Chapter 7 Financial Statements

Question 7.1

Maksima Traders
Statement of profit or loss and other comprehensive income
For the year ending 28 February 20.0
20.0
R

Sales (380 000 - 6 000) 374,000

Less: Cost of Sales -266,600
Opening inventory 122,400
Net purchases (314 000 - 9 800) 304,200
426,600
Less: Closing inventory -160,000
Gross Profit 107,400
Less: Operating expenses -38,780
Salaries and wages 22,880
Rent (6960 - 2000) 4,960
Advertising 2,400
Electricity 2,560
Insurance (1920 - 320) 1,600
Sundry expenses 480
Credit losses (2000 - 800) 1,200
Depreciation (300 + 2 400) 2,700

Profit for the year 68,620

Gross profit % on Sales

GP 100
Sales × 1

107 400 100

374 000 × 1 = 28,72%

Gross profit % on Cost of Sales

GP 100
Cost of Sales × 1

107 400 100

266 600 × 1 = 40,29%

Maksima Traders
Statement of Financial Position
On 28 February 20.1
20.0
R
ASSETS
Non-Current Assets 12,300
Vehicles Calc 1 9,600
Equipment Calc 1 2,700

Current Assets 246,320

Inventory 160,000
Debtors (26 000 - 2 000) 24,000
Bank 60,000
Prepaid expenses Calc 2 2,320

258,620
EQUITY AND LIABILITIES
Equity 176,620
Opening balance 156,000
Profit 68,620
224,620
Less: Drawings -48,000

Current Liabilities 82,000

Creditors 82,000

258,620
CALCULATIONS
Note 1: Accumulated
Cost Depreciation Carrying value
Vehicles 24,000 -14,400 9,600 (12000+2400)
Equipment 6,000 -3,300 2,700 (3000 + 300)
30,000 -17,700 12,300

Note 2 : Prepaid Expenses R

Prepaid Rent 2,000
Prepaid Insurance 320
2,320

Dep:
Vehicles: (24000 - 12000) = 12000 × 20% = R2400
Equipment: R6000 × 5% = R300
Chapter 7 Financial Statements

Question 7.2

DELTA DEALERS
Statement of profit or loss and other comprehensive income
For the year ended 31 December 20.0
R

Sales 512,800
Cost of sales 302,000
Gross profit 210,800

Plus: Other Income: 16,233

Commission (1400 - 1072) 13,728
Rent (4 500/15 × 6) 1,800
Profit on Sale of asset 505
Credit losses recovered 200

Less: Expenses 118,496

Advertising (10000 - 3000) 7,000
Insurance(3000 - 400) 2,600
Electricity 9,000
Salaries and Wages 56,050
Telephone (5 800 + 347) 6,147
Stationery (5 000 - 333) 4,667
Depreciation (534 + 729 + 5995 +17094) 24,352
Credit losses (3 000 + 580) 3,580
Consumables (6 700 - 1 600) 5,100
Profit before Finance Income 108,537
Investment Income (66667*0.15*8/12) 6,667
Finance cost (73799 × 0.22 × 3/12) -4,053
Profit for the period 111,151

Calculations

Credit losses: (76000 - 3000) = R73000 * 6% = R4380

R4380 - R3800 = R580

Depreciation
Equipment

Old Equipment
19.9 (R6667 - R750) × 15% = R888
20.0 (R6667 - 750 - 888) × 15% × 8.5/12 = R534
Total = R2172

Profit on sale: R5000 + R 2172 - R6667 = R505

New equipment
R16 667 x 15% x 3.5 /12 = R729 IAS16.55

Other equipment
('R80000 - R6667) - (R35000 - (750 + 888)) × 15% = R5995

Vehicles
271700km - 100760 km
=170940 * 0.10 per kilometre
R17094
Chapter 7 Financial Statements

Question 7.3

ALPHA DEALERS
Statement of profit or loss and other comprehensive income
For the year ended 31 May 20.1
20.1
R

Sales 221,625 255375 - 33750

Cost of sales: 189,000
Opening Inventory 90,000
Net Purchases 195,750 202500 - 6750
Freight in 15,750
301,500
Closing inventory -112,500
Gross profit 32,625
Operating Expenses: 161,438
Advertising 16,425
Credit losses 3,038 2250 + (2812.5 - 2025)
Freight out 9,000
Depreciation: Equipment 4,500
Depreciation : Vehicles 22,500
Sundry expenses 19,575
Insurance 2,700 2025 + 675
Electricity 10,800
Rent 5,400 5850 - 450
Salaries and wages 67,500
Finance cost 6,750
Profit (Loss) -135,563

Gross profit % on sales = 32 625

221 625 = 14.72%

CALCULATIONS

Office equipment: R90000 * 20% = R4500

Vehicles: (R157500 - 45000) x 20% = R22500

Allowance for credit losses:(R58500 - R2250) x 5% = R2812.50 - R2025 = R787.50 (R788)

Finance cost = R45000 * 15% = R6750

Chapter 7 Financial Statements

Question 7.4

KINGS DEALERS
Statement of profit or loss and other comprehensive income
For the year ended 30 November 20.0
20.0
R

Sales 48,000 54000 - 6000

Cost of sales: 35,000
Opening inventory 24,000
Purchases 37,200 40800 - 2800 - 800
Freight-in 2,800
64,000
Closing inventory -29,000
Gross Profit 13,000

Operating income: 1,920

Rent 1,920 1760 + 160

Operating Expenses: 30,384

Advertising 840
Salaries and wages 10,000
Freight - Out 1,200
Sundry expenses 4,320 5520 - 1200
Insurance 1,200
Stationery 120 200 - 80
Telephone 3,016 2800 + 216
Credit losses 328 224 + 104
Depreciation 9,360 4560 + 1200 + 3600
Finance cost 2,100 4200/12 x 6
Loss for the year -17,564

