FAC1602 ASSIGNMENT 03 2 SEMESTER 2023
ND
YOUR GATEWAY TO DISTINCTIONS
FOR ALL YOUR COMMERCIAL & LAW MODLUES
CONTACT 0688714794
,Question 1
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The following information pertains to The Roses CC and covers questions 1 – 9:
David and Patrick are the only members of a Close Corporation trading as The Roses CC (Roses CC).
They both have an equal interest of 50% each in the CC. The CC has a 28 February financial year-
end.
You have been appointed by Roses CC as the accounting officer for the year ended 28 February
2023.The following information was presented to you by the CC’s accountant:
The Roses CC
EXTRACT OF BALANCES AS AT 28 February 2023:
The Roses CC R
Member contribution:David 180000
Member contribution:Patrick 240000
Loan from David 60000
SARS (Dr) 6240
Allowance for credit losses 2400
Inventory (01 March 2022) 72000
Long-term loan : Redbank 134400
Prepaid expenses 4920
Accrued expenses 6480
Sales 648000
Sales return 22800
Purchases 238800
Delivery expenses on Sales 5904
Depreciation 5184
Rental income 6540
Purchases returns 4980
Salaries and wages 283692
Land and buildings at cost 576000
, Debtors control 39600
Interest on loan from member ?
Telephone expense 7680
Stationery 3960
Water and electricity 8580
Advertising expense 5160
Insurance expense ?
Additional information:
Extract from the member’s arrangement:
1.Patrick and David are entitled to a monthly salary of R6 000 each. Patrick as the managing members
is entitled to an additional amount of R12 000 per annum.
Year-end adjustments:
1.The allowance for credit losses must be adjusted to R5 760.Mr Johny a debtor who owe the
business R1 300 was declared insolvent and must be written off as irrecoverable.
2.Inventory on hand on 28 February 2023 amounted to R82 000
3.The partners salaries were paid during the year and are included in salaries and wages amount.
4.On 15 August 2022 Roses CC entered into an insurance contract with Orange Insurance. The policy
came into effect from the 1 September 2023 at a premium of R1200 per month. A total of R15 000
was paid to Orange by the CC as insurance premium. No entries have been made in the books of The
Roses regarding the premiums.
5.On 30 November 2022, a profit distribution of R40 000 was made to each member of the close
corporation. These amounts should be regarded as loans from members with interest charged and
capitalised at 10% per annum. This transaction is yet to be accounted for.
6.Interest on the mortgage from City Bank at 18% per annum must still be considered. The interest is
payable on 1 March 2023. The mortgage was obtained on 1 September 2022 and is secured by a first
mortgage over land and buildings. The mortgage is repayable in five equal instalments as from 31
March 2024.
Round off all amounts to the nearest rand.
QUESTION 1
ND
YOUR GATEWAY TO DISTINCTIONS
FOR ALL YOUR COMMERCIAL & LAW MODLUES
CONTACT 0688714794
,Question 1
Not yet answered
Marked out of 1.00
Flag question
Question text
The following information pertains to The Roses CC and covers questions 1 – 9:
David and Patrick are the only members of a Close Corporation trading as The Roses CC (Roses CC).
They both have an equal interest of 50% each in the CC. The CC has a 28 February financial year-
end.
You have been appointed by Roses CC as the accounting officer for the year ended 28 February
2023.The following information was presented to you by the CC’s accountant:
The Roses CC
EXTRACT OF BALANCES AS AT 28 February 2023:
The Roses CC R
Member contribution:David 180000
Member contribution:Patrick 240000
Loan from David 60000
SARS (Dr) 6240
Allowance for credit losses 2400
Inventory (01 March 2022) 72000
Long-term loan : Redbank 134400
Prepaid expenses 4920
Accrued expenses 6480
Sales 648000
Sales return 22800
Purchases 238800
Delivery expenses on Sales 5904
Depreciation 5184
Rental income 6540
Purchases returns 4980
Salaries and wages 283692
Land and buildings at cost 576000
, Debtors control 39600
Interest on loan from member ?
Telephone expense 7680
Stationery 3960
Water and electricity 8580
Advertising expense 5160
Insurance expense ?
Additional information:
Extract from the member’s arrangement:
1.Patrick and David are entitled to a monthly salary of R6 000 each. Patrick as the managing members
is entitled to an additional amount of R12 000 per annum.
Year-end adjustments:
1.The allowance for credit losses must be adjusted to R5 760.Mr Johny a debtor who owe the
business R1 300 was declared insolvent and must be written off as irrecoverable.
2.Inventory on hand on 28 February 2023 amounted to R82 000
3.The partners salaries were paid during the year and are included in salaries and wages amount.
4.On 15 August 2022 Roses CC entered into an insurance contract with Orange Insurance. The policy
came into effect from the 1 September 2023 at a premium of R1200 per month. A total of R15 000
was paid to Orange by the CC as insurance premium. No entries have been made in the books of The
Roses regarding the premiums.
5.On 30 November 2022, a profit distribution of R40 000 was made to each member of the close
corporation. These amounts should be regarded as loans from members with interest charged and
capitalised at 10% per annum. This transaction is yet to be accounted for.
6.Interest on the mortgage from City Bank at 18% per annum must still be considered. The interest is
payable on 1 March 2023. The mortgage was obtained on 1 September 2022 and is secured by a first
mortgage over land and buildings. The mortgage is repayable in five equal instalments as from 31
March 2024.
Round off all amounts to the nearest rand.
QUESTION 1
