FINAL ONLINE SUMMATIVE ASSESSMENT

Bachelor of Public Administration

Bachelor of Business Administration

Bachelor of Commerce in Project Management

Bachelor of Commerce in Financial Management

PROGRAMME Bachelor of Commerce in Marketing Management

Bachelor of Commerce in Supply Chain Management

Bachelor of Commerce in Human Resource Management

Bachelor of Commerce in Tourism and Hospitality Management

Bachelor of Commerce in Information and Technology Management

MODULE Financial Reporting and Analysis (Fundamentals of Financial Accounting)

YEAR One (1)
INTAKE July 2022 Semester 2
DATE 15 May 2023
Answer ALL questions in this paper. [100 MARKS]

QUESTION 1 (20 MARKS)

REQUIRED
Prepare the Statement of Financial Position of Solero Traders as at 28 February 2023.
Note: Where applicable, show workings in the spaces provided. The Statement of Comprehensive Income and notes to
the financial statements are NOT required.
INFORMATION
The information given below was extracted from the accounting records of Solero Traders on 28 February 2023, the end
of the financial year.

SOLERO TRADERS
PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2023
Debit (R) Credit (R)
Balance sheet accounts section
Capital 1 471 100
Drawings 650 750
Vehicles at cost 1 700 000
Equipment at cost 1 000 000
Accumulated depreciation on vehicles 840 000
Accumulated depreciation on equipment 320 000
Trading inventory 632 000
Debtors control 294 000
Provision for bad debts 14 000
Bank 200 000
Petty cash 3 100
Creditors control 372 000
Mortgage loan: Reef Bank (15% p.a.) 620 000
Nominal accounts section
Sales 4 454 000
Cost of sales 2 160 000
Sales returns 34 000
Salaries and wages 766 000
Bad debts 10 000
Consumable stores 14 000
Rent expense 208 000
Motor expenses 160 000
Bad debts recovered 6 000
Telephone 56 000
Electricity and water 110 000
Bank charges 22 000
Insurance 48 000
Interest on mortgage loan 85 250
Commission income 56 000
8 153 100 8 153 100

Adjustments and additional information

1. According to physical stocktaking on 28 February 2023, the following were on hand:
1.1 Trading inventory, R622 000
1.2 Consumable stores, R2 000.
2. Rent has been paid up to 31 March 2023.
3. A debtor who owed R6 000 could not be traced. It was decided to write off his account.
4. The provision for bad debts must be increased to R14 400.
5. Provide for the outstanding interest on the mortgage loan for the last month of the financial year. The loan
balance is expected to be reduced by R60 000 in the next financial year by means of monthly repayments.
6. The insurance total includes an annual premium of R12 000 that was paid on 01 June 2022.
7. Bank charges which appeared on the February 2023 bank statement have not been recorded, R800.
8. On 28 February 2023 an amount of R1 000 was received from P. Villers whose account was written off on 08
January 2023. No entry was made for this receipt.
9. A payment of R6 000 for the telephone account was erroneously debited to the drawings account. Correct the
error.
10. A debtor whose account was overdue must be charged R200 interest.
11. R400 was paid from petty cash for wages to a temporary employee. No entry was made for this.
12. Provide for depreciation as follows:
12.1 On equipment at 10% on cost.
12.2 On vehicles at 20% per annum on the diminishing balance.
13. The net profit for the year ended 28 February 2023, after considering the above adjustments and additional
information, was R561 600.
QUESTION 2 (20 MARKS)
REQUIRED
Use the information provided below to prepare the Statement of Changes in Equity for the year ended
28 February 2023.
INFORMATION
The information given below was extracted from the accounting records of Sidney Traders, a partnership business with
Siddle and Neymar as partners.
Balances in the ledger on 28 February 2023
Debit (R) Credit
(R)
Capital: Siddle 800
000
Capital: Neymar 400
000
Current a/c: 100
Siddle (01 March 000
2022)
Current a/c: 20 000
Neymar (01
March 2022)
Drawings: Siddle 360 000
Drawings: Neymar 440 000

The following must be considered:

(a) The net profit according to the Statement of Comprehensive Income amounted to R1 000 000 on
28 February 2023.
(b) The partnership agreement made provision for the following:
¦ Interest on capital must be provided at 12% per annum on the balances in the capital accounts.
Note: Siddle increased his capital by R200 000 on 01 September 2022. On the same date, Neymar decreased
his capital by R200 000. The capital changes have been recorded.
¦ The partners are entitled to the following monthly salaries from 01 March 2022 to 30 November 2022:
Siddle R10 000
Neymar R12 000
An increase in salaries of 10% is effective from 01 December 2022.
¦ Siddle is entitled to a bonus of 10% of the net profit before any appropriations are made.
¦ Siddle and Neymar share the remaining profits or losses in the ratio of the capital contributions as at
01 March 2022.
QUESTION 3 (20 MARKS)
REQUIRED
Use the information provided below to prepare the Statement of Comprehensive Income for the year ended
31 December 2022.
INFORMATION
The information given below was extracted from the accounting records of Questor Ltd on 31 December 2022 (the end of
the financial year).

