FAC1602 Assignment 1 Semester 1 2024 (SOLUTIONS)

FAC1602 Assignment 1 Semester 1 2024 (SOLUTIONS) Question 1 Answer saved Marked out of 6.50 Flag question Question text Mhlalkwana Dealers is in the business of selling leather jackets, at a price of R1 500 each, around the townships of KwaNdebele. The owner, Masango, was approached by a local clothing store called Thubana Clothing for a bulk sale. Mhlalkwana Dealers sold 18 jackets to Thubana Clothing on credit and this transaction was concluded on 31 October 2023. This transaction was concluded on the following terms: A trade discount of 12% on the bulk sale. An early payment discount of 5% on the amount paid within 30 days. Which one of the following amounts represents the correct amount received by Mhlalkwana Dealers if Thubana Clothing only paid 75% of the amount owing on 30 November 2023? a. R 23 760 b. R 22 572 c. R 16 929 d. R 17 820 Question 2 Answer saved Marked out of 4.00 Flag question Question text Given information to questions 1 – 6: Phaduli Boerdery, a cattle feedlot business supplying to various abattoirs around Mpumalanga, is a partnership between Itani and Ndivhuwo. The following information relates to the business activities of the partnership for the year ended 30 June 2023. EXTRACT OF BALANCES AS AT 30 JUNE 2023 R Land and building at cost R672,800 Vehicle at cost R362,240 Accumulated depreciation: Vehicles R16,710 Inventory R29,770 Bank (positive) R130,070 Trade receivables control R163,080 Allowance for credit losses R4,000 Prepayment: Veterinary services R54,040 Trade payables control R76,490 Drawings: Itani (30 June 2023) R5,936 Drawings: Ndivhuwo (30 June 2023) R11,830 Capital: Itani R152,100 Capital: Ndivhuwo R147,180 Current account: Itani (CR: 1 July 2022) R15,270 Current account: Ndivhuwo (DR: 1 July 2022) R12,640 Profit for the year R191,420 2. Supplementary information: 2.1 Partnership agreement specifics between the partners: 2.1.1 Profit and loss share between Itani and Ndivhuwo are shared equally. 2.1.2 Each partner is due a salary of R18,500 monthly. As of 30 June 2023, Itani and Ndivhuwo received R15,200 and R16,500 respectively as their monthly salaries for only 11 months of the year, which has not yet been recorded in the partnership’s financial records. 2.1.3 An annual interest rate of 14% is applied to the opening balances of the partners’ capital and current accounts. 2.2 Adjustments at the end of the year: 2.2.1 As of 30 June 2023, it was decided that an outstanding debt of R22 850, owed to the business, would be classified as irrecoverable and thus needs to be written off. 2.2.1 The business needed to expand and get additional land for the backgrounding of cattle bought at less than 250kg. On 30 June 2023, Itani’s father provided a loan of R600,000 to the partnership to buy the additional adjacent land. The farmland was purchased only purchased on 2 January 2024 at a cost of R600 000. This loan is considered long-term, bearing an 8% annual interest rate, and is structured to be repaid over 6 years with equal payments, starting from 30 June 2024. This transaction is yet to be recorded. Which one of the following alternatives represents the correct amount that must be disclosed as total equity in the statement of changes in equity of Phaduli Boerdery for the year ended 30 June 2022? a. R 327,190 b. R 296,650 c. R 299,280 d. R 301,910 e. R 299,000 Clear my choice Question 3 Answer saved Marked out of 2.00 Flag question Question text Which one of the following alternatives represents the correct amount that must be disclosed as cash and cash equivalents or bank overdraft in the statement of financial position of Phaduli Boerdery as at 30 June 2023? a. R 130,070 b. R 730,700 c. R 730,000 d. R 730,070 e. R 130,700 Clear my choice Question 4 Answer saved Marked out of 3.00 Flag question Question text Which one of the following alternatives represents the correct amount that must be disclosed as property, plant and equipment in the statement of financial position of Phaduli Boerdery as at 30 June 2023? a. R 1,035,040 b. R 1,618,000 c. R 656,090 d. R 1,018,330 e. R 1,618,330 Clear my choice Question 5 Answer saved Marked out of 6.00 Flag question Question text Which one of the following alternatives represents the correct amount that must be disclosed as trade and other receivables in the statement of financial position of Phaduli Boerdery as at 30 June 2023? a. R 140,230 b. R 163,080 c. R 159,000 d. R 159,080 e. R 136,230 Clear my choice Question 6 Answer saved Marked out of 6.00 Flag question Question text Which one of the following alternatives represents the correct amount that must be disclosed as drawings in the statement of changes in equity of Phaduli Boerdery for the year ended 30 June 2023? a. R 49,466 b. R 366,466 c. R 398,166 d. R 461,766 e. R 17,766 Question 7 Not yet answered Marked out of 2.00 Flag question Question text A credit balance on a ledger account