to mark it yourself.
This section of the work must under no circumstances be regarded as less important for examination
purposes.
This assignment covers study units 1 to 6.
The assignment is compiled as follows:
Time
Question Subject
(minutes)
Partnership: Statement of profit or loss and other comprehensive
1 36
income
2 Partnership: Journal entries Change in ownership structure 52
3 Close corporation: Financial statements 54
4 Company: Journal entries Issue of shares 50
192
6
, FAC1601/102/3/2019
QUESTION 1 (36 minutes)
The following information pertains to a partnership, trading as Do Di Traders:
1. Balances as at 31 March 2019:
R
Capital: D Do (1 April 2018).......................................................................................... 300 000
Capital: D Di (1 April 2018) ........................................................................................... 250 000
Current account: D Do (Dr) (1 April 2018) .................................................................... 27 500
Current account: D Di (Cr) (1 April 2018) ..................................................................... 15 000
Drawings: D Do (cash) ................................................................................................. 65 000
Drawings: D Di (cash) .................................................................................................. 55 000
Office furniture at cost .................................................................................................. 190 000
Vehicles at cost ............................................................................................................ 200 000
Accumulated depreciation: Office furniture (30 September 2018) ................................. 73 200
Accumulated depreciation: Vehicles (31 March 2018) .................................................. 10 800
Long-term loan (unsecured) ......................................................................................... 125 000
Trade receivables control ............................................................................................. 100 000
Trade payables control ................................................................................................. 74 000
Bank (overdraft) ........................................................................................................... 9 800
Allowance for credit losses ........................................................................................... 2 550
Stationery inventory (31 March 2018)........................................................................... 3 250
Sales ............................................................................................................................ 462 800
Inventory (31 March 2018) ........................................................................................... 42 500
Profit on sale of office furniture ..................................................................................... 3 480
Delivery expenses (in respect of sales) ........................................................................ 3 450
Settlement discount granted ......................................................................................... 5 620
Purchases .................................................................................................................... 391 643
Delivery expenses (in respect of purchases) ................................................................ 6 500
Sales returns ................................................................................................................ 7 000
Purchases returns ........................................................................................................ 2 585
Settlement discount received ....................................................................................... 1 523
Rent expense ............................................................................................................... 27 000
Bank charges ............................................................................................................... 1 475
Depreciation (office furniture) ....................................................................................... 1 280
Interest expense (paid on long-term loan) .................................................................... 21 250
Salaries and wages ...................................................................................................... 155 000
Telephone expenses .................................................................................................... 3 620
Maintenance and repairs (office furniture) .................................................................... 1 250
Fuel and sundry vehicle expenses ............................................................................... 14 400
Stationery (purchased) ................................................................................................. 2 540
Marketing fees ............................................................................................................. 5 460
2. Additional information
2.1 Stationery on hand at 31 March 2019 - R450.
2.2 Inventory on hand at 31 March 2019 - R39 700.
2.3 On 30 September 2018 office furniture with a cost price of R20 000 was sold for R15 000.
On the same date office furniture to the amount of R40 000 was purchased on credit, in order
to replace furniture that was sold. All the necessary accounting entries in respect of these
transactions were done correctly.
2.4 The following (outstanding) amounts have not yet been provided for:
2.4.1 Depreciation
On the office furniture at 20% per annum on the diminishing balance method.
7
, FAC1601/102/3/2019
QUESTION 1 (continued)
On the vehicles according to the straight-line method. The expected lifespan of each
vehicle is estimated to be 10 years. The residual value thereof is estimated at R20 000.
No vehicles were acquired or disposed of during the year.
The long-term loan was acquired from ABA Bank on 1 April 2018 at 18% interest per
annum. The loan is unsecured and is repayable in 10 equal annual instalments from
1 April 2019.
2.4 Credit losses of R5 000 must be written off. The closing balance of the allowance for credit
losses account must be increased with R2 200.
2.5 The partnership agreement stipulates that:
2.5.1 The partnership must create separate drawings and current accounts for each partner.
2.5.2 Interest on capital must be calculated at 8,5% per annum on the opening balances of the
capital accounts.
2.5.3 Interest on current accounts must be calculated at 15% per annum on the opening balances
of the current accounts.
2.5.4 A salary of R15 000 per annum must be paid to D Di. The salary has been paid and is included
in the salaries and wages account.
2.6 Drawings still to be accounted for:
D Do trading inventory, R2 500
D Di stationery inventory, R235
2.7 At the end of each financial year the drawings accounts must be closed off against the
applicable current accounts.
REQUIRED:
Prepare the statement of profit or loss and other comprehensive income of Do Di Traders for the
year ended 31 March 2019 in compliance with International Financial Reporting Standards (IFRS),
appropriate to the business of the partnership.
Notes and comparative figures are NOT required.
8
, FAC1601/102/3/2019
QUESTION 2 (52 minutes)
John and Shoes were in a partnership and traded as JS Traders. John and Shoes shared in the
profits or losses of JS Traders in the ratio of 5:3 respectively. John and Shoes decided to admit
Mosheu to the partnership. Before any valuation-adjustments and goodwill were recorded. The
following statement of financial position was prepared (in preparation of the change in the ownership
structure) at 28 February 2019, the financial year-end of JS Traders:
Balances as at 28 February 2019:
R
Capital: John ............................................................................................................... 87 500
Capital: Shoe............................................................................................................... 52 500
Furniture and equipment ............................................................................................. 80 000
Inventories................................................................................................................... 30 000
Trade receivables control ............................................................................................ 20 000
Trade payables control ................................................................................................ 15 000
Bank (Dr) ..................................................................................................................... 25 000
In the preparation of the change in the ownership structure of JS Traders, John and Shoes obtained
the following appraisals on 28 February 2019:
1. Trade receivables control - R19 000. (Create an allowance for credit losses to the amount of
R1 000.)
2. Inventories - R35 000.
3. Furniture and equipment at market (fair) value - R100 000.
After the valuation adjustments and goodwill were recorded, Mosheu was admitted to the partnership
on 1 March 2019. The new partnership trades as JSM Traders and the profit sharing ratio between
John, Shoes and Mosheu is 5:3:2 respectively. On 1 March 2019, Mosheu paid R50 000 into the
bank account of the partnership for a 20% interest in the net assets (equity) of the new partnership.
REQUIRED:
2.1 Prepare the journal entries in the general journal of JSM Traders on 28 February 2019 to
prepare for the admission of Mosheu as a partner, and to record the dissolution of the
partnership. Apply the accounting procedure which is based on the legal perspective.
Narrations are NOT required.
2.2 Prepare the journal entries in the general journal of JSM Traders on 1 March 2019 to record
its formation. Apply the accounting procedure which is based on the legal perspective.
Narrations are NOT required.
9