CALCULATIONS

Credit losses: R320 * 0.70 = R224

Allowance for credit losses = R(18400 - R320) = R18080 x 5% = R904

R904 - R800 = R104

Depreciation:
(52000 - 24 000) - R5200 = R22800 × 20% = R4560
R24000 × 20% × 3/12 = R1200
Equipment: R36000 × 10% = R3600
Chapter 7 Financial Statements

Question 7.5

RODEO TRADERS
Statement of profit or loss and other comprehensive income
For the year ending 31 December 20.2
20.2
R

Sales 135,600 136000 - 400

Cost of sales 80,000
Gross profit 55,600

Operating income 9,760

Rent 9,600 8800 + 800
Credit losses recovered 160
65,360
Operating Expenses 35,664
Stationery 80 160 - 80
Credit losses 2,064 1200 + 800 + 64
Salaries and wages 29,520
Depreciation 3,600 3200 + 400
Inventory losses (16 000-15 600) 400 16000 - 15600
29,696
Finance income 720
Interest received 960 480 + 480
Interest paid -240 240
Profit for the year 30,416

RODEO DEALERS
Statement of Financial Position
On 31 December 20.2
20.2
R
ASSETS
Non current assets 73,500
Property Plant and Equipment (Calc 1) 63,900
Financial assets 9,600

Current assets 27,936

Debtors 10,976 12000 - 800 - 160 - 64
Inventory 15,680 16000 - 400 + 80
Accrued income 1,280 480 + 800
Total assets 101,436

EQUITY AND LIABILITIES

Equity 91,216
Opening balance 64,000
Profit for the year 30,416
94,416
Drawings -3,200

Non-current liabilities
Loan Absa Bank 3,200

Current liabilities 7,020

Bank 380 540 - 160
Creditors 6,400
Accrued expenses 240
Total equity and liabilities 101,436

Note 1

Acc. Bank
Cost Dep. Value
Land and Buildings 48 000 - 48 000
Vehicles 20 000 7 200 12 800 @
Furniture 4 000 800 3 200 #
64 000

@: (20000 - 4000) = R16000 * 20% = R3200

#: (R4000 * 10% = R400)
Allowance for credit losses (11200 * 2% = R224 - R160 = R64
Chapter 7 Financial Statements

Question 7.6

SIMFONY DEALERS
Statement of profit or loss and other comprehensive income
For the year ending 31 January 20.3
20.3
R

Sales 297,850 308000 - 10150

Cost of sales: -198,716
Opening inventory 42,000
Purchases 217,700 218750 - 1050
Freight-in 1,736
Custom duties 14,280
275,716
Closing inventory -77,000
Gross profit 99,134

Operating Income 1,120

Credit losses 1,120

Operating Expenses -43,134

Advertising 5,320 4900 + 420
Stationery 1,540 2240 - 700
Sundry Expenses 19,474
Depreciation 16,800 12600
Profit for the year 57,120

2
Gross profit % sales
99,134
297,850
33%

Gross profit % cost of sales

99,134
-198,716
-50%

3
SIMFONY DEALERS
Statement of Financial Position
On 31 January 20.3
20.3
R
ASSETS
Non-current assets
Property and equipment 67,200

Current assets 132,020

Inventory 77,700 R7700 + R700
Debtors 36,120 36400 - 1400 + 1120
Cash-Bank 18,200

199,220
EQUITY AND LIABILITIES
Equity 122,920
Opening balance 88,200
Profit 57,120
145,320
Drawings -22,400

Non-current liabilities
Loan: North-West Bank 18,480

Current liabilities 57,820

Creditors 57,400
Expenses payable 420

199,220

CALCULATIONS
Vehicles: (R112000 - 28000) = R84000 * 20% = R16800
Chapter 7 Financial Statements

Question 7.7

FOCUS DEALERS
Statement of profit or loss and other comprehensive income
For the year ending 31 December 20.2
20.2
R

Sales (452913 - 3050) 449,863

Cost of sales: 257,862
Opening inventory 75,750
Purchases (253135 - 1000 - 2163) 249,972
Freight-in (7313 + 1525) 8,838
334,560
Closing inventory -76,698
Gross profit 192,001

Operating Income 12,353

Credit losses recovered 163
Rent income (14625 - 2435) 12,190

Operating expenses -172,949

Insurance 8,650
Credit losses (420 + 350 + 212) 982
Assessment Rates 5,250
Packaging material (11518 - 2630) 8,888
Telephone and postage (3363 + 613) 3,976
Salaries and wages 114,833
Depreciation ((95000 - 7500) 10%) + ((75000 - 29400) × 20%) + (100000 20% × 3/12) 22,870
Repairs 7,500
Profit before finance income 31,405
Finance Income: 1,280
Interest on fixed deposit 1,280
Profit for the year 32,685

2
FOCUS DEALERS
Statement of financial position
On 31 December 20.2
20.2
R
ASSETS
Non-current assets
Property, plant and equipment Note 1 418,355
((250000 + 175000 + 95000 - 7500) - (29400 + 14120 + 41875 + 8750))
Investment: Fixed deposit: Swiss Bank 12,000

Current assets 130,403

Inventory 76,698
Consumable stock 2,630
Debtors (49725 - 350 - (1763 + 212)) (Calc 2) 47,400
Income receivable 320
Bank 3,355
560,758
EQUITY AND LIABILITIES
Equity 508,685
Opening balance 500,000
Profit for the year 32,685
532,685
Drawings (23000 + 1000) -24,000

