BUSINESS ADMINISTRATION, MANAGEMNT& COMMERCIAL SCIENCES

ACCOUNTING 512 ASSIGNMENT

2ND SEMESTER_2017
Name & Surname: ____________________________________________ ICAS No: _________________

Qualification: ______________________

Specialization: _____________________ Date Submitted: ___________

QUESTION NUMBER MARK ALLOCATION EXAMINER MARKS MODERATOR MARKS

1 40

2 28

3 32

TOTAL 100
Examiners Comments:

Moderators Comments:

Signature of Examiner: Signature of Moderator:

PLEASE NOTE:
1. All questions must be answered.
2. All calculations must be shown.
3. Please follow the instructions in the required part of the question carefully to ensure that you
obtain the maximum marks for the subsection of the question.
4. This assignment covers selected sections of Partnership Accounting, Ratio Analysis and Cash
Flow Statement. Work carefully through the relevant topics in the study guide in conjunction
with the prescribed textbook before you attempt the assignment.
QUESTION 1: PARTNERSHIP ACCOUNTING (40 MARKS)
Peter and Paul are trading in partnership, sharing profits and losses and equally. Interest at 5% per
annum is allowed or charged on both the capital account and the current account balances at the
beginning of the year. The partners are entitled to annual salaries of:
Sage R12 000
Onion R8 000

Sage and Onion

Trial Balance as at 31 December 2016
DR CR
R R
Capital accounts: Peter 100 000
Paul 50 000
Current accounts: Peter 2 000
Paul 600
Drawings for the year: Peter 15 000
Paul 10 000
Freehold premises at cost 50 000
Stock at 1 January 2016 75 000
Fixtures and fittings at cost 15 000
Purchases 380 000
Purchase returns 12 000
Bank 31 600
Sales 508 000
Sales returns 6 000
Trade debtors 52 400
Trade creditors 42 000
Carriage inwards 21 500
Carriage outwards 3 000
Staff salaries 42 000
Office expenses 7 500
Provision for doubtful debts 2 000
Advertising 5 000
Discounts received 1 000
Discounts allowed 1 200
Bad debts 1 400
Rent and business rates 2 800
Accumulated depreciation of fixtures and fittings 3 000
720 000 720 000

At 31 December 2016:
a) Stock on hand was valued at R68 000.
b) Purchase invoices amounting to R3 000 for goods included in the stock valuation at (a) above had
not been recorded.
c) Staff salaries owing R900.
d) Business rates paid in advance R200.
e) Provision for doubtful debts to be increased to R2 400.
f) Goods withdrawn by partners for private use had not been recorded and were valued at: Peter
R500, Paul R630. No interest is to be charged on these amounts.
g) Provision is to be made for depreciation of fixtures and fittings at 10% on cost.
h) Interest on drawings for the year is to be charged: Peter R360, Paul R280.

REQUIRED:
1.1 Prepare the partnership profit and loss and appropriation account for the year ended 31December
2016. (20)
1.2 Prepare the partners current accounts and hence show the respective capital account balances (6)
1.3 Prepare the statement of financial position as at 31 December 2016. (10)
1.4 Notes to the financial statements prepared above (4)

QUESTION 2: RATIO ANALYSIS (28 MARKS)

Study the following financial statements for two very similar privately owned department stores which
each comprise of one store in the city of Cape Town.

SUMMARY OF FINANCIAL STATEMENTS:

Statement of Financial Position

A B
R000s R000s R000s R000s
FIXED ASSETS
Building at cost 300 440
Depreciation to date (255) (220)
45 220
Equipment at cost 140 180
Depreciation to date (119) (90)
21 90
66 310
CURRENT ASSETS
Stock 200 240
Debtors 205 140
Bank 4 2
409 382
TOTAL ASSETS 475 692

EQUITY AND LIABILITIES

Capital accounts
Balance at start of year 240 430
Net profit 60 90
300 520
Drawings (70) (80)
230 440
Current liabilities
Creditors 245 245 252 252
TOTAL EQUITY AND LIABILITIES 475 692
Statement of Profit and Loss and other comprehensive income
A B
R000s R000s R000s R000s

SALES 1 800 2 700

COST OF SALES
Opening stock 300 280
Purchases 1 300 2 250
1,600 2 530
Closing stock (200) (240)
(1,400) (2 290)
Gross profit 400 410
Less Depreciation 22 40
Other expenses 318 280
(340) (320)
NET PROFIT 60 90

REQUIRED:

Calculate the following ratios:

2.1 Gross profit as percentage of sales (3)
2.2 Net profit as percentage of sales (3)
2.3 Expenses as percentage of sales (3)
2.4 Stock turnover (3)
2.5 Rate of return of net profit on capital employed (use the average of the capital account
for this purpose) (4)
2.6 Current ratio (3)
2.7 Acid test ratio (3)
2.8 Debtor: sales ratio (3)
2.9 Creditor: purchases ratio (3)

QUESTION 3: CASH FLOW STATEMENT (32 MARKS)

Omega CC is a business that is located in Limpopo Province, they are the business of supplying farmers
with different types of chemicals for crops and animals. Omega CC has two founding members (Neo and
Keisha) and no changes to ownership has happened since its formation in 2005.
The following information relates to Omega CC:

Statement of financial position information as at 31 December 2013

2013 2012
(R) (R)
Members Contribution 480 000 314 800
Retained earnings 520 000 450 000
Land and buildings at cost 750 000 600 000
Motor vehicles at cost 300 000 250 000
Equipment at cost 270 000 230 000
Accumulated depreciation-Motor vehicles 175 000 150 000
Accumulated depreciation -equipment 130 000 91 000
Loan to Keisha 38 000 -
Loan from Neo 70 000 100 000
Mortgage loan 160 000 89 000
Debtors Control 23 000 30 000
Creditors control 25 000 27 000
Inventory 80 000 60 000
Prepaid rental expense 2 000 3 000
Bank (DR) 133 300 20 000
Investments at cost 55 000 50 000
Interest payable 1 500 1 200
Interest receivable 700 500
Current tax payable 4 500 3 500
Distribution payable to members 31 000 17 000

Extract from the statement of profit or loss and other comprehensive income for the year ended 31
December 2013
R
Revenue 652 000
Cost of sales (330 000)
Gross Profit 322 000
Rental income 13 000
Interest income 6 700
Depreciation (125 000)
Loss on sale of equipment (2 000)
Rental expenses (7 000)
Interest expenses (5 700)
Profit before tax 202 000
Income tax expense (57 000)
Profit for the year 145 000
Additional information

1. Distribution to members to the amount of 70 000 for the year ended 31 December 2013 was made
during the year and part of it was paid on 27 December 2013.
2. Additional member contribution was made in cash during the year.
3. Additional building was bought during the year and a cheque was issued to Northwest Properties.
This was the only transaction relating to buildings.
4. Additional motor vehicles were bought for cash during the year and there were no vehicles sold
during the year.
5. Two transactions happened in regards to equipment, the first was the sale of an equipment that had
a carrying amount of 9 000 and accumulated depreciation of 11 000, the equipment was sold for
cash and a new equipment to replace was bought for cash.
6. The loan to Keisha and loan from Neo are all long term and interest is not capitalised.

REQUIRED:
Prepare the Statement of Cash Flows of Omega CC for the year ended 31 December 2013. Your answer
must comply with the International Financial Reporting Standards (IFRS), appropriate to Close
Corporations.