Exam (elaborations)
FAC1602 Assignment 5 Semester 2 2022
- Institution
- University Of South Africa
FAC1602 Assignment 5 Semester 2 2022 FAC1602 Assignment 5 Semester 2 2022
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FAC1602Assignment 5
2022
Unique No.: 687054
Due date: 8 June 2022
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3.00 Following the surge in crime rates around the Dzingidzingi Village in 2017, Baloyi and Manzini came together to form a security company
to operate around the village. Yena-Aya-Kwin Security was formed as a partnership with Baloyi and Manzini as partners. The information
below pertains to the business activities of the partnership for the year ended 29 February 2020.
1. EXTRACT OF BALANCES AS AT 29 FEBRUARY 2020:
R
Land.............................................................................................................. 799 200
Buildings ....................................................................................................... 2 268 000
Accumulated depreciation: Buildings (1 March 2019) .................................. 154 000
Equipment (at cost)....................................................................................... 423 500
Accumulated depreciation: Equipment (1 March 2019)................................ 99 000
Vehicles (at cost) .......................................................................................... 606 600
Accumulated depreciation: Vehicles (1 March 2019) ................................... 92 100
Allowance for credit losses ........................................................................... 5 500
Trade receivables control ............................................................................. 315 800
Fixed deposit ................................................................................................ 103 200
Investments .................................................................................................. 162 000
Prepaid expenses {Advertising).................................................................... 9 900
Capital: Baloyi............................................................................................... . 525 600
Capital: Manzini ............................................................................................ . 373 800
Capital: Nkuna .............................................................................................. . 747 500
Current account: Baloyi (Dr - 1 March 2019) ................................................ 102 400
Current account: Manzini (Dr - 1 March 2019) ............................................. 79 600
Drawings: Baloyi ........................................................................................... . 20 900
Drawings: Manzini ........................................................................................ . 5 600
Allowance for settlement discount granted ................................................... 8 800
Long-term loan: Giyani Development Agency (1 March 2019)..................... . 890 700
Loan to Manzini ............................................................................................ . 54 500
Loan from Baloyi........................................................................................... . 339 900
Bank overdraft .............................................................................................. . 26 100
Trade payables control ................................................................................. . 543 400
Profit for the year (before year-end adjustments)......................................... 1 035 800
2. Terms of the partnership agreement
2.1 Interest is calculated at 8% per annum on the opening balances of the partners’ current and capital accounts.
2.2 Each partner is entitled to a monthly salary of R12 500.
3. Additional information
3.1 Due to investment commitments requiring cash injection, the partnership decided on the following:
Only paid 92% of the salaries to the partners for the year.
On 1 February 2020, admitted a new partner Nkuna for a contribution of cash amount of R320 000 and security equipment
valued at R427 500. Nkuna started earning a salary from the date of admission
The three partners decided to share profits and losses equally.
3.2 A commission of R18 900 was paid to Nkuna for securing additional security contracts at the nearby village. This amount was
recorded as part of wages and salaries expense.
3.3 The long-term loan from Giyani Development Agency was granted on 1 December 2016. The loan is secured by a first mortgage
over land and buildings and is repayable together with interest, on 1 December 2020.
3.4 All loans to partners are immediately callable whilst the loan from Baloyi is repayable in full on 30 November 2022.
3.5 Investments consist of
Investment in Mfunekani (Pty) Ltd valued R82 000
12 000 shares in Mpange Ltd valued at R80 000
3.6 The accountant of the partnership neglected to record the sale of a vehicle with a cost price of R85 000. The vehicle was sold for
R21 000 cash on 1 November 2019. The accumulated depreciation on the vehicle amounted to R66 000 on 1 November 2019.
3.7 Depreciation for the year which must still be provided for was correctly calculated as follows:
Buildings R148 000
Equipment R 35 600
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