Current liabilities 52,073

Creditors 47,500
Expenses payable (1525 + 613) 2,138
Income received in advance 2,435
560,758
Calculations
Calc 1
PPE
COST ACC. DEP. BOOK
VALUE
Land and buildings 250,000 - 250,000
Vehicles 175,000 43,520 131,480
Equipment 87,500 50,625 36,875
418,355

Calc 2
Trade and other debtors
Debtors 49,375
Allowance for credit losses -1,975
47,400
Chapter 7 Financial Statements

Question 7.8

KUMBA DEALERS
Statement of profit or loss and other comprehensive income
For the year ending 28 February 20.3
20.3
R

Sales 225,372
Cost of sales: -96,648
Opening inventory 24,048
Freight-in 2,754
Purchases 120,663
147,465
Closing inventory -24,015
Gross profit 128,724

Operating income 9,750

Rent 9,750

Operating expenses -46,831

Assessment Rates 1,110
Bank charges 573
Depreciation 6,990
Donations 225
Credit losses 256
Stationery 351
Freight-out 720
Sundry expenses 36,606

Finance charges -5,505

Interest on loan 810
Interest on mortage bond 4,695

Profit for the year 86,138

228183 - 2811

2376 + 378
121773 - 1020 + 135 - 225

4500 + 5250

3300 + 3690

399 + 186 - 329

579 - 135 - 93
540 + 180

3600 + 1095
Chapter 7 Financial Statements

Question 7.9

ZEERUST DEALERS
STATEMENT OF FINANCIAL POSITION
ON 28 FEBRUARY 20.1
R
Notes 20.1
ASSETS
Non-current Assets 110,000
Property, plant and equipment 2 105,000 150000 - 45000
Financial assets 3 5,000

Current assets 53,000

Stock 4 3,000
Debtors 5 36,000 25000 - 2000 + 3000 + 10000
Cash and cash equivalents 6 14,000 10000 + 1000 + 3000

Total assets 163,000

EQUITY AND LIABILITIES

Equity 119,000
Opening balance 100,000
Profit for the year 94,000 119000 - 25000
194,000
Drawings -75,000

Non-current liabilities
Interest bearing borrowings 15,000 20000/4 × 3

Current liabilities 29,000

Short-term portion of non-current liabilities 5,000
Creditors 24,000

Total equity and liabilities 163,000

000 + 3000 + 10000
Chapter 7 Financial Statements

Question 7.10

TLOKWE DEALERS
Statement of profit or loss and other comprehensive income
For the year ended 31 December 20.1
20.1
R

Sales 500,000
Less Cost of sales -352,000 350000+(97000-95000)
Gross profit 148,000
Plus other revenue - services rendered 127,000
Less operating expenses -128,200
Depreciation 16,000 Calc 1, 2
Credit losses 5,700 4400 + (2600 × 50%)
Rent 24,000
Salaries 38,500 36000 + 2500
Other operating expenses 44,000
Operating profit 146,800
Finance costs -37,500 250000 × 0.15
Profit for the year 109,300

Calculations
1. Depreciation: Vehicles
168000km-138000km = 30000km for the year
Dep. R84000 × (30000/140000) 18,000
Book value 84000 - 69 000 15,000
Residual value 14,000
Dep. limited to 15000 - 14000 1,000

2. Depreciation: L&B
Dep. 300000 × 5% 15,000

Total depreciation 1000+15000 16,000

3. Interest on loan
Table
Year Pmt Int. Capital Balance
250,000.00
1 49,813.02 37,500.00 12,313.02 237,686.98
2 49,813.02 35,653.05 14,159.97 223,527.01
3 49,813.02 33,529.05 16,283.97 207,243.04
4 49,813.02 31,086.46 18,726.56 188,516.47
5 49,813.02 28,277.47 21,535.55 166,980.92
6 49,813.02 25,047.14 24,765.88 142,215.04
7 49,813.02 21,332.26 28,480.76 113,734.28
8 49,813.02 17,060.14 32,752.88 80,981.40
9 49,813.02 12,147.21 37,665.81 43,315.59
10 49,813.02 6,497.34 43,315.68 -0.09

Already recorded
Dr Interest on loan 11,000.00
Cr Bank 11,000.00

What is should look like in total

Dr Interest on loan 37,500.00
Dr Loan 12,313.02
Cr Bank 49,813.02

Therefore the entry is

Dr Interest on loan 26,500.00
Dr Loan 12,313.02
Cr Bank 38,813.02

TLOKWE DEALERS
Statement of Financial Position
On 31 December 20.1
20.1
R
ASSETS
NON-CURRENT ASSETS
Property plant and equipment 299,000 14000 (Veh) + 285000 (L&B)

CURRENT ASSETS 192,487

Inventory 95,000
Debtors 17,300 21000 - 4400 - 1300 + 2000 (rec. in advance)
Cash and cash equivalents 80,187 117000 + 2000 (Petty cash) - 38813.02 (Int)

Total assets 491,487

EQUITY AND LIABILITIES

EQUITY 249,300
Opening balance 200,000
Profit for the year 109,300
Drawings -60,000

NON-CURRENT LIABILITIES
Interest-bearing loans 223,527 (250000 - 12313) - 14160

CURRENT LIABILITIES 18,660

Current portion of non-current liabilities 14,160
Bonus payable 2,500
Creditors 2,000 Debtors rec. in advance

Total equity and liabilities 491,487

TLOKWE DEALERS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 20.1

1. ACCOUNTING POLICIES
The accounting policies of the company in accordance with the previous year, except where otherwise stated.
The most important accounting policies are as follows:

1.1 Basis of measurement

The financial statements are the costs opgetsel historical basis unless otherwise stated.

