FAC2601 Assignment 1 (Semester 1, 2022) Solutions (Detailed answers with explanations) #. Answers have been worked out in detail (calculations have been given as well as the explanations for the answers given).
SECOND SEMESTER 2022
ASSIGNMENT 02 (30 marks) (36 minutes)
The following information was extracted from the accounting records of Sankofa Ltd on
30 June 2020:
R
Inventories (additional information 3) 305 300
Trade and other receivables 220 000
Trade and other payables 35 000
Dividends payable 5 000
Bank 23 000
Retained earnings (30/06/2019) 49 800
Long-term loan – Kwasi Ltd (additional information 4) 950 000
Land at cost 1 000 000
Buildings at cost 1 500 000
Machinery and equipment at cost (30/06/2019) 390 000
Motor vehicles at cost (30/06/2019) 690 000
Accumulated depreciation (30/06/2019)
- Machinery and equipment 48 750
- Motor vehicles ?
Investments (additional information 2) 255 000
Additional information:
1. The following information regarding property, plant and equipment is available:
1.1 Land and buildings consist of Erf 392, Limpopo, with a factory building thereon. The land
was acquired on 1 September 2018 for R1 000 000. A factory building was erected during
the current year at a cost of R1 500 000. The company purchased machinery at a cost of
R300 000 and paid for installation cost of R25 000 on 1 July 2019. This new machinery
was withdrawn from production from 1 August 2019 to 31 January 2020 in which time it
was used in the process of erecting the factory building. This cost was not taken into
consideration in determining the cost of R1 500 000 for the erection of the building. The
building was completed and brought into use by management on 29 February 2020. The
land was revalued for the first time on 30 June 2020 at a market value of R1 120 000 by
Mr Mkefa, a sworn appraiser.
1.2 All machinery and equipment except machinery purchased in the current year were
purchased on 1 October 2018.
1.3 One of the delivery vehicles was sold for R50 000 on 31 December 2019. This vehicle was
originally purchased on 1 April 2017 for R260 000. All other vehicles were purchased on 1
July 2018.
1.4 Non-current assets are depreciated as follows:
- Machinery and equipment: straight-line method over 6 years.
- Motor vehicles: 25% per annum using the straight-line method.
- Buildings: 2% per annum using the straight-line method.
5
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