FAC2601 – MAY/ JUNE 2011

Question 1

One shot Ltd

Statement of comprehensive income for the year ended 28 February 2011

Note / R
Revenue (20520000 / 1.14) / 18000 000
Cost of sales / *(10800000)
Gross profit (18000000 x 40%) / 7200 000
Other income (40000 + 3600 + 1600 + 5000 + 13000 ) / 63 200
Distribution expenses / (107200)
Administrative expenses (6776400 – 27600 – 32000) / (6716800)
Other expenses / (8000)
Finance costs (27600 + 32000 + 22500 (C3)) / (82100)
Profit before tax / 1 / 349 100
Income tax expense / 2 / ( 76000)
Profit for the year / 273 100
Other comprehensive income / 816 000
Gain on available for sale financial assets (80000 – 64000) / 16 000
Gains on property revaluation (600000 + 200000) / 800 000
Total comprehensive income for the year / 1 089 100
  1. Notes to the statement of comprehensive income

  1. Profit before tax

Revenue
Revenue consists of sales to customers and excludes vat / 18000 000
Income from subsidiary
Interest received / 5 000
Fair value adjustment / 40 000
Profit on sale of vehicle / 13 000
Income from other financial assets
Listed investments – held at fair value through profit and loss
Dividends received / 3 600
Unlisted investment – available for sale
Dividends received / 1 600
Expenses
Directors remuneration
Executive directors 14 000
Emoluments (13600 + 7200 + 8000 + 280000 + (280000 x 5%) / 322 800
Less: paid by subsidiary / ( 8000)
Total paid by company / 314 800
Non – executive directors
Emoluments / 7 200
Auditors remuneration
Audit fees (9000 - 4200) / 4 800
Travel expenses / 4 200
Depreciation (58000 + 48000 + 40000) / 146 000
  1. Income tax expense

SA normal tax
Current year / 76 000

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Question 2

One Shot Ltd

Note / R
Statement of financial position at 28 February 2011
Assets
Non- current assets / 3461 000
Property plant and equipment / 1 / 3201 000
Investment in subsidiary / 2 / 180 000
Available for sale financial asset / 3 / 80 000
Current assets / 963 000
Other financial assets / 3 / 200 000
Trade receivables / 3 / 190 000
Inventory / 4 / 540 000
Cash and cash equivalents / 33 000
Total assets / 4424 000

Notes to the statement of financial position

  1. Property, plant and equipment

Land / Buildings / Delivery vehicle / Machinery and equipment / Total
Carrying amount – 1 March 2010 / 200 000 / - / 70 000 / 200 000
Cost / 200 000 / - / 140 000 / 320 000
Accumulated depreciation / - / - / (70000) / (120000)
Additions at cost / - / 1800 000 / 340 000
Revaluation during the year / 200 000 / 600 000
Depreciation for the year / (48000) / (58000) / (40000)
Disposals at carrying amount / (63000)
Carrying amount – 28 February 2011 / 400 000 / 2352 000 / 289 000 / 160 000 / 3201 000
Cost / 400 000 / 2400 000 / 340 000 / 320 000
Accumulated depreciation / - / (48000) / (51000) / (160000)

Land and buildings are owner occupied, situated on Erf 90, Riviera. The land and buildings were revalued on the 31 August 2010 by Mr Smit, a sworn appraiser according to the gross replacement basis.

  1. Investment in subsidiary

Shares at cost / 120 000
Loan to subsidiary / 60 000
180 000
  1. Other financial assets

Non- current financial assets
Available for sale financial asset
800 ordinary shares in Cringe (Pty) Ltd at directors’ valuation / 80 000
Current financial assets
Trade receivables / 172 000
Loans to personnel / 18 000
190 000
Listed investments – held at fair value through profit and loss
4000 ordinary shares in Babe Ltd at fair value / 200 000
  1. Inventory

Inventory consists of:
Raw material / 16 000
Finished goods / 484 000
Work in progress / 40 000
540 000

Question 3

One shot Ltd

Note
Equity and liabilities / 4396 000
Share capital / 5 / 3070 000
Retained earnings / 710 000
Other components of equity / 616 000
Non – current liabilities
Interest bearing borrowings / 7 / 550 000
Current liabilities / 759 100
SARS – vat output ( 2520000 – 2020000) / 500 000
Current portion of long term loan / 7 / 50 000
SARS (76000 – 32400) / 43 600
Trade and other payables (22500 + 143000) / 165 500
Total equity and liabilities / 5705 100

Notes to the statement of financial position

5.

Share capital
Authorised
1600000 ordinary shares of R2 each
200000 10% non - cumulative preference shares of R5 each
100000 12% cumulative preference shares of R4 each
Issued / 3070 000
1300000 ordinary shares of R2 each / 2620 000
54 000 10% non - cumulative preference shares of R5 each / 270 000
45 000 12% cumulative preference shares of R4 each / 180 000
  1. Other components of equity

Non – distributable reserves
Revaluation surplus / 800 000
Distributable reserves
Mark to market reserve / 16 000
816 000

6.

Interest bearing borrowings
Secured
12% debentures / 400 000
Unsecured loan / 150 000
Long term portion / 200 000
Less: current portion / (50000)
550 000
The debentures are secured by a first mortgage bond over land and buildings and are redeemable on 31 March 2014

Question 4 (only for students that registered in 2011)

4.1

a) Amortisation table

Date / Pmt / Capital / Interest / O/S Bal
01/07/2007 / 360,000
31/12/2007 / 70,000 / 30,328 / 39,672 / 329,672
30/06/2008 / 70,000 / 33,670 / 36,330 / 296,002
31/12/2008 / 70,000 / 37,381 / 32,619 / 258,621
30/06/2009 / 70,000 / 41,500 / 28,500 / 217,121
31/12/2009 / 70,000 / 46,073 / 23,927 / 171,048
30/06/2010 / 70,000 / 51,151 / 18,849 / 119,898
31/12/2010 / 70,000 / 56,787 / 13,213 / 63,110
30/06/2011 / 70,000 / 63,110 / 6,890 / 0

b) Journal entries

Date / Description / Debit / Credit
01/07/2007 / Machine @ Cost (SOFP) / 360,000
Finance lease liability (SOFP) / 360,000
31/12/2007 / Finance lease liability (SOFP) / 30,328
Finance charges (SOCI) / 39,672
Bank / 70,000
30/06/2008 / Finance lease liability (SOFP) / 33,670
Finance charges (SOCI) / 36,330
Bank / 70,000
30/06/2008 / Depreciation (SOCI) / 72,000
Accumulated depreciation (SOFP) / 72,000
[360 000 / 5 years]

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4.2) (Only for students that wrote supplementary exam)

One shot Ltd

Statement of changes in equity for the year ended 28 February 2011

Ordinary share capital / 10% non – cumulative preference share capital / 12% cumulative preference share capital / Retained earnings / Mark to market reserve / Revaluation surplus / Total
Balance – 1 March 2010 / 2000 000 / 220 000 / 180 000 / 787 600 / - / -
Total comprehensive income for the year / 273 100 / 16 000 / 600 000
Capitalisation issue / 200 000 / (200000)
Ordinary shares issued / 420 000
10% non – cumulative preference shares issued (10000 x 5) / 50 000
Share issue expenses written off / (12000)
Preliminary expenses written off / (6000)
Dividends paid
Ordinary dividends / (65000)
10% non – cumulative preference dividends / (24500)
12% cumulative preference dividends / (43200)
Balance – 28 February 2011 / 2620 000 / 270 000 / 180 000 / 710 000 / 16 000 / 600 000

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