1.2 Property, plant and equipment

Depreciation is not provided for on land and buildings. Vehicles are depreciated at rates
considered appropriate to write off the carrying amount of the assets over their estimated useful lives
to the expected residual value. The rates used are as follows:
Vehicles 20%
Buildings 5%

1.3 Inventories
Inventories are valued at the lower of cost or net realisable value on the FIFO basis.

2. PROPERTY, PLANT AND EQUIPMENT

Land &
Buildings Vehicles
Carrying value at beginning of year: 300,000 15,000
Cost 300,000 84,000
Accumulated depreciation - 69,000

Movement:
Depreciation 15,000 1,000 (84000 - 14000) / 140000*30000 = 15000
limited to 1000

Carrying value at end of year: 285,000 14,000

Cost 300,000 84,000
Accumulated depreciation 15,000 70,000

Land consists of property XXX XXX XXX purchased on. This is offered as security
for interest-bearing liabilities (refer to point 3).

3. INTEREST-BEARING LIABILITIES

AB Bank loan 237,687

Secured bank loan AB incurred in XXX and payable in 10
10 annual repayments of R 49 813 from 31 December 20.1.
Bears interest at 15%. Land with a carrying value of R300 000
was offered as security (see point 2).

Less portion transferred to short-term liabilities 14,160

223,527

2. Comments
Details regarding the number of items is not required.
Details regarding the realisable value is not required.
Only inventory item and value are required.
Chapter 7 Financial Statements

QUESTION7.11

OMMIHOEK SUPERMARKET
Statement of profit or loss and other comprehensive income
For the year ended 28 February 20.8
20.8
R

Sales 151,270 159270 - 8000(3)

Cost of sales: -113,920 113740 + 1380 - 1200(4)
Opening inventory -
Purchases -92,720
-92,720
Closing inventory -21,200

Gross profit 37,350

Other income 6,590

Rent received 6,240 Calc 6 (5664 + 576)
Profit on sale of asset 350 Calc 3

Operating Expenses -39,234

Fuel and repairs 3,910
Insurance 3,470 3670 - 200(9)
Advertising costs 2,380
Staff costs 18,364
Credit losses 1,540 540 + 1100 - (3000 - (30100 - 1100)*.10)(2)
Stationery 50 380 - 330
General expenses 5,020
Depreciation - Vehicles 2,390 Calc 3 (1540 + 850)
Depreciation - Furniture 860 Calc 4&5 (830 + 30)
Depreciation - Building 1,250

4,706
Interest paid -3,350 Calc 7
Profit for the year 1,356

Calculations
Cost Acc Dep CA
3 Vehicles (3/01/20.7) 29,600 13,400 16,200
Additional regarding vehicle sales 850

Purchase (31/05/20.5) 12,500

Dep to 02/28/20.6 (20% for 9 months) 1,875 1,875
Dep to 02/28/20.7 (20% diminishing value) 2,125 4,000
Dep to 01/09/20.7 (20% for 6 months) 850 4,850
12,500 4,850 10,725

Asset realisation
Cost 12,500 Acc 4,850
Profit 350 Bank 8,000
12,850 12,850

Total 1 September 29,600 14,250 15,350

Few car sales -12,500 -4,850 -7,650
17,100 9,400 7,700
Dep for the year (7700 *. 20) 1,540
17,100 10,940 6,160

Cost price Acc dep CA

4&5 Furniture (3/01/20.7) 8,300 6,200 2,100
Purchased (1/12/20.7) 1,200 1,200
9,500 6,200 3,300
Depreciation - old (8300 * 0.10) -830 -830
Depreciation - new (1200 * 0.10 * 3 / 12) -30 -30
9,500 5,340 2,440
6 Rent before increase = x

7 x + 4 x (1.20) = 5664
11.8 x = 5664
480 Rent before increase
576 (480 * 1.20) after increase

7 Interest paid

Must pay Mar-Nov 30000*12%*9/12 2,700

Dec & Jan 20000*12%*2/12 400
Feb 20000*15*1/12 250
3,350
Already 3,100
Provide 250

OMMIHOEK SUPERMARKET
Notes to the financial statements
For the year ended 28 February 20.8

1. Accounting Policies
The statements have been prepared under the historical cost basis.
The accounting policies are consistent with the previous year except where
otherwise stated.

1.1 Non-current assets

No depreciation is written off on land.
Other assets are depreciated at rates considered appropriate to write off
the cost over the expected useful life to the estimated residual value.

The main rates are as follows:

Vehicles 20% reducing balance
Furniture 10 % straight line
Building 5% straight line

1.2 Inventories
Inventories are valued at the lower of cost or net realisable value on the
first-in-first-out basis.

2. Non-current Assets
Land Buildings Vehicles Furniture Total
Carrying value at beginning of year: 20,000 20,000 15,350 2,100 57,450
Cost 20,000 25,000 29,600 8,300 82,900
Accumulated depreciation 5,000 14,250 6,200 25,450

Movement for the year:

Purchases 1,200 1,200
Disposals 7,650 7,650
Depreciation 1,250 2,390 860 4,500

Carrying value end of the year: 20,000 18,750 6,160 2,440 47,350
Cost 20,000 25,000 17,100 9,500 71,600
Accumulated depreciation 6,250 10,940 7,060 24,250

Land and buildings are encumbered by a mortgage.

Land and buildings comprise property XXX located at XXX purchased on xxx.

