FAC1601
EXAM PACK.Detailed working, solutions, memo, notes & . 2
Statement of Profit or Loss and Other
Comprehensive Income
Question 1
The following information pertains to a partnership, trading as K Naz
Capital: Kurt (1 April 20.1
Nazli (April)
300 000
250 000
Current Account: Kurt (1 A...
,Statement of Profit or Loss and Other
Comprehensive Income
Question 1
The following information pertains to a partnership, trading as K Naz
Capital: Kurt (1 April 20.1 300 000
Nazli (April) 250 000
Current Account: Kurt (1 April 20.1) 27 500
Nazli 15 000
Drawings: Kurt 65 000
Nazli 55 000
Office Furniture @ cost 190 000
Vehicles @ cost 200 000
Accumulated depreciation: Office furniture (30 September 20.1) 73 200
Vehicles (30 September 20.1) 10 800
Long-term loan (unsecured) 125 000
Debtors control 100 000
Bank (overdraft) 9 800
Allowance for credit losses 2 550
Stationery inventory (31 March 20.1) 3 250
Sales 462 800
Inventory (31 March 20.1) 42 500
Profit on sale of furniture 3 480
Delivery expenses (in respect of sales) 3 450
Settlement discount granted 5 620
Purchases 391 643
Delivery expenses (in respect of purchases) 6 500
Sales Returns 7 000
Purchases Returns 2 585
Settlement Discount Received 1 523
Rent expense 27 000
Bank charges 1 475
Depreciation (office furniture) 1 280
Interest expense ( paid on long term loan) 21 250
Salaries and wages 155 000
Telephone expenses 3 620
Maintenance and repairs (office furniture) 1 250
Fuel and supply vehicle expenses 14 400
Stationery (purchased) 2 540
Marketing fees 5 460
pg. 2
,Additional information
1. Stationery on hand at 31 March 20.2 - R450.
2. Inventory on hand at 31 March 20.2 - R39 700.
3. On 30 September 20.1 office furniture with a cost price of R20 000 was sold for R15 000. On
the same date office furniture to the amount of R40 000 was purchased on credit, in order to
replace the furniture that was sold. All the necessary accounting entries in respect of these
transactions were done correctly.
4. The following (outstanding) amounts have not yet been provided for:
4.1 Depreciation
On the office furniture – at 20% per annum on the diminishing balance method.
On the vehicles – according to the straight-line method. The expected lifespan of each vehicle
is estimated to be 10 years. The residual value of all the vehicles in total is estimated at R20
000. No vehicles were acquired or disposed of during the year.
4.2 The long-term loan was acquired from ABA Bank on 1 April 20.1 at 18% interest per annum.
The loan is unsecured and is repayable in 10 equal annual instalments from 1 April 20.2.
5. Credit losses of R5 000 must be written off. The closing balance of the allowance for credit
losses account must be increased with R2 200.
6. The partnership agreement stipulates that:
6.1 The partnership must create separate drawings and current accounts for each partner.
6.2 Interest on capital must be calculated at 8, 5% per annum on the opening balances of the
capitalaccounts.
6.3 Interest on current accounts must be calculated at 15% per annum on the opening balances of
thecurrent accounts.
6.4 A salary of R15 000 per annum must be paid to K Naz. The salary has been paid and is
included inthe salaries and wages account.
At the end of each financial year the drawings accounts must be closed off against the
applicablecurrent accounts.
REQUIRED:
Prepare the statement of profit or loss and other comprehensive income of K Naz for the year
ended31 March 20.2 in compliance with International Financial Reporting Standards (IFRS)
appropriate to thebusiness of the partnership. (30)Notes and comparative figures are NOT
required.
pg. 3
, Partnership Change in Ownership Structure
Question 2
Tabs and James were in a partnership and traded as TJ Traders. Tabs and James shared in the
profits or losses of TJ Traders in the ratio of 5:3 respectively. Tabs and James decided to admit
Edie to thepartnership. Before any valuation-adjustments and goodwill were recorded, the
following statement offinancial position was prepared at 28 February 20.2, the financial year-end
of TJ Traders:
Balances as at 28 February 20.2
R
Capital: Tabs 87 500
James 52 500
Furniture and equipment 80 000
Inventories 30 000
Debtors control 20 000
Creditors Control 15 000
Bank (dr) 25 000
In preparation for the change in the ownership structure of TJ Traders, Tabs and James obtained the
following appraisals on 28 February 20.2
1. Debtors control- R19 000. (Create an allowance for credit losses to the amount of R1000.)
2. Inventories R35 000
3. Furniture and equipment at market (fair) value R 100 000
After the valuation adjustments and goodwill were recorded, Edie was admitted to the partnership
on 1 March 20.2. The new partnership trades as TJE Traders and the profit sharing ratio between
Tabs, James and Edie is 5:3:2 respectively. On 1 March 20.2, Edie paid R50 000 into the
bankaccount of the partnership for a 20% interest in the net assets (equity) of the new
partnership.
REQUIRED:
a) Prepare the journal entries in the general journal of TJE Traders on 28 February 20.2 to
prepare for the admission of Edie as a partner and to record the dissolution of the
partnership. Apply the accounting procedure which is based on the legal perspective.
Narrations are NOT required. (25)
b) Prepare the journal entries in the general journal of JSM Traders on 1 March 20.2 to record
its formation. Apply the accounting procedure which is based on the legal perspective.
(18) Narrations are NOT required.
pg. 4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Excellentstudyresources001. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.75. You're not tied to anything after your purchase.
