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FAC1601 Assignment 3 2023 - (ANSWERS)
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FAC1601 Assignment 3 2023 - (ANSWERS)
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,Due to the high crime rate in South Africa, Thabo and Nandi have a close corporation trading as Best Security CC. Theservices provided by the CC include VIP protection, Community security services, Surveillance monitoring and Access
control. The close corporation provides services within Gauteng in the Sandton Area. The financial period for the CC
ends 28 February.
The following extract of balances as at 28 February 2023 from the accounting records of
Bester CC is presented to you for assistance:
R
Loan to Nandi - 01 March 2020 25,000
Member’s contribution: Thabo 300,000
Member’s contribution: Nandi 275,000
Member’s contribution: Moses ??
Retained earnings (1 March 2022) 272,450
Trade debtors control 161,500
Trade creditors control 158,700
Loan from Thabo - 01 March 2022 120,500
Bank (favourable) 2,876,100
Long-term loan (Times Bank) 4,806,900
SARS (income tax) liability 120,300
Vehicles at cost 3,540,400
Accumulated depreciation: Vehicles (1 March 2022) 427,200
Furniture at cost 120,000
Accumulated depreciation: Furniture (1 March 2022) 26,800
Equipment at cost 1,700,600
Accumulated depreciation: Equipment (1 March 2022) 491,800
Inventory 314,800
Profit before tax (before taking into account the additional information) 3,259,800
Additional information
1. In the financial year ending 2022, Nandi’s father named Moses a professional within the security industry with
over 25 years of experience was admitted to the CC in July 2022 to assist in managing and overseeing a new division.
Moses contributed R70 000,00 cash, he further contributed a patrol vehicle to the valued at R150 000.
2. The loan from Thabo was advanced to the CC on the 1st of November 2021 and is repayable on 31 October
2023.
3. On 01 August 2022 the electronic Gun Safe (Equipment) got damaged by floods and was not
reparable. This Safe was acquired on 30 June 2020 at a cost of R150 000.The carrying amount of the Safe on the day
of the floods amounted to R95 000. Best CC received an insurance pay-out of R95 0000 on 15th September 2022.
4. Depreciation for the year ended 28 February 2023 was calculated as follows:
Vehicles: R123 000
Furniture: R12 000
Equipment: R78 000
5. Nandi experienced personal financial problems during the year and borrowed R30 000 from the close
corporation. The loan was granted to Nandi on 31 May 2022 at an interest rate of 13% per annum. The interest on
this loan is capitalised. This transaction is still to be recorded.
,6. On 30 November 2022, a profit distribution of R47 000 was made to each member of the close corporation.
These amounts should be regarded as loans from members with interest charged and capitalised at 15% per
annum. This transaction is yet to be accounted for.
7. The Inventory amount relates to the pepper spray, surveillance camera and other protection gear sold to the
public. The Net Realisable Value for the inventory amounted to R320 000,00 at year end.
8. The income tax assessment, received from SARS on 1 March 2023, indicated that the normal income tax for
the 2022 financial year amounted to R278 000.
9. All amounts should be rounded off to the nearest Rand.
Use the information above to answer questions 1 to 13.
Question 1
Which one of the following alternatives represents the correct amount of member’s contributions from the new
member Moses to be included in the statement of changes in net investments of members of Best CC for the year
ended 28 February2023?
A.
R 130 000
B.
R 70 000
C.
R 220 000
D.
R 150 000
Clear my choice
Question 2
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Question text
Assume the correct members contribution from Moses is R125 000. Which one of the following alternatives
represents the correct total member’s contributions to be included in the statement of changes in net investments of
members of Best CC for the year ended 28 February 2023?
A.
R 700 000
B.
R 645 000
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