3. Inventory
Inventories consist of:
Trading inventory -21,200
Stationery on hand 330
-20,870
Chapter 7 Financial Statements

Question 7.12

Before adjustments Adjustments Post-adjustment

Trial Balance trial balance
DR CR No DR CR DR CR
Capital 176,000 176,000
Drawings 30,500 30,500
Land 150,000 150,000
Vehicles 30,000 5 10,000 20,000
Accumulated depreciation - Vehicles 21,000 5 9,000 6,000 18,000
Trademarks 20,000 6 1,000 19,000
Mortgages 120,000 3 20,000 100,000
VAT input 5,000 5,000
VAT output 20,000 5 430 20,430
VAT control 8,000 8,000
Debtors control 9,100 9,100
Bank 101,500 3,5 3,300 20,000 84,800
Inventory 12,500 4 7,000 12,500 7,000
Rental income 22,000 2 10,522 11,478
Fuel 34,000 34,000
Interest on mortgage 3 24,000 24,000
Insurance 23,200 23,200
Allowance for credit losses 1,000 1 209 791
Admin expenses 28,400 28,400
Purchases 107,800 4 107,800 -
Sales 200,000 200,000
560,000 560,000
Cost of sales 4 12,500 7,000 113,300
107,800
Credit losses 1 209 209
Income received in advance (rent) 2 10,522 10,522
Expenses payable 3 24,000 24,000
Depreciation 5 6,000 6,000
Asset realisation 5 10,000 9,000
1,870 2,870
Profit on scrapping - Vehicles 5 1,870 1,870
Trademark amortisation 6 1,000 1,000
213,200 213,200 563,300 563,300
- -

JOU BOU
Statement of Financial Position
On 28 February 20.4 20.4
Notes R
ASSETS
Non-current assets 171,000 Vehicles Acc dep: Vehicles
Property, plant and equipment 2 152,000 150000 + (30000 - 10000) - (21000 - 9000 + 6000)
Intangible assets 3 19,000 20000 - 1000

Current assets 100,109

Inventory 4 7,000 12500 - 5500
Trade and other debtors 5 8,309 9100 - (1000 - 209)
Cash and cash equivalents 6 84,800 101500 + 3300(5) - 20000(3)

Total assets 271,109

EQUITY AND LIABILITIES

Equity 171,109
Opening balance 213,800
Loss for the year -12,191 - 107800 - 28400 - 34000 + 22000 + 200000 - 23200 - 6000 - 1000 - 10000 - 24000 + 209
201,609
Drawings -30,500

Non-current liabilities
Interest-bearing borrowings 80,000 120000 - 20000(3) - 20000 (short-term)

Current liabilities 54,000

Short-term portion of non-current liabilities 20,000
Creditors 34,000 24000(3) + 10000(2)
SARS (Vat payable) 7,430 20000 - 5000 - 8000 + 430

Total equity and liabilities 271,109

000 - 23200 - 6000 - 1000 - 10000 - 24000 + 209
Question 7.13

ALLY MAC ATTORNEYS

Statement of profit or loss and other comprehensive income
For the year ended 28 February 20.10
20.10
R

Sales 60,000 90000 - 30000

Cost of sales: -96,500
Opening inventory 24,000
Purchases 80,000
104,000
Closing inventory -7,500 75 × ((172.50 - 15 Vat) × 66.67/100)
Gross loss -36,500

Other operating income: 780,250

Credit losses recovered 250 287.50 - 37.50 Vat
Services rendered 780,000

Operating expenses: -687,466

Administration costs 198,250 198000 - 250 + 500
Bank charges 2,100
Salaries 409,800
Rent paid - Equipment 35,000
Rent paid - Building 24,000
Rent paid - Security System 6,000
Depreciation 4,375 Calc 1
Credit losses 6,816 ((345 - 115) - 30 Vat) + ((215 000 - 345 + 1500) × 10%) - 1
Loss on disposal of asset 1,125 Calc 2
Profit from operations 56,284
Finance cost -15,000 Calc 3
Profit for the year 41,284

Calculations

1. Depreciation 2,500 given

Previous cost per photocopy R10 000/100000 0.10 cents

Number of photocopies already made = R2 500/R0.10 25,000

New cost per photocopy R10 000/80000 0.125 cents

According to new quantity, accumulated depreciation had to be:

25,000 x 12.5c 3,125
Already provided -2,500
Insufficient supply 625

Current year 30000 × 12.5c 3,750

Total depreciation 625 + 3 750 4,375

2. Loss on disposal
Asset realisation
Equipment 10,000 Acc dep 6,875 (2500 + 625 + 3750)
Insurance 2,000 (2300 × 100/115)
Loss 1,125
10,000 10,000

3. Interest on loan for the full year 100 000 × 0.15 15,000
Already paid -10,000
Payable 5,000
15 Vat) × 66.67/100)

Vat) + ((215 000 - 345 + 1500) × 10%) - 15000)

Chapter 7 Financial Statements

Question 7.14

REEF TRADERS
Statement of profit or loss and other comprehensive income
For the year ended 30 June 20.9
20.9
R

Sales (208000 - 160 - 680 - 220) 206,940

Cost of sales: -122,720
Opening inventory 2,080
Purchases (95700 - 525 + 18480 + 10560) 124,215
Closing inventory -3,575 Calc 1
Gross profit 84,220

Other income:
Rent (5280 + 1980) 7,260 Calc 2

Operating expenses: -94,323

Insurance (3159 - (121.5 + 312 + 675)) 2,051 Calc 3
Credit losses (1532.6 + 30) 1,563 Calc 4
Depreciation (2400 + 12150 + 7500) 22,050 Calc 5 + 6
Salaries and wages 60,669
Office Expenses 4,200
Bank charges 1,841
Carriage 1,950
Operating profit -2,843
Investment income 2,800
Finance costs (8000 + 4000) 12,000
Loss for the year 11,957

