FAC2246 October Exam (DETAILED ANSWERS) 2023

FAC2246 October Exam (DETAILED ANSWERS) 2023 100% TRUSTED workings, explanations and solutions. For assistance call or us on +/ 2/ 5/ 4 /7 /7 /9 /5 /4 /0 /1 /3 /2 . Question 1 (20 Marks) The partnership agreement of Madi-Maxi Traders provided for the following: Balances on 1 March 20.19: Capital: Madi R 125 000 Maxi R 85 000 Current Account: Madi R 24 000 Maxi R 8 000 (debit) Net profit for the period: R 366 000 Transactions during the year, not included in profit: 1. Madi will be full-time employed and will receive a monthly salary of R 12 000. 2. Interest on drawings to be charged at 15% per annum. 3. Interest on capital will be paid at 12% per annum. 4. Interest on current accounts will be charged at 7% per annum. 5. The partners will share profits in the ratio of capital contributed. 6. On 1 July 20.18, Madi withdrew R 10 000 in cash. On 1 December 20.18, Madi withdrew goods at a cost of R 5 000, this was drawings against expected profits. 7. Madi drew R 6 000 of his salary at the end of each month. REQUIRED: Record the journal entries for Madi-Maxi Traders for the year ended 29 February 20.20. (20 marks) Question 2 (40 marks) The following detail of transactions and balances were extracted from the records of Wasp Manufacturers a company manufacturing gas lights. The company make use of the periodic inventory system. During the year 20 400 units were completed. The company are registered for VAT and the VAT rate is 15%. 01/07/20.19 30/06/20.20 Inventory - completed units: 2 720 units ? units Balances Inventory: R R Raw materials Work in progress Indirect materials The following information was obtained from the trial balance on 30 June 20.19 20.20 Factory equipment Accumulated depreciation – factory equipment The following information was obtained from the trial balance on 30 June Debit Credit Purchases of raw materials (on credit) 485 300 Raw materials returned 25 100 Freight costs: raw materials 15 600 Indirect materials purchased (on credit) 17 400 Depreciation (note 8) ? Railage on sales 16 800 Salaries and wages (note 1) 525 200 Insurance claim for damaged goods (note 3) 3 800 Telephone 66 600 Electricity and water 152 000 Sales (18 700 units) 2 500 600 Maintenance factory equipment 70 025 Insurance (note 6) 45 000 Loss on sale of factory equipment (note 8) 4 800 Rent of buildings 150 100 VAT Input 16 900 VAT Output 29 400 Additional information: 1 Salaries and wages can be divided as follows: factory supervisors R126 100 office staff - administrative R85 650 factory security guards R42 000 machine operators R198 300 factory cleaners R44 250 office cleaner R28 900 2. Wasp Manufacturers donated 120 finished products with a total selling price (including VAT) of R17 477 to charity. No entry was made of this transaction. 3. During the year raw materials costing R4 140 were damaged in a thunderstorm. The insurance company paid the replacement cost of R4 370. 4. Rent paid and electricity and water are allocated according to floor space used. The total area of the buildings rented is 900 m 2 of which 630 m 2 are occupied by factory buildings and the rest by the administration offices. 5. No entry was made for the following amounts owing on 30 June 20.20: Wages for machine operators on leave R2 700 Rent (including VAT) R16 100 Telephone (including VAT) R6 670 6. Insurance is paid monthly in advance. On 30 June 20.20 the insurance for July 20.20 was paid R4 025 (including VAT). 75% of the insurance was paid in respect of the factory. The rest was for the administration department. 7. The telephone expenses of the factory amounts a 1 /4 of that of the office. 8. The depreciation rate on factory equipment is R5,50 per unit produced on all factory equipment. During the year equipment with a cost of R150 800 and accumulated depreciation on 1 July 20.19 of R62 800 were sold at a loss of R4 800. This equipment produced 1 700 units during the current financial year until it was sold. These units are included in the total number of units given above. New factory equipment was purchased on the 1 September 20.19. REQUIRED: 2.1. Calculate the number of units on hand at 30 June 20.20. 2.2. Prepare the following ledger accounts for the year ended 30 June 20.20: • Raw materials • Indirect materials • Work in Progress • Number of Units of the Finished Products 2.3. Calculate the cost to manufacture one unit. NB Do your workings to the nearest R1 Question 3 (40 marks) Cocoa Traders trades in hardware. The company’s merchandise are sold at the head office in Midrand and at the branch in Giyani. All the merchandise are purchased by the head office and dispatched to the branch at a mark-up of 33 1 /3% on cost. A bank account for the branch is opened at a bank at Giyani. The branch must deposit all cash receipts in the bank and payments at the branch are made by cheque. The branch only keeps record of cash transactions and all other accounts are kept at head office. The head office is registered for VAT (use a VAT rate of 15%). The following balances appeared in the records of head office on 1 November 20.19: Branch inventories at selling price (excluding VAT) R96 000 Branch receivables R15 000 Transactions during November 20.19: 1. Head office dispatched goods at selling price R842 000, excluding VAT, to the branch. 2. The branch sells merchandise for cash and receive R503 700. 3. The branch sells merchandise to the amount of R368 000 (total of invoices) on credit to receivables. 4. Some of the merchandise which is not in demand in Giyani is returned at selling price of R9 000 (excluding VAT) to head office. 5. Receivables of the branch pay the accounts to: The branch R120 000 The head office R80 000 The branch allows R11 730 discount to receivables (not accounted for with sales). 6. The branch receives notice that a receivable who owes R2 640 is insolvent and receives R1 716 as a first and final dividend. 7. The head office pays the monthly rent of the building to the amount of R17 020 on behalf of the branch. 8. The branch pays salaries and wages of R12 400. Additional information 1. Inventories were sold at a discount of 10% at a sale during the month. The proceeds with the sale of these items amounted to R20 909 (including VAT) and are included in the amount in point 2. 2. The value of inventories at the branch at marked price on 30 November 20.19 amounts to R162 780 (excluding VAT) 3. Inventory losses of more than R500 are material. REQUIRED: Prepare the following accounts in the records of head office: 3.1 Branch inventories 3.2 Branch gross profit 3.3 Branch profit or loss 3.4 Branch receivables NOTE: Calculate towards the nearest rand.