QUESTION ONE [25]
The following financial information relates to Cams Limited.
Statement of Financial Position as at 31 December 2020 and 2021
| 2021 R | 2020 R | |
| Ordinary share capital | 400 000 | 295 000 |
| Retained earnings | 55 000 | 5 000 |
| Property, plant and equipment | 230 000 | 195 000 |
| Investments | 165 000 | 110 000 |
| Debentures 12.5% | 20 000 | 60 000 |
| Inventory | 124 000 | 120 000 |
| Trade debtors | 37 000 | 28 500 |
| Prepaid expenses | – | 1 500 |
| Trade creditors | 25 000 | 42 500 |
| Bank overdraft | 21 000 | 25 000 |
| SARS (income tax) | 5 000 | 7 500 |
| Shareholders for dividends | 30 000 | 20 000 |
Statement of comprehensive income for the year 31 December 2021
| R | |
| Profit before interest and tax Depreciation on equipment Dividends received on investments Interest on dividends Income tax | 149 500 5 000 18 000 7 500 50 000 |
Statement of changes in equity for the year ended 31 December 2021 R
Dividends on ordinary shares 60 000
Note no. 1 for the year ended 31 December 2020 and 2021
Property, plant and equipment 2021 (R) 2020 (R)
Land and building at cost 200 000 160 000
Equipment at carrying value 30 000 35 000
230 000 195 000
Additional information
- No equipment was purchased or sold during the financial year ended 31 December 2021
- Ordinary shares were issued during the year.
Required:
Use the information provided above to prepare the cash flow statement for the year ended 31 December 2021.
QUESTION TWO [20]
Show the effect of the following transactions of Mac Limited on accounting equation using the format provided. Use + if the element increases, – if the element decreases and 0 if the element remains unchanged. Also indicate the amount.
E.g. Mac bought stationery on credit, R900.
| No. | Assets | = Equity | + Liabilities |
| E.g. | 0 | -900 | +900 |
Transactions:
- Bought invoice books on credit, R1 300.
- Bought a computer by cheque, R230 000.
- Cash received for services rendered, R14 000.
- Paid the annual fire insurance by cheque R22 400.
- Received R2 000 from a debtor in part settlement of her account.
- The tenant paid the monthly rental to Mac Limited, R15 000
- Received an account for repairs to the machinery, R17 500.
- Bought fuel for delivery vehicle by cheque, R400.
- Mac took R1 800 drawings from the business.
- Cash received for services rendered to Mr Harry who is a valued a customer, R101 150.
QUESTION THREE [20]
The following list of balances was taken from the books of Orange Traders, a fruit and vegetable distributor as at 28 FEBRUARY 2021, the end of the financial year:
| Capital | 60 500 |
| Drawings | 3 400 |
| Loan: NRB | 70 000 |
| Inventory: 1 March 2020 | 13 760 |
| Provision for bad debts | 150 |
| Sales | 250 620 |
| Purchases | 116 040 |
| Sales returns | 250 |
| Purchases returns | 1 150 |
| Rent income | 10 500 |
| Salaries and wages | 77 500 |
| Railage on sales | 1 600 |
| Interest on loan | 6 300 |
| Packing material | 3 600 |
| Discount received | 400 |
| Bad debts | 300 |
| Stationery | 5 400 |
| Insurance | 660 |
| Printing | 1 350 |
| Railage on purchases | 2 500 |
Additional Information:
- Inventory on hand at 28 February 2021 amounts to R 15 350.
- Depreciation must be provided as follows: Vehicles R 3 400
Equipment R 560
c) The loan was granted on 1 March 2019 at 12% p.a., payable every three months. Interest for the period 1 December 2020 to 28 February 2021 is payable on
1 March 2021.
- A store room was sublet from 1 June 2020 at R 1 050 per month.
- An amount of R120 was paid to Vesta Insurers as an advance premium for March 2021.
- An account of R1 350 was received from Prints Printers for the printing of documents. This must still be recorded.
Prepare the Statement of Comprehensive Income (Income Statement) for the year ended 28 February 2021.
Required:
QUESTION FOUR [20]
- List the five (5) elements of financial statements. (5)
- Discuss the objectives of financial statements according to the accounting
framework. (4)
- List five (5) components of the financial statements. (5)
- List and explain the two (2) key fundamental assumptions when preparing financial statements. (6)
QUESTION FIVE [15]
The following information relates to PAT STORES with financial year end 28 February 2021:
| Sales | 400 000 |
| Purchases | 155 000 |
| Inventory (01/03/2020) | 8 000 |
| Inventory (28/02/2021) | 18 000 |
| Carriage on sales | 10 000 |
| Railage on purchases | 5 000 |
Required:
Calculate gross profit and gross profit percentage on sales for the year ended 28 February 2021.
Answer to Question 1:
Cash flow statement is an important statement that indicates the cash position of an organisation. It provides information on cash flow from operating activities, cash flow from financing activties and cash flow from investing activities. The calculation of cash flow statement for Cams Limited is performed as follows…..
Accounting experts can provide all relevant answers for all the above calculative questions. Assignmenthelp.co.za has accounting experts to provide accounting assignment writing services in South Africa.
