CONSTRUCTION ACCOUNTING 306D
CSA306D
GROUP ASSIGNMENT
Due date: No later than 16H00 31 October 2023
INSTRUCTIONS:
• Answer all the questions.
• Write neatly and legibly.
• The group assignment can be typed or handwritten.
• Types assignments can be submitted in word doc or pdf doc and the handwritten
assignment should be scanned.
• Submission of the assignment shall be done via an Assignment submission link
on D2L. N.B no email submissions nor hand submissions will be marked.
• All the names and student numbers of the group members should be reflected on
the cover page of the assignment submission. N.B the names on the cover page
must match the names that were submitted before the assignment was
issued.
• One (1) submission per group will be marked.
• Round all figures to the nearest Rand.
• Number questions correctly.
• Pencil work will not be marked.
Question 1
Financial statements
46 Marks
Question 2
Inventory
21 Marks
Question 3
Accounts receivable and
Accounts payable
13 Marks
QUESTION 1
(46 Marks)
Michelle Traders had the following balances in their records at end of their reporting
period, 31 December 2020:
Debit
Credit
R
R
Land
100 000
Building at carrying amount at the
150 000
beginning of the year
Investments
120 000
Furniture at cost
60 000
Accumulated depreciation- Furniture
20 000
Cleaning materials (Stationary at hand)
10 000
Receivables
20 000
Bank
26 000
Capital
434 000
Sales
330 000
Purchases
Sales return
157 500
8 000
Rent income
27 000
Salaries and wages
96 000
Sundry expenses
18 000
Interest income
9 000
Insurance expense
4 500
Inventories (01 January 2020)
50 000
820 000
820 000
Additional information:
1. The investment was made for a full year, but interest was received for only nine
months.
2. No depreciation has yet been written off for the year. It is the entity’s policy to
write off depreciation on furniture at 10% per annum on the diminishing balance
method, and building have remaining useful life of 20 years and straight-line
method is used to depreciate buildings.
3. Cleaning materials worth R3 000 were on hand on 31 December 2020.
4. Rent income includes payments for the first three months of 2021.
5. Wages and salaries include an amount of R2 000 which was lent to an
employee. The amount will be repaid during January 2021.
6. Insurance premiums was only paid for 11 months instead of 12 months.
Insurance premiums are equal monthly.
7. Inventory on 31 December 2020 amounted to R47 500.
Required:
a) Record the year-end adjustments, according to the information given, in general
journal entries for Michelle Traders for the year ended 31 December 2020. N.B
Dates and narrations are NOT required (19 marks)
b) Prepare the statement of profit or loss for Michelle Traders for the year ended
31 December 2020. (15 marks)
c) Prepare the statement of financial position for Michelle Traders at 31 December
2020. (12 marks)
QUESTION 2
(21 MARKS)
Mike is the owner of the sole traders by the name of Kgaugelo Traders. Kgaugelo
Traders sells generators to the general public. It should be noted that Kgaugelo
Traders is a registered VAT vendor and VAT rate is 15%. Throughout the month of
April 2021, the following transactions took place:
1. On 1 April 2021, 60 generators to the amount of R1 437 500 (including VAT)
were ordered from Bongi Traders, for purposes of re-sale. Kgaugelo Traders
is responsible for the delivery costs in respect of the generators from the
premises of Bongi Traders to the premises of Kgaugelo Traders.
2. Kgaugelo Traders acquired the services of an external transport contractor to
deliver the generators to the premises of Kgaugelo Traders. On 15 April
2021, the generators were loaded by the contractor. At this point in time, the
right of ownership was transferred to Kgaugelo Traders.
3. On 17 April 2021, the generators were delivered to the premises of Kgaugelo
Traders and an amount of R51 750 (including VAT) was paid to the
contractor by means of cash.
4. The invoice, to the amount of R1 437 500, was received together with the
goods and contains an indication that, if the invoice is paid before 30 April
2021, a settlement discount of 5% will be granted. Kgaugelo Traders’
payment history indicated that the entity has always made use of the
settlement discount. (refer to point 1)
5. On 28 April 2021, Kgaugelo Traders paid the invoice by means of an
electronic fund transfer.
Required:
a) Recognise the abovementioned transactions in the records (general journal)
of Kgaugelo Traders for the reporting period ended 30 April 2021, if it is
accepted that Kgaugelo Traders uses the perpetual inventory system. N.B
Dates and narrations are required. (13 marks)
b) Recognise the abovementioned transactions in the records (general journal)
of Kgaugelo Traders for the reporting period ended 30 April 2021, if it is
accepted that Kgaugelo Traders uses the periodic inventory system.
N.B Dates and narrations are required. (8 marks)
QUESTION 3
(13 MARKS)
Moola Traders and Thabo Traders are both registered as VAT vendors in terms of
the VAT act and VAT rate is 15%. Thabo Traders is a wholesaler and one of the
suppliers of products to Moola Traders. The following transactions took place during
December 2020 between the two entities:
Both entities use the perpetual inventory system.
1. Trade inventories that were sold and delivered by Thabo Traders on 8
December 2020, were received by Moola Traders. The invoice amount of
R207 000 (including VAT) is payable on 7 January 2021. The cost price of
these trade inventories, according to the records of Thabo Traders, is R80
000. (This amount obviously excludes VAT).
2. On 14 December 2020, Moola Traders returned some of trade inventories that
were received on 8 December 2020, to Thabo Traders. The amount on the
debit note is R28 750 (including VAT) and the reason is indicated as “latent
defects”.
3. On 17 December 2020, Thabo Traders issued a credit note dated 17
December 2020 to the amount of R28 750 (including VAT) to Moola Traders.
The cost price of the inventories received back from Moola Traders, amounts
to R10 000 for Thabo Traders.
Required:
a) Journalise the abovementioned transactions in the records (general journal) of
Thabo Traders (Selling entity- A wholesaler) for the month ended 31 December
2020. N.B – Dates and narrations are required. (13 marks)