CALCULATIONS

Calculation 1 Units R/U R

Opening inventory 650 3.20 2,080
Purchases 14,000 3.50 49,000
Returns -150 3.50 -525
Purchases 12,000 3.75 45,000
Purchases 400 4.25 1,700

Cost of sales 26,000 93,680

650 3.20 2,080
13,850 3.50 48,475
11,500 3.75 43,125

Closing inventory 900 3,575

500 3.75 1,875
400 4.25 1,700

Calculation 2
Rent 20.7 500
10% increase 550
20% increase 660

6 months at 550 3,300

6 months at 660 3,960
7,260
Already recorded -5,280
Provide 1,980
Calculation 3
1 Oct (486/12) 40.50 p/m
3 months in advance = 121.50

1 Jan (624/12) 52 p/m

6 months in advance = 312.00

1 April (900/12) 75 p/m

9 months in advance = 675

Calculation 4
Credit losses = 1580 *. 97 1,532.60

Allowance= (18800 - 220 - 1580) *. 04 680

Already 650
Increase 30

Calculation 5
4 × (13400 - 800) 2,400
5 * (5 +1)

Calculation 6
100000 - 2500 × 81 000 12,150
650000

REEF TRADERS
Notes to the financial statements
For the year ended 30 June 20.9

5. Property plant and equipment

Equipment Buildings Vehicles Total
Carrying value at beginning of year: 6,800 150,000 75,700 225,700
Cost 13,400 150,000 100,000 250,000
Accumulated depreciation 6,600 - 24,300 24,300

Movement for the year:

Depreciation 2,400 7,500 12,150 19,650

Carrying value at end of year: 4,400 142,500 63,550 206,050

Cost 13,400 150,000 100,000 250,000
Accumulated depreciation 9,000 7,500 36,450 43,950
Chapter 7 Financial Statements

Question 7.15

Finished goods
Mar 20.3 Balance b/f 264,500 Feb 20.4 COS 340,170
Feb 20.4 WIP 320,620 Balance c/f 244,950
585,120 585,120
Mar 20.4 Balance b/f 244,950

WIP
Mar 20.3 Balance b/f 21,000 Feb 20.4 Finshed goods 320,620
Feb 20.4 Raw material 112,600 Balance c/f 36,400
Direct labour
( 90200 + 4600) 94,800
Overheads
(74400 + 12400 ) 86,800
Manfact profit 41,820
357,020 357,020
Mar 20.4 Balance b/f 36,400

Prov for unrealised profit

Mar 20.3 Unrealised profit 2,550 Mrt 20.3 Balance b/f 34,500
Balance c/f 31,950
34,500 34,500
Mrt 20.4 Balance b/f 31,950

Manufacturing profit
Mrt 20.3 Finished goods 41,820
Allowance for UP 2,550
44,370
Chapter 7 Financial Statements

Question 7.16

Finished goods
Feb 20.5 Balance 154,800 Feb 20.6 Cost of sales 306,000
Feb 20.6 Work-in-progress 278,000 Balance 182,400
Manufacturing profit 55,600
488,400 488,400
Mar 20.6 Balance 182,400

Work-in-progress
Mar 20.5 Balance 14,500 Feb 20.6 Finished goods 278,000
Feb 20.6 Raw material 191,400 Balance 64,300
Labour (87800-5600) 82,200
Overheads 54,200

342,300 342,300
Mar 20.6 Balance 64,300

Provision for unrealised profit (SFP)

Feb 20.5 Balance 25,800 @
Feb 20.6 Man profit 4,600
Balance 30,400 #

Manufacturing profit (SCI)

Feb 20.6 Prov for unreal profit 4,600 Feb 20.6 Finished goods 55,600

@ (154800/120*20)
# (182400/120*20)
12,400
231,200
4,200
-56,400
191,400
Chapter 7 Financial Statements

Question 7.17

Raw material Direct labour

Balance 17,600 Bank 102,300
Bank/Creditors 97,600 WIP 100,590
Bank (Freight) 8,790 Balance 23,400
123,990 123,990

Overheads Consumable goods

Indirect labour 12,650 WIP 59,300 Balance 4,340
Maintenance 5,100 Bank 2,180
Municipal cost 4,800
Electricity 2,600
Manufacturing dep 28,950
Consumable goods 5,200
59,300 59,300

Sales WIP
Bank 452,000 Balance 13,400
Raw material 100,590
Direct labour 102,300
Overheads 59,300
275,590

Finished goods Cost of sales

Balance 32,300 Cost of sal 265,350 Finished goods 265,350
WIP 259,390 Balance 26,340
291,690 291,690

SAMA MANUFACTURERS
Manufacturing cost statement
For the year ended 31 December 20.7
R
Cost of raw materials used 100,590
Inventory 1 Jan 20.7 17,600
Purchases 97,600
Freight 8,790
Inventory 31 Dec 20.7 -23,400
Direct labour 102,300
Primary cost 202,890
Factory overheads 59,300
Depreciation: manufacturing equipment (193000*0.15)(4) 28,950
Indirect labour 12,650
Maintenance 5,100
Municipal cost 4,800
Electricity 2,600
Consumable goods (4340 + 2180 - 1320) 5,200
Total production cost 262,190
Work in progress 1 Jan 20.7 13,400
Work in progress 31 Dec 20.7 -16,200
Production cost of finished goods 259,390
SAMA MANUFACTURERS
Statement of profit or loss and other comprehensive income
For the year ended 31 December 20.7
20.7
R

