QUESTION 1
COMPANY FINANCIAL STATEMENTS
(70 marks, 42 minutes)
REQUIRED
1.1 Complete the Statement of Comprehensive income in your answer book
1.2.1 Complete the note for Trade and other Receivables
1.2.2 Complete the note for Ordinary Share Capital
1.2.3 Complete the note for Trade and other Payables
Information relating to Maqwathi Limited
Pre-adjustment Trial Balance for the year ended 31 October 2022
R
R
Balance Sheet Section
Ordinary share capital
?
Retained income
?
Land and buildings
4 064 000
Vehicles
1 850 000
Accumulated depreciation on vehicles
1 729 000
Fixed deposit: Rand Merchant at 10,5% p.a.
135 000
Trading stock
360 870
Debtors control
161 969
Bank
32 740
Loan: Capitec Bank
300 000
Creditors for salaries
25 100
SARS: PAYE
12 050
Unemployment insurance fund (UIF)
979
Creditors control
229 120
Provision for bad debts
SARS: Income tax
7 930
289 000
Nominal Accounts Section
Sales
2 435 000
Cost of sales
1 521 875
Debtors' allowances
3 725
Rent income
144 313
Audit fees
25 000
Directors fees
159 600
Sundry expenses
116 649
Bad debts
11 594
Salaries
240 000
Interest on fixed deposit
9 050
Loss on disposal of asset
6 000
Ordinary share dividends
140 000
9 085 282
Additional information and adjustments that still need to be taken into account:
1. The following adjustments relate to their debtors:
1.1 A credit note dated 31 October 2022 was issued for defective stock with a
selling price of R2 256. The company consistently applies a mark-up of
60% on cost. These goods were returned to the supplier.
1.2 Provision for bad debts needs to be adjusted to R8 200.
2. Rental income for November 2022 was received and recorded on 25 October
2022. The premises were occupied for the entire year.
3. Maqwathi Limited paid a 40% deposit on their audit fees for the year. The balance
will be settled on 7 November 2022.
4. According to the physical stock count, trading stock on hand amounted to R358
240.
5. The creditors for salaries figure of R25 100 in the pre-adjustment trial balance
reflected the following 2 situations:
5.1 The salaries clerk had incorrectly processed the October salary of
employee Jack Jones who had left the company on 30 September 2022.
9 085 282
The details of his October salary are as follows:
GROSS
SALARY
R28 000
DEDUCTIONS:
CONTRIBUTIONS
PAYE: R7 852
UIF:
R148
(Ignore the maximum for
UIF)
UIF: R148
(Ignore the maximum for
UIF)
Contributions are debited to the salaries account.
5.2 The remaining salary was for an employee who requested that his October
salary only be paid on 1 November 2022.
5.3 Payments to SARS and the various funds will only be made on 1
November 2022.
6. The fixed deposit was increased by R25 000 on 1 July 2022. This has been
recorded. Interest is not capitalised. Outstanding interest needs to be accounted
for.
7. Only one asset, a vehicle, was sold at the beginning of the year. The book value
of this vehicle on the date of sale was R20 000. It was sold for R24 000 cash. All
the transactions relating to the transfer of the cost price and accumulated
depreciation of the asset were correctly transferred to the asset disposal account,
but the bookkeeper recorded the receipt of cash in the CRJ and the asset disposal
account as R14 000 instead of R24 000.
8. The remaining vehicles must be depreciated to a book value of R15 000.
9. Maqwathi Limited took out a loan from Capitec Bank on 1 November 2021 on
the agreement that they would pay back a fixed amount of the loan each year as
well as any interest expense for that year. The following table shows the
transactions related to the loan for the financial year ending 31 October 2022:
Opening balance at 1 November 2021
Add: Interest capitalised
Less: Repayments and interest payments made during the year
Closing balance at 31 October 2022
Maqwathi Limited has budgeted to repay the same capital portion of the loan next
year.
R420 000
?
(166 200)
300 000
10. The following share transactions took place during the year:
•
•
•
•
On 31 October 2021 the company had shares in issue with a weighted average of R6,90
per share
On 1 November 2021 the company issued a further 125 000 ordinary shares at R7,30 per
share. This transaction has been recorded.
On 30 September 2022 the company repurchased 37 500 shares at R8,50 per share from
the estate of a deceased shareholder
On 31 October 2022 director A. Shaw was issued 2 500 ordinary shares at R7,40 each in
lieu of his outstanding directors fees. No entry has been made to record this.
11. On completion of the audit for the year it was calculated that Maqwathi Limited
owed SARS a further R11 450 for Income Tax.
12. On 31 October 2022, the directors declared a final dividend of 80 cents per share.
The shares issued to director A. Shaw DO NOT qualify for this dividend.
COMMON DISTRICT TOPIC TEST
ANSWER BOOK
NAME OF THE SCHOOL______________________________
NAME OF THE LEARNER_____________________________
MARKS OBTAINED
70
QUESTION 1
COMPANY FINANCIAL STATEMENTS
(70 marks; 42 minutes)
Refer to the information relating to Maqwathi Limited.
1.1 Complete the Statement of Comprehensive Income for the year ending 31 October 2022.
Maqwathi Limited
Statement of Comprehensive Income for the year ending 31 October 2022
Sales (2 435 000
Cost of Sales (1 521 875
Gross Profit
Do not fill in this amount
Add: Other income
Rent income (144 313
Gross income for the year
Do not fill in this amount
Less: Operating expenses
Do not fill in this amount
Audit fees (25 000
Directors fees (159 600
Sundry expenses
116 649
Salaries (240 000
Bad debts
11 594
Loss on sale of asset (6 000
Operating profit for the year
Do not fill in this amount
Interest income (9 050
Operating profit before interest expense
Do not fill in this amount
Interest expense
Net income before taxation
Do not fill in this amount
Taxation for the year (289 000
Net income after taxation
Do not fill in this amount
(33)
1.2 Complete the notes to the financial statements as at 31 October 2022.
NB: Maqwathi Limited show all their current liabilities under Trade and other
payables and not separately in the Balance Sheet.
1.2.1 Trade and other receivables
(5)
Net trade debtors
Debtors Control (161 969
Less: Provision for bad debts (7 930
Do not fill in this amount
1.2.2 Ordinary share capital
(12)
Ordinary shares at
per share
Ordinary shares at
per share
Ordinary shares at
per share
Ordinary shares at
per share
2 587 500
(20)
1.2.3 Trade and other payables
Creditors control (229 120
Creditors for salaries (25 100
SARS: PAYE (12 050
Unemployment insurance fund (979
Bank Overdraft (32 740
Do not fill in this amount