This document contains the solution to FAC1601 Assignment 3 due on 02 October 2023, using this document will ensure that you get 80% plus pass mark. trusted solutions and workings.
The following information pertains to The Roses CC and covers questions 1 – 9:
David and Patrick are the only members of a Close Corporation trading as The Roses CC (Roses CC). They both have an equal interest of
50% each in the CC. The CC has a 28 February financial year-end.
You have been appointed by Roses CC as the accounting officer for the year ended 28 February 2023.The following information was
presented to you by the CC’s accountant:
The Roses CC
EXTRACT OF BALANCES AS AT 28 February 2023:
The Roses CC R
Member contribution:David 180000
Member contribution:Patrick 240000
Loan from David 60000
SARS (Dr) 6240
Allowance for credit losses 2400
Inventory (01 March 2022) 72000
Long-term loan : Redbank 134400
Prepaid expenses 4920
Accrued expenses 6480
Sales 648000
Sales return 22800
Purchases 238800
Delivery expenses on Sales 5904
Depreciation 5184
Rental income 6540
Purchases returns 4980
Salaries and wages 283692
Land and buildings at cost 576000
