FEEDBACK TUTORIAL LETTER 1st SEMESTER 2020...FEEDBACK TUTORIAL SEMESTER 1/2020 BUSINESS ACCOUNTING...

FEEDBACK TUTORIAL LETTER

1st SEMESTER 2020

ASSIGNMENT 1

BUSINESS ACCOUNTING 2A BAC211S

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BUSINESS ACCOUNTING 2A

BAC211S

1

ASSIGNMENT 01

QUESTION 1 ( 30 MARKS)

a.) Journal entries

Details Debit Credit

1. Sales returns √ 5,540

Suspense √ 5,540

(Being sales returns posted to the incorrect

side of the sales returns account)

2. Payables √ 810

Purchases √ 810

(Being the book of original entry overcast)

3. Telephone √ 740

Sundry suppliers √ 740

(Being an error of omission)

4. Z Andrew √ 6,760

A Andrew √ 7,670

Suspense √ 14,430

(Being payment to a payable recorded

incorrectly by amount and in the incorrect

account)

5. Fixtures and fittings- non-current assets √ 420

Purchases √ 420

(Being the correction of an error of principle)

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6. Bank √ 20,000

Rent received √ 8,000

Other payables √ 2,000

Suspense √ 10,000

(being rent received inappropriately treated)

7. Cash Sales √ 6,500

Capital √ 6,500

Bank √ 10,000

Drawings √ 5,000

Loan √ 5,000

(Being a capital injection and loan

inappropriately treated)

√= (20 marks)

b.) Suspense account

Details N$ Details

N$

Balance b/d √

29,970 Error 1 √

5,540

Error 4 √

14,430

Error 5 √

10,000

29,970 29,970

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√= (4 marks)

c.) Proprietor’s Profit

N$

√ 1,210

Error 1 √ (5,540)

Error 2 √ 810

Error 3 √ (740)

Error 4 -

Error 5 √ 420

Error 6 √ 8,000

Error 7 √ (6,500)

(2,340)

√= (6 marks)

QUESTION 2 ( 20 MARKS)

a) Statement of adjusted profit for the year ended 31 October 2017

N$ N$

Net profit as per draft accounts 88,000√

(1) Depreciation:

Leasehold Premises 5,000

Plant and Machinery 26,000

Furniture & Fittings 5,000 (36,000)√

(2) Wages owing (14,000)√

(3) Rent prepaid 7,000√

Adjusted net profit 45,000√

(√ = 1 mark each, Total = 5 marks)

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b) Appropriation account for the year ended 31 October 2017

N$ N$

Net profit 45,000

Less:

Partner’s salaries

Geoff 5,000

Henry 6,000

Ian 7,000 (18,000) √

Interest on capital

Geoff 4,000

Henry 3,500

Ian 3,500 (11,000) √

16,000

Appropriated as follows:

Geoff 8,000

Less: to meet guarantee (1,000) 7,000√

Henry 4,000

Less: to meet guarantee (1,000) 3,000√

Ian 4,000

Add: to meet guarantee 2,000 6,000√

16,000

(√ = 1 mark each, Total = 5 marks)

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c)

Geoff, Henry and Ian Partnership

Statement of Financial Position as at 31 October 2017

Cost

Accumulated

Depreciation

NBV

N$ N$ N$

Non-current assets

Leasehold Premises 250,000 55,000 195,000

Plant and machinery 130,000 91,000 39,000

Furniture & Fittings 25,000 10,000 15,000

405,000 156,000 249,000√√

Current Assets

Inventory 30,000√

Receivables 26,000√

Prepaid rent 7,000√

Bank 12,000√ 75,000

324,000

Partners capital accounts

Geoff 80,000

Henry 70,000

Ian 70,000 220,000 √

Partners current accounts

Geoff 32,000

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Henry (7,500)

Ian 26,500 51,000 √

Current liabilities

Payables 26,000√

Short term loan from Nambank 13,000√

Accrued wages and salaries 14,000√ 53,000

324,000

(√ = 1 mark each, Maximum 11, allowed Total = 10 marks)

