6 FAC1601/102
ADDITIONAL QUESTIONS (Not to be submitted)
Please take note that these questions must NOT be submitted. The solution to the questions are 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.
PROPOSED TIMETABLE
(try not to deviate from this)
Time in
Question Subject Marks minutes
Close corporations:
Calculation of profit or loss for the year
1 39 47
Statement of changes in net investment of members
Statement of financial position
Changes in the ownership structure of a partnership:
2 Valuation account, equipment account and calculation of 21 25
goodwill
Statement of cash flows:
3 22 26
Cash flows from investing and financing activities sections
Companies:
4 18 22
Share transactions and calculation of dividends
TOTAL 100 120
, 7
QUESTION 1 (39 marks)(47 minutes)
BoomShaka CC is a trading entity, operating in Mshenguville business centre. Lebo and Thembi
are the only members of the corporation. They have an equal interest in the corporation and
distribute profits or losses accordingly. The following information appeared in the accounting
records of the CC on 28 February 2017, the end of the financial year:
Balances as at 28 February 2017:
R
................................................................ 50 000
................................................................ 50 000
Retained earnings (1 March 2016) .......................................................................................... 34 300
Loan from member: Lebo (1 March 2016) ............................................................................... 18 000
Loan from member: Thembi (1 March 2016) ................................................................ 24 000
Trade receivables control ................................................................................................ 1 500
Bank (favourable) ....................................................................................................................136 360
Trade payables control ............................................................................................................4 000
SARS (Income tax) (Dr) ................................................................................................ 10 450
Inventory ................................................................................................................................
60 000
Long-term loan (Great Bank) ................................................................................................ 35 000
Land and buildings at cost ................................................................................................ 50 000
Equipment at cost ................................................................................................................... 15 000
Furniture and fittings at cost ................................................................................................ 45 000
Accumulated depreciation: Equipment ....................................................................................5 000
Accumulated depreciation: Furniture and fittings ................................................................ 13 500
Additional information:
1. Before the information below was taken into account, the bookkeeper calculated the profit
before tax for the year ended 28 February 2017 as R84 510.
1.1 The bookkeeper neglected to record the depreciation for the current financial year:
Depreciation on equipment is accounted for at 25% per annum according to the diminishing
balance method. On 1 February 2017 a printer was purchased on credit for R9 600; this
transaction is still to be recorded in the books of the business.
On furniture and fittings, depreciation to the amount of R9 000 must be recorded.
1.2 On 28 February 2007 a debtor owing the business R400 was declared insolvent but his
account was not written off. On the same date another debtor, whose account had been
written off as irrecoverable during the 2016 financial year, made a cash payment of R850 to
the CC in order to settle the amount that was previously written off. The cashier forgot the
R850 in a drawer and did not record this transaction.
1.3 The actual normal income tax for the current financial year was calculated as R24 500 and
must still be recorded.
ADDITIONAL QUESTIONS (Not to be submitted)
Please take note that these questions must NOT be submitted. The solution to the questions are 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.
PROPOSED TIMETABLE
(try not to deviate from this)
Time in
Question Subject Marks minutes
Close corporations:
Calculation of profit or loss for the year
1 39 47
Statement of changes in net investment of members
Statement of financial position
Changes in the ownership structure of a partnership:
2 Valuation account, equipment account and calculation of 21 25
goodwill
Statement of cash flows:
3 22 26
Cash flows from investing and financing activities sections
Companies:
4 18 22
Share transactions and calculation of dividends
TOTAL 100 120
, 7
QUESTION 1 (39 marks)(47 minutes)
BoomShaka CC is a trading entity, operating in Mshenguville business centre. Lebo and Thembi
are the only members of the corporation. They have an equal interest in the corporation and
distribute profits or losses accordingly. The following information appeared in the accounting
records of the CC on 28 February 2017, the end of the financial year:
Balances as at 28 February 2017:
R
................................................................ 50 000
................................................................ 50 000
Retained earnings (1 March 2016) .......................................................................................... 34 300
Loan from member: Lebo (1 March 2016) ............................................................................... 18 000
Loan from member: Thembi (1 March 2016) ................................................................ 24 000
Trade receivables control ................................................................................................ 1 500
Bank (favourable) ....................................................................................................................136 360
Trade payables control ............................................................................................................4 000
SARS (Income tax) (Dr) ................................................................................................ 10 450
Inventory ................................................................................................................................
60 000
Long-term loan (Great Bank) ................................................................................................ 35 000
Land and buildings at cost ................................................................................................ 50 000
Equipment at cost ................................................................................................................... 15 000
Furniture and fittings at cost ................................................................................................ 45 000
Accumulated depreciation: Equipment ....................................................................................5 000
Accumulated depreciation: Furniture and fittings ................................................................ 13 500
Additional information:
1. Before the information below was taken into account, the bookkeeper calculated the profit
before tax for the year ended 28 February 2017 as R84 510.
1.1 The bookkeeper neglected to record the depreciation for the current financial year:
Depreciation on equipment is accounted for at 25% per annum according to the diminishing
balance method. On 1 February 2017 a printer was purchased on credit for R9 600; this
transaction is still to be recorded in the books of the business.
On furniture and fittings, depreciation to the amount of R9 000 must be recorded.
1.2 On 28 February 2007 a debtor owing the business R400 was declared insolvent but his
account was not written off. On the same date another debtor, whose account had been
written off as irrecoverable during the 2016 financial year, made a cash payment of R850 to
the CC in order to settle the amount that was previously written off. The cashier forgot the
R850 in a drawer and did not record this transaction.
1.3 The actual normal income tax for the current financial year was calculated as R24 500 and
must still be recorded.
