Financial Accounting Assignment – VAT, Journals, Depreciation & Cash Flow Analysis

Question 1 (10 marks)

The following information is given for Tank Retailers (Pty) Ltd, a VAT-registered vendor. VAT is at 15%.

No.	Cost price (VAT- inclusive)	Mark-up or margin	Selling price (VAT- exclusive)	VAT @ 15%	Selling price (VAT- inclusive)
1	A	50% on cost price	B	1 320	C
2	18 400	D?% on selling price	48 000	E	F
3	2 300	G?% on cost price	5 000	H	5 750
4	I	20% on selling price	J	1 800	13 800

Required:

Calculate the missing amounts represented by A to J in the table above.            (10) Workings are not required. Round off all answers to the nearest rand.

Question 2 (14 marks)

Tank retailers Ltd, a VAT-registered vendor registered on the invoice basis, had the following transactions for the month of June 2025. All amounts stated are inclusive of VAT (at 15%), except if stated otherwise or where VAT is not applicable. The business uses the perpetual system when accounting for inventory.

1. On 9 June, the owner took home a coffee table, which was meant for sale, for his personal use. This coffee table had a selling price of R5 625 (VAT-inclusive) and a margin (on sales) of 30%.
2. On 20 June, the business sold goods on credit. These goods had a cost price (VAT-inclusive) of R113 000 and a mark-up (on cost) of 50%. (Both the cost of sales and sales need to be accounted for.)

• On 29 June, the business bought tea, coffee and milk for office use. The total cost was R575 (VAT-inclusive) and was paid from petty cash.
• On 30 June, the business bank account showed a debit for a total amount of R3 000. Of this amount, R2 700 of this was for interest charges and the rest was for bank charges.

Required:

Prepare the General Journal of Tank Ltd for the month of June 2025 by copying and completing the table below.

Workings are not required

Round off all answers to the nearest rand.                                                                                                                (14)

Question 3 (20 marks)

Lihle Manufacturing LTD had the following assets and details as at 30 June 2024:

Amounts in R’000 (thousands of rands)
Asset name	Accumulated depreciation (30 June 2024)	Cost (Excl- VAT)	Date of purchase	Depreciation policy
Machinery	?	2 000	1 July 2023	Reducing- balance method over a 5-year period
Motor Vehicles	153	1 000	1 September 2023	Straight-line over a 4-year period. Residual value = 5% of cost
Land and buildings	?	2 600	1 October 2023	3.5% on cost. Residual value = nil

Note in respect of the above:

1. Machinery was fully installed on 15 June 2023 and ready for use on 1 October 2023.
2. Land was valued at R900 000 on 1 December 2023.

• Motor vehicles and buildings were ready for use on date of purchase.

Events that occurred during the year ended 30 June 2025:

1. Additions and improvements were made to buildings at a total cost of R300 000. This was completed and ready for use on 01 February 2025. This was capitalised to the cost of buildings on the same date.
2. Machinery with a cost of R172 500 (VAT-inclusive) was purchased on 1 March 2024. It was ready for use on 01 April 2025, but Lihle only began using it on 1 May 2025.
3. One of the vehicles purchased on 01 September 2023 for R322 000 (VAT- inclusive) was involved in an accident on 30 April 2025 and was badly damaged. On this date, it was written off and sold on credit to an employee at 30% of the original cost.

Required:

• Calculate the depreciation on each asset as well as the total depreciation

for the year ended 30 June 2025.                                                  (14)

• Complete the asset disposal account for the motor vehicle written off and disposed on 30 April 2025.                                                                                                    (6)

Question 4 (26 marks)

The following information of DDP Retailers, a JSE-listed company, is provided below. Use the information contained therein to answer the questions that follow:

Statement of profit or loss and other comprehensive income for the year ended 31 December 2024
	R’000
Sales	14 113
Cost of sales	7 606
Gross profit	6 507
Other income	300

Gross operating income	6 807
General, selling and admin expenses	1 707
Depreciation	800
Operating profit	1 500
Interest expenses	700
Profit before tax	2100
Tax	240
Profit after tax	1860

Statement of financial position of DDP Retailers at 31 December 2024
	2024	2023
	R’000	R’000
ASSETS
Property, Plant and equipment	5 875	5 075
Inventory	2 009	2 690
Accounts receivables	3 501	3 400
Cash and cash equivalents	–	459
TOTAL ASSETS	11 385	11 624
EQUITY AND LIABILITIES
Share capital	5 303	6 507
Retained earnings	553	1 113
Accounts payables	4 201	3 709
Bank overdraft	994
Accrued expenses	334	295
TOTAL EQUITY AND LIABILITIES	11 185	11 624

Required:

• Calculate the cash received from customers that would appear in the statement of cash flows for the year ended 31 December 2024.   (5)

• Calculate the cash paid to suppliers and employees that would appear in the statement of cash flows for the year ended 31 December 2024. (14)

• Calculate the amount of cash generated/used for the year ended 31 December 2024 as it would appear in the statement of cash flows. State whether the amount represents cash used or generated for the year. (Hint: You do not need to draw up the entire cash-flow statement)

(3)

• The statement of cash flows has been criticised for lacking accrual information and providing limited insights into firm profitability, among many other reasons. Accordingly, because of the weaknesses of the statement of cash flows, the shareholders of DDP Retailers have decided that the financial accountant should not prepare the cash-flow statement. Since the shareholders are more concerned about wealth, they believe that only the statement of profit or loss and the statement of financial position will be useful to them.

Required: Do you agree with the view of the shareholders? Provide detailed motivation for your response.                                                                                                      (4)

Templates provided for 4.1 and 4.2 (T-accounts)

	ACCOUNTS RECEIVABLE
Date	Details	Folio	Amount	Date	Details	Folio	Amount

	INVENTORY
Date	Details	Folio	Amount	Date	Details	Folio	Amount

	ACCOUNTS PAYABLES
Date	Details	Folio	Amount	Date	Details	Folio	Amount

Accounting Assignment Answers: Experts Answer on Above Accounting Questions

Answer 1:

No.	Cost price (VAT- inclusive)	Mark-up or margin	Selling price (VAT- exclusive)	VAT @ 15%	Selling price (VAT- inclusive)
1	6747	50% on cost price	8800	1 320	10120
2	18 400	66.67%	48 000	7200	55200
3	2 300	150%	5 000	750	5 750
4	11040	20% on selling price	13800	1 800	13 800

Disclaimer: This answer is a model for study and reference purposes only. Please do not submit it as your own work.

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