Sales 452,000
Cost of sales: -265,350
Finished goods 1 Jan 20.7 32,300
Cost of production 259,390
Finished goods 31 Dec 20.7 -26,340
Gross profit 186,650
Operating expenses: -60,220
Electricity 940
Salaries 14,800
Sales costs 20,300
Admin costs 22,700
Credit losses (1050 + 430) 1,480
Profit for the year 126,430
 Direct labour
WIP 102,300

Consumable goods
Overheads 5,200
Balance 1,320

WIP

Finished goods 259,390

Balance 16,200
275,590

Cost of sales
Chapter 7 Financial Statements

Question 7.18

Raw material Direct labour payable

Balance 30,000 Returns 1,900 Bank 421,000
Bank/Creditors 329,000 WIP 370,000 Balance 10,000
Bank (Import) 37,000 Balance 35,000 431,000
Bank (Freight) 10,900
406,900 406,900

Overheads Tools
Rates 2,400 WIP 165,000 Balance 2,500
Insurance 5,000 Bank 12,500
Salaries&Bonusses 65,000
Depreciation 60,000
Power 22,600
Tools 10,000
165,000 165,000

Sales WIP
Bank 1,631,250 Balance 33,000
Raw material 370,000
Direct labour 430,000
Overheads 165,000
998,000

Finished goods Cost of sales

Balance 37,500 Cost of sales 1,043,400 Finished goods 1,043,400
WIP 958,000 Balance 143,700
Manufacturing profit 191,600
1,187,100 1,187,100

Manufacturing profit Allowance for unrealised profit

Allowance for unrealised profit 17,700 Finished goods 191,600 Closing balance 23,950
Profit and loss 173,900
191,600 191,600 23,950

ITL MANUFACTURERS
Manufacturing cost statement
For the year ended 31 December 20.7
R
Direct material 370,000
Opening inventory 30,000
Purchases (329000 + 37000 + 10900 - 1900) 375,000
405,000
Closing inventory -35,000

Direct labor 430,000

Factory Wages (-1000 + 421000 + 10000(4)) 430,000

Manufacturing Overheads 165,000

Tools (2500 + 12500 - 5000) 10,000
Rates Factory (1200 + 1200(5) 2,400
Depreciation machine (400000*0.15(6)) 60,000
Salaries and bonuses (62500 + 2500(4)) 65,000
Factory Insurance 5,000
Power 22,600
965,000
Unfinished goods: 1 Jan 20.7 33,000
31 Dec 20.7 -40,000
Production costs of finished goods 958,000
Maunfacturing profit (20% * 958,000) 191,600
Cost of manufactured goods transferred to finished goods 1,149,600
ITL MANUFACTURERS
Statement of profit or loss and other comprehensive income of ITL manufacturers
For the year ended 31 December 20.7
R

Sales 1,631,250
Cost of Sales: 1,043,400
Opening inventory 37,500
Cost of production 1,149,600
1,187,100
Closing inventory Calculation 1 -143,700
Gross profit 587,850
Other Income:
Manufacturing Profit (191600 - 17700) Calc 2 173,900
761,750
Expenses: -419,341
Depreciation: Vehicles (630000*0.05(7)) 31,500
Sales commision (1631250 × 10%)(9) 163,125
Insurance (1250 + 3750(10)) 5,000
Delivery Costs 30,000
Salaries Sales staff 95,000
Classifieds 40,500
Miscellaneous/General sales expenses 20,875
Management Bonus Calculation 3 366750/110*10 33,341
342,409
Interest paid (90000*0.10)(1) -9,000
Profit for the year 333,409

ITL MANUFACTURERS
Statement of Financial Position
On 31 December 20.7
R
Non-current assets
Property, Plant and Equipment 30000 + 770000 + 400000 - 120000 + 179500 - 69500 + 5000 1,195,000.00

Current Assets 301,625.00

Inventory 35000 + 40000 + 143700 - 23950 194,750.00
Trade and other debtors 100000 - 10000 90,000.00
Cash and Cash Equivalents 16,875.00

TOTAL ASSETS 1,496,625.00

EQUITY 1,310,284.09
Capital 1,160,000 1,160,000.00
Retained earnings -183,125.00 150,284.09

Non-Current liabilities
Long-term loans 80000 - 10000 70,000.00

Current liabilities 116,340.91

Short-term portion of LT debt 10,000.00
Trade and other Creditors 12500 + 1200 + 9000 + 46550 + 3750 + 33341 106,340.91

TOTAL EQUITY AND LIABILITIES 1,496,625.00

CALCULATIONS

1) Closing balance - Finished goods

Closing inventory 1500 sets
plus Sales 11,000
12,500
Less Opening inventory -500
12000 sets

Cost of Manufacturing:

958000 = 79.83
12000 R 1500 × R 95.8
= R 143,700
Profit 20% 15.97
95.80
2) Allowance for unrealised profit in inventory
20/120 × 37500 = 6250 (Opening inventory)
20/120 × 143700 = (23950) (Closing Inventory)

3) Manager Bonus
Set net profit = y and the bonus = x
y = 366750 - x
x = 0.1y

x= 33,340.91
y= 333,409.09
 Direct labour payable
Balance 1,000
WIP 430,000
431,000

Tools
Overheads 10,000
Balance 5,000

WIP

Finished goods 958,000

Balance 40,000
998,000

Cost of sales

Allowance for unrealised profit

Balance 6,250
Manufacturing profit 17,700
23,950
Chapter 7 Financial Statements

Question 7.18

Direct material Direct labour

OI 30,000 1,900 Bank 421,000 Creditors
329,000 Wages 10,000 WIP
37,000 CI 35,000
10,900 WIP 370,000

