FAC1602 - Assignment 2 - Semester 2 - 2023 - DISTINCTION GURANTEED

Question 1
Greg and Sheniz are in a partnership trading as Sugar Rush, a
Answer saved new, up-and-coming pastry shop. They share profits and
Marked out of losses in the ratio of 5:3 respectively. The following information
1.00 was obtained for the financial year ending 31 August 2023:




The partnership agreement stipulates the following:
1. Interest on capital must be calculated at 7% per annum
on the opening balances of the Capital Accounts.
2. The partnership must create separate drawings and
current accounts for each partnership.
3. Interest on current accounts must be calculated at 17.5%
per annum on the opening balances of the current
accounts.
4. At the end of the financial year, the Drawings accounts
must be closed off against the applicable current
accounts.

Additional Information
The following information has not yet been accounted for:
1. A settlement discount of 3% on total Purchases for the
year was received. Inventory on hand at 31 August 2023
amounted to R16 000.
2. The mortgage was obtained from The Baking Bank on 01
November 2022 and bears interest at a rate of 15% per annum.
Interest for the current year must still be provided for.

, 3. The closing balance of the allowance for credit losses account
must be increased with R3 800.
4. Depreciation is accounted for as follows:

a. Vehicles: Straight line method, no residual value.
The expected lifespan of each vehicle is estimated to
be 15 years. A new Ford bakkie was purchased on the
30 November 2022 for R680 000. There were no
disposals during the year.
b. Office furniture: 15% per annum on the diminishing
balance method, no residual value. Office Furniture
with a cost of R65 000 was sold on the 31 December
2022 for R50 000, the furniture was acquired on the 1
October 2021
5. Drawings:
a. Greg - Inventory R5 000
b. Sheniz - Inventory R360
6. The monthly salary expense for existing staff amounts to
R48 000 per month. Sugar Rush brought in two new
employees on January 1, 2023, both receiving a monthly
wage of R18 000 each.
A new insurance contract was entered into by Sugar Rush on 1
March 2023. The monthly insurance premiums are R750 with a
total annual payment being made on 1 st of March every year.
The current years premium was not recorded in the books of
Sugar Rush.


QUESTION 1
Which one of the following alternatives represents the correct
Revenue amount recorded in the statement of profit / loss
and other comprehensive income of Sugar Rush for the year
ended 31 August 2023?

A. R653 334

B. R659 200
C. R660 934

D. R482 500
E. R432 220




Question 2
Which one of the following alternatives represents the correct
Answer saved Purchases amount of Sugar Rush for the year ended 31
Marked out of 1.00 August 2023?

, A. R501 840
B. R517 440

C. R508 040
D. R502 836

E. R505 050




Question 3
Which one of the following alternatives represents the correct
Answer saved Allowance for Credit Losses balance amount to be recorded
Marked out of in the financial statements of Sugar Rush for the year ended
1.00 31 August 2023?

A. R4 850
B. R8 650

C. R3 650
D. R3 800

E. R4 250


Question 4 Assuming a Purchases amount of R360 000, which of the
Answer saved following alternatives represent the correct Cost of Sales
amount recorded in the statement of profit / loss and other
Marked out of
1.00 comprehensive income of Sugar Rush for the year ended 31
August 2023?

A. R470 520

B. R330 840
C. R485 000

D. R404 640
E. R309 850