QUESTOR LTD
PRE-ADJUSTMENT TRIAL BALANCE AS AT 31 DECEMBER 2022
Balance Sheet Accounts Section Debit (R) Credit (R)

Ordinary share capital 960 000

Retained earnings 120 000
Land and buildings 1 620 000
Vehicles (cost) 690 000
Equipment (cost) 258 000
Accumulated depreciation on vehicles 150 000
Accumulated depreciation on equipment 120 000
Debentures (12% p.a.) 780 000
Inventory (31 December 2021) 300 000
Debtors control 105 000
Provision for bad debts 6 000
Bank 39 000
Creditors control 279 000
South African Revenue Services (Company tax) 87 000
Nominal accounts section
Sales 2 880 000
Purchases 1 230 000
Sales returns 90 000
Purchases returns 90 000
Carriage on purchases 54 000
Municipal rates 45 000
Carriage on sales 30 000
Wages and salaries 240 000
Stationery 33 000
Bad debts 36 000
Insurance 39 000
Directors’ fees 144 000
Other operating expenses 285 000
Ordinary share dividends 60 000
5 385 000 5 385 000

Additional information
1. Physical stocktaking on 31 December 2022 revealed the following inventories:
1.1 Trading inventory, R210 000
1.2 Stationery, R3 000.
2. The municipal rates increase by 20% each year on 01 July. The rates expense for December 2022 was due to
be paid on 02 January 2023.
3. Depreciation must be provided for as follows:
3.1 On equipment at 15% per annum on cost.
3.2 On vehicles at 20% per annum on the diminishing balance. Note: A vehicle that cost R300 000 was purchased
on 01 October 2022. This transaction has been recorded.
4. No entry was made for a debtor who was declared insolvent and was only able to pay R1 800, which
represented 60% of the amount that she owed. The balance of her account must also be written off.
5. The insurance total includes an insurance premium of R7 200 that was paid for the period 01 May 2022 to 30
April 2023.
6. An amount of R36 000 was owed for directors’ fees and was due to be paid on 02 January 2023.
7. The provision for bad debts must be increased to R6 300.
8. Provide for interest on debentures that is yet to be paid.
9. The company tax calculation based on the profit for the year revealed that an amount of R31 188 is owed to
South African Revenue Services.
QUESTION 4 (20 MARKS)
REQUIRED
Study the information provided below and prepare the Cash Flow Statement of Topaz Limited for the year ended 31
December 2022.
INFORMATION

TOPAZ LIMITED
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022
R
Sales 9 300 000
Cost of sales (4 530 000)
Gross profit 4 770 000
Selling and administrative expenses (1 890 000)
Operating profit 2 880 000
Interest expense (180 000)
Profit before tax 2 700 000
Tax (720 000)

Profit after tax 1 980 000

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:
2022 2021
ASSETS R R
Non-current assets 8 400 000 6 600 000

Land and buildings 4 950 000 4 230 000

Plant and machinery 2 790 000 2 370 000
Investments 660 000 0
Current assets 2 430 000 2 040 000
Inventories 1 080 000 1 140 000
Accounts receivable 1 146 000 720 000
Cash and cash equivalents 204 000 180 000
10 830 000 8 640 000

EQUITY AND LIABILITIES

Equity 7 020 000 5 850 000

Ordinary share capital 4 500 000 4 500 000
Retained earnings 2 520 000 1 350 000

Non-current liabilities 1 800 000 900 000

Current liabilities 2 010 000 1 890 000
Accounts payable 1 080 000 1 260 000
Company tax payable 360 000 180 000
Shareholders for dividends 570 000 450 000
Total equity and liabilities 10 830 000 8 640 000

Additional information
¦ Selling and administrative expenses include the following:
Depreciation on buildings R270 000
Depreciation on plant and machinery R450 000

¦ Property, plant and equipment were purchased during the year but there were no disposals.
¦ Total dividends for the year ended 31 December 2022 amounted to R810 000.
¦ 750 000 ordinary shares were issued by the company.
¦ All purchases and sales of inventories were on credit.
¦ The market price of each Topaz Limited share was R10 on 31 December 2022.
QUESTION 5 (20 MARKS)

REQUIRED
Use the information provided in Question 4 to answer the following questions:
5.1 Calculate the following ratios for 2022 only. Express the answers to two decimal places.
5.1.1 Inventory turnover (2 marks)
5.1.2 Debtors collection period (2 marks)
5.1.3 Creditors payment period (2 marks)
5.1.4 Earnings yield (2 marks)
5.1.5 Dividend yield (2 marks)
5.1.6 Acid test ratio (2 marks)
5.1.7 Debt to equity (2 marks)

5.2 Comment briefly but meaningfully on the following ratios:

2022 2021
Current ratio 1.21:1 1.08:1
Earnings per share 264 cents 296 cents
Profit margin 21.29% 25.56%
(6 marks)

TOTAL: 100 MARKS