indicates……… a. a liability or an expense b. a liability or income c. an asset or expense d. an amount owing to the business Question 8 Not yet answered Marked out of 7.00 Flag question Question text The following is presented for Mhlalkwana Dealers at 31 December 2023: Revenue R 265 000 Cost of sales R 115 000 Operating expenses R 62 000 Capital R 230 000 On October 10, 2023, the owner, Thubana, withdrew an amount of R9,300 to purchase a cow for the funeral of his grandmother in Siyabuswa. He further withdrew R62 500 on 1 December 2023 to cover his family’s vacation for the festive season. A stocktake of the jackets was conducted on December 31, 2023. During this assessment, it was discovered that 5 jackets, valued at R7,500, were damaged due to a chemical spill in the storage room. The five workers expressed interest in acquiring the damaged jackets at a price of R600 each. The owner consented to this arrangement with the stipulation that the amount would be deducted from their salaries at the end of January 2024. Which one of the following alternatives represents the correct capital balance in the statement of financial position of Mhlalkwana Dealers as at 31 December 2023? a. R 239 300 b. R 241 700 c. R 238 700 d. R 251 000 e. R 313 500 Question 9 Not yet answered Marked out of 2.00 Flag question Question text FoxCo purchased a Printing Machine for their printing business. Which one of the following expenses should not be included in the cost of the machine: a. Delivery costs b. Installation costs c. Printing machine cost d. Maintenance and repair costs Clear my choice Question 10 Not yet answered Marked out of 2.00 Flag question Question text Insurance expenses paid in advance by an entity at the end of its financial year is recorded in the financial statements as: a. an expense in the statement of profit or loss and other comprehensive income. b. an expense in the statement of changes in equity c. a prepayment in the non-current assets section of the statement of financial position. d. a prepayment in the current assets section of the statement of financial position. Clear my choice Question 11 Not yet answered Marked out of 2.00 Flag question Question text Which one of the following alternatives is incorrect? a. The purpose of the Conceptual Framework is to override any particular disclosure or measurement requirement in any IFRS b. The purpose of the Conceptual Framework is to assist in harmonising legislation and reducing the number of alternative accounting treatments. c. The purpose of the Conceptual Framework is to assist in developing future standards. d. The purpose of the Conceptual Framework is to assist users in interpreting the information in interpreting the financial statements when compiled according to IFRS. Clear my choice Question 12 Not yet answered Marked out of 2.00 Flag question Question text Telephone expense in arrears (unpaid) at the end of an entity’s financial year will be recorded in the general journal of the entity by: a. Debiting telephone expense and crediting bank b. Debiting telephone expense and crediting accrued expense c. Debiting accrued expense and crediting bank d. Debiting bank and crediting telephone expense Question 13 Not yet answered Marked out of 2.00 Flag question Question text Relevance and faithful representation are the… a. fundamental qualitative characteristics of financial reporting as stipulated in IFRS. b. enhancing qualitative characteristics of financial reporting as stipulated in the Conceptual Framework. c. enhancing qualitative characteristics of the disclosure requirements as stipulated in IFRS. d. fundamental qualitative characteristics of financial reporting as stipulated in the Conceptual Framework. Clear my choice Question 14 Not yet answered Marked out of 2.00 Flag question Question text Which one of the following is an example of a financial asset: a. Loans receivable b. Inventory c. Property, Plant and Equipment d. Trade payable Clear my choice Question 15 Not yet answered Marked out of 2.00 Flag question Question text Which one of the following expenses should be included in the cost of inventories sold during the year? a. Carriage on sales b. Depreciation on delivery vehicle c. Carriage on purchases d. Insurance on deliveries Clear my choice Question 16 Not yet answered Marked out of 2.00 Flag question Question text Which of the following statements is correct: a. A liability is a future obligation of a reporting entity to transfer an economic resource as a result of a past event. b. Equity is the residual interest in the assets of the entity after deducting all the expenses. c. The value of a reporting entity lies in the net assets (assets minus liabilities) under its control. d. The accounting equation is: Liabilities + Assets = equity Clear my choice Question 17 Not yet answered Marked out of 2.00 Flag question Question text The definition of an asset is: a. A future economic resource