QUESTION 3 (25 MARKS)

a.) Receivables Control Account √

Details N$ Details

N$

Balance b/d √

142,760 Balance b/d √

11,200

Sales √

1,150,000 Returns inwards √

74,200

Dishonored cheque √

2,170 Cash received √

985,200

Refunds √

3,330 Irrecoverable debts √

24,860

Contra √

9,750

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Discounts allowed √

19,700

Balance c/d √

9,100 Balance c/d √p

182,450

1,307,360

1,307,360

Balance b/d

182,450 Balance b/d 9,100

13

b.) Payables Control Account √

Details N$ Details N$

Balance b/d √

4,150 Balance b/d √

162,450

Returns outwards √

40,300 Purchases √

942,070

Cash paid √

888,410 Interest charged √

5,470

Discounts received √

23,600 Refunds √

2,190

Contra √

9,750

Balance c/d √p 149,290 Balance c/d √ 3,320

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1,115,500

1,115,500

Balance b/d

3,320 Balance b/d

149,290

12


Nelago Limited

Statement of cash flows for the year ended 31 March 2018

Notes N$

Cash receipt from customers W1 6,216,600 (4)

Cash paid to suppliers

W2,3&

4 -3,968,100 (9)

Cash paid to employees

-1,020,000

Cash generated from operations

1,228,500 p

Interest paid W5 -65,700

Tax paid W6 -153,100

Net cash flow from operating activities

1,009,700

Cash flow from investing activities

Purchase of equipment W7 -1,420,000

Proceeds from sale of equipment W8

190,000

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Net cash outflow from investing

activities

-1,230,000

Workings:

1. Cash received

Receivables b/f

265,500

Revenue

6,460,000

Bad debts

-167,500

Bank (bal)

6,216,600

Receivables c/f

341,400

2. Cost of sales

Inventory b/f

187,500

Cost of sales

3,003,000

Purchases (bal)

3,079,000

Inventory c/f

263,500

3. Cash paid to suppliers

Payables b/f

206,500

Purchases (W2)

3,079,000

Bank (bal)

3,156,100

Payables c/f

129,400

4. Operating expenses

Prepaments balance b/f

52,500

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Operating expenses as per SOPLOCI

-2,574,000

Non cash items (525 000 + 60 000)

585,000

Staff costs

1,020,000

Bad debts

167,500

Bank (bal)

-812,000

Prepayments balance c/f

63,000

5. Interest paid

Accrued finance costs b/f

6,200

Current charge

65,000

Bank (bal)

65,700

Accrued finance costs c/f

5,500

6. Taxation

Taxation liabilibity b/f

142,600

Current charge

204,500

Bank (bal)

153,100

Taxation liabilibity c/f

194,000

7. Non current assets

Net book value b/f

1,250,000

Depreciation

-525,000

Disposal

-250,000

Revaluation

200,000

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Bank

1,420,000

Net book value c/f

2,095,000

8. Proceeds from sale of assets

Net book value

250,000

Loss on sale

-60,000

Bank (bal)

190,000

9. Share issue

Opening share capital plus premium

190,000

Bank (bal)

210,000

Closing share capital plus premium

400,000

10. Loan repayments

Opening balance

500,000

Bank (bal)

100,000

Closing balance

400,000

11. Cash and cash equivalents

opening

Investments

230,000

Cash at bank

93,500

Cash in hand

2,500

326,000

12. Cash and cash equivalents closing

Investments

75,400

Cash in hand

2,500

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Overdraft

-15,000

62,900

Cash generated from operations (indirect method)

Profit before tax 818,000

Adjustment with non-cash items

Depreciation 525,000

Bad debts 167,500

Loss on disposal of non-current assets 60,000

Prepaid insurance (10,500)

Adjustment with items presented separately

Interest expense 65,000

Working capital changes

Increase in inventories (76,000)

Decrease in payables (77,100)

Increase in receivables (243,400)

Cash generated from operations 1,228,500

TOTAL MARKS FOR ASSIGNMENT 01: 100

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ASSIGNMENT 2 Question 2 (40 Marks)

A.

Details Debit Credit

1. Suspense (1) 5 500

Sales (1) 2 750

Capital (1) 2 750

2. Suspense (1) 578

Discount Allowed (1) 289

Discount received (1) 289

3. Payable (ROR) (1) 800

Receivable (ROR) (1) 800

Suspense (1) 1 600

4. Property Plant and equipment (1) 8 000

Repairs and maintenance (1) 8 000

Depreciation (1) 300

Accumulated depreciation (1) 300

5. Purchases (1) 324

Suspense (1) 324

6. Rent expense (1) 1 640

Rates (1) 1 640

7. Telephone (1) 573

Payable/Bank (1) 573

8. Water and Electricity (1) 405

Payable (1) 405

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[MAXIMUM 20 MARKS]

B.

Considerations before an ordinary dividend may be declared:

A preference dividend must be declared before an ordinary dividend is declared.

The directors must apply the solvency and liquidity test before a dividend is declared to protect the payables of the company.

(i) Solvency – the fair value of assets equal or exceeds the fair value of liabilities.

(ii) Liquidity – the company will be able to pay its debts as they become due in the ordinary

course of business for a period of 12 months after the date of the test. [5]

2.

PART ( (10 MARKS)

Close Corporation Partnership Private limited company

Separate legal person Not a legal person Separate legal person

Unlimited life Limited life Unlimited life

Members have limited liability

for debts

No limited liability

Partners are jointly and severally

liable for debts

Shareholders have limited

liability for debts

Potential loss of limited

liability in certain instances

Not applicable Loss of limited liability by court

decision

Solvency and liquidity

requirements

None Capital Maintenance Rule

Member’s interest Partners’ capital accounts Share capital & reserves


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Maximum of 10 members Maximum of 50 partners Maximum of 50 shareholders

Minimum of 1 member Minimum of 2 partners Minimum of 1 shareholder

Members may only be

individuals (natural persons)

Partners may be individuals

(natural persons) or companies

(juristic persons)

Shareholders may be individuals

(natural persons) or companies

and trusts (juristic persons)

Members conduct

Business

Partners conduct

Business

Shareholders appoint directors

to conduct business


Transferability of member’s

interest restricted

New partnership formed when

partners change

Transferability of shares

restricted

Tax paid at a fixed rate

applicable to companies

Individual partners are taxed Tax paid at a fixed rate

applicable to companies

Distributions of income to

members

Income, taxed in hands of

partners

Dividends payable

Dividends received exempt from

tax

Partnership not taxable Dividends received exempt from

tax

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d.) Journal entries

DETAILS DEBIT CREDIT

1. Accounts receivable (SFP) 900

Sales (P/L) 900

2. Canteen supplies (P/L) 75

Postage stamps (P/L) 35

Gifts/Presents (P/L) 170

Petty Cash (SFP) 280

3. Discount received (P/L) 65

Discount allowed (P/L) 65

Suspense (SFP) 130

4. Suspense (SFP) 1,650

Purchases returns (P/L) 1,650

5. Suspense (SFP) 2,600

Drawings (SFP) 1,300

Bank (SFP) 1,300

6. Sales (P/L) 1,100

Drawings (SFP) 1,110

Cash/ Bank (SFP) 2,210

7. Sales (P/L) 3,700

Accumulated depreciation (SFP) 14,100

Vehicles (SFP) 16,750

Bank (SFP) 1,050

e.) Suspense account

Details N$ Details

N$

Purchases returns 1,650 Balance b/d 4,120

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Drawings 2,600 Discount Allowed 65

Discount Received 65

4,250 4,250

f.) Proprietor’s Profit

N$

Net profit per accounts Xxx

Error 1 900

Error 2 (280)

Error 3 (65+65) (130)

Error 4 1,650

Error 5 -

Error 6 (1,100)

Error 7 (3,700)

Adjusted profit (2,660)

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