406,900 406,900 431,000

WIP
Balance 33,000 Finished g
D Mat 370,000
D Labour 430,000
Man overheads 165,000 CI

998,000

Allowance for unrealised profits Finished goods

Balance 6,250 Balance (500) 37,500 COS (11000)
WIP (12000) 958,000 CL (1500)
Man profit 17,700 Man profit 191,600

Balance 23,950 1,187,100

Cost of Sales
1,043,400
r Manufacturing overheads
1,000 1,200 WIP 165,000
430,000 5,000
22,600
62,500
60,000
431,000 10,000
2,500
1,200
165,000 165,000

958,000

40,000

998,000

ds Manufacturing profit (SoCI)

1,043,400 Allowance 17,700 Finished 191,600
143,700 Profit 173,900

191,600 191,600
1,187,100

s
Chapter 7 Financial Statements

Question 7.18

Opening
Balance JNL01 JNL02 JNL03 JNL04 JNL05 JNL06 JNL07 JNL08 JNL09 TOTAL
Capital 1 Jan 20.7 -1,160,000.00 -1,160,000.00
Land at cost 30,000.00 30,000.00
Factory property at cost 770,000.00 770,000.00
Factory equipment at cost 400,000.00 - 400,000.00
Accumulated depreciation on factory equipment -60,000.00 -60,000.00 -120,000.00
Vehicles at cost 179,500.00 179,500.00
Accumulated depreciation on vehicles -38,000.00 -31,500.00 -69,500.00
Tools 1 Jan 20.7 2,500.00 -2,500.00 -
Tools 31 Dec 20.7 5,000.00 5,000.00
Tools purchased during the year 12,500.00 -12,500.00 -
Raw materials 1 Jan 20.7 30,000.00 -30,000.00 -
Raw materials purchased 329,000.00 -329,000.00 -
Import duties on raw material 37,000.00 -37,000.00 -
Delivery charges on raw material 10,900.00 -10,900.00 -
Purchase returns raw material -1,900.00 1,900.00 -
Raw material 31 Dec 20.7 35,000.00 35,000.00
Productive wages payable 1 Jan 20.7 -1,000.00 1,000.00 -
Productive wages 421,000.00 -421,000.00 -
Salaries -
Salaries payable -12,500.00 -33,341.00 -45,841.00
Rates and taxes payable -1,200.00 -1,200.00
Rates and taxes factory property 1,200.00 -2,400.00 1,200.00 -
Insurance factory property 5,000.00 -5,000.00 -
Water & electricity 22,600.00 -22,600.00 -
Salaries: manufacturing supervisors 62,500.00 -75,000.00 12,500.00 -
Bonuses 33,341.00 33,341.00
WIP: 1 Jan 20.7 33,000.00 10,000.00 955,000.00 -958,000.00 40,000.00
Finished goods: 1 Jan 20.7 500 computers 37,500.00 1,149,600.00 -1,043,400.00 143,700.00
Allowance for unrealised profit -6,250.00 -17,700.00 -23,950.00
WIP: 31 Dec 20.7 -
Debtors 100,000.00 100,000.00
Allowance for credit losses -10,000.00 -10,000.00
Interest payable (Creditors) -9,000.00 -9,000.00
Sales: 11 000 computers -1,631,250.00 -1,631,250.00
Cost of sales 1,043,400.00 1,043,400.00
Sales commission 163,125.00 163,125.00
Delivery cost to wholesalers 30,000.00 30,000.00
Manufacturing profit -191,600.00 17,700.00 -173,900.00
Advertisements 40,500.00 40,500.00
Insurance finished goods 1,250.00 3,750.00 5,000.00
Salaries: sales personnel 95,000.00 95,000.00
Depreciations: factory equipment -60,000.00 60,000.00 -
Depreciation: vehicles 31,500.00 31,500.00
Creditors -46,550.00 -46,550.00
Accrued Insurance -3,750.00 -3,750.00
General expenses 20,875.00 20,875.00
Loan: PN Bank -90,000.00 10,000.00 -80,000.00
Bank 190,000.00 -10,000.00 -163,125.00 16,875.00
Accrued loss 183,125.00 183,125.00
Interest paid - 9,000.00 9,000.00
-
- - - - - - - - - - -
Chapter 7 Financial Statements

Question 7.19

1 b
2 b
Chapter 7 Financial Statements

Question 7.20

Material: Purchasing dep Work-in-Progress

Balance 10,000.00 WIP 38,000.00 Balance 4,000.00 FG 59,400.00
Bank 40,000.00 Balance 12,000.00 Material 38,000.00
50,000.00 50,000.00 Direct labour 10,000.00
Overhead 13,000.00 Balance 5,600.00
OB 20,000.00 65,000.00 65,000.00
CB -50,000.00
Payments -10,000.00
-40,000.00

Finished goods Inventory selling department

Balance 15,000.00 Inventory Selling dept 60,400.00 Balance 13,000.00 COS 68,440.00
WIP 59,400.00 Balance 14,000.00 FG 60,400.00 Balance 11,000.00
74,400.00 74,400.00 Profit 6,040.00
79,440.00 79,440.00

Provision for unrealised profit

Manufacturing profit 181.82 Balance 1,181.82 Manufacturing profit
Balance 1,000.00 Inventory selling dept 6,040.00
1,181.82 1,181.82 Prov. for unrealised profit 181.82
6,221.82

Inventory
Inventory is made up of:
Material 12,000.00
Work-in-Progress 5,600.00 If unrealised profit is deducted
Finished goods 14,000.00 If unrealised profit is deducted
Stock: selling dep 10,000.00 If unrealised profit is deducted
41,600.00

Inventory written off to profit/loss 68,440.00