controlled by a reporting entity as a result of a past event. b. A future economic resource controlled by a reporting entity as a result of a future event. c. A present economic resource controlled by a reporting entity as a result of a future event. d. A present economic resource controlled by a reporting entity as a result of a past event. Clear my choice Question 18 Not yet answered Marked out of 2.00 Flag question Question text Which of the following measurement bases will often be encountered in a set of financial statements: a. Fair value b. Historical cost c. All of the above d. Present value Clear my choice Question 19 Not yet answered Marked out of 2.00 Flag question Question text The statement of financial position consists of three elements namely: a. liabilities, income and expenses b. liabilities, equity and expenses c. assets, liabilities and equity d. assets, income and expenses Clear my choice Question 20 Answer saved Marked out of 5.00 Flag question Question text .Given information to questions 1 – 5: Sharpville 4U Furniture, a partnership established on February 1, 2023, by Carlton and Carlie, specialises in the manufacturing of household and office furniture and supplies to furniture stores and households around Sharpville. The following information pertains to the business activities as of February 29, 2024. EXTRACT OF BALANCES AS AT 28 FEBRUARY 2024 R Sales 730,590 Purchases 474,670 Settlement discount received 9,620 Delivery cost on sales 1,750 Delivery cost on purchases 12,800 Bank charges 4,470 Depreciation 19,380 Office equipment rental expenses 19,320 Water and electricity 20,150 Salaries and wages 43,980 Stationery consumed 1,630 Interest on loan 17,000 Equipment at cost 178,250 Accumulated depreciation: Equipment 18,290 Land and buildings at cost 517,500 Inventory (1 March 2023) 6,900 Trade receivables control 94,630 Bank (Dr) 81,570 Capital: Carlton 212,400 Capital: Carlie 120,000 Drawings: Carlton 42,480 Drawings: Carlie 48,750 Long-term loan (Myeni Bank) 450,000 Trade payables control 34,480 1. Additional information: 2.1 Partnership agreement: 2.1.1 Each partner has a monthly salary entitlement of R14,100. An advance payment to one of the partners has been made to one of the partners as salary for March and April 2024. 2.1.2 An annual interest rate of 10% is applied to the capital account balances. 2.1.3 Carlton and Carlie agreed to share profits and losses at a ratio of 3:1. 2.2 Year-end adjustments: 2.2.1 The office equipment rental expenses include R3 150 for a printing machine which Carlie’s wife uses at home for personal reasons. Additionally, on 3 March 2024, a bill for February 2024 totalling R2 800 was received and has yet to be accounted for. 2.2.2 The company's land and buildings include the factory and adjacent office in Sharpville, which also acts as collateral for a long-term loan from Myeni Bank. This loan, bearing a 10% annual interest rate, was secured on May 1, 2023, with interest payments due semi-annually at the end of August and February. 2.2.3 During the year, Carlton was allotted R4,800 for a travel allowance to attend a black industrialist summit in Durban. From this allowance, R1 200 was spent on Uber for travel to (and from) the airport and summit, and R3,000 was spent on flight tickets and accommodation. 2.2.4 The inventory's value was calculated to be R18,100 as of February 29, 2024. 2.2.5 As an initial capital contribution, one partner introduced inventory valued at R6,000, which was the opening inventory on March 1, 2023. Which one of the following alternatives represents the correct amount that must be disclosed as cost of sales in the statement of profit or loss and other comprehensive income of Sharpville 4U Furniture for the year ended 29 February 2024? a. R 447,410 b. R 434,610 c. R 466,650 d. R 453,850 e. R 453,800 Clear my choice Question 21 Not yet answered Marked out of 3.00 Flag question Question text Which one of the following alternatives represents the correct amount of half-yearly interest payment by Sharpville 4U Furniture on 31 August 2023? a. R 41,250 b. R 18,750 c. R 15,000 d. R 45,000 e. R 37,500 Clear my choice Question 22 Not yet answered Marked out of 4.00 Flag question Question text Which one of the following alternatives represents the correct amount that must be disclosed as office equipment rental expense in the statement of profit or loss and other comprehensive income of Sharpville 4U Furniture for the year ended 29 February 2024? a. R 18,970 b. R 19,320 c. R 22,120 d. R 16,100 e. R 16,170 Clear my choice Question 23 Not yet answered Marked out of 4.50 Flag question Question text Which one of the following alternatives represents the correct amount that must be disclosed as finance costs in the statement of profit or loss and other comprehensive income of Sharpville 4U Furniture for the year ended 29 February 2024? a. R 41,250 b. R 45,000 c. R 37,500 d. R 18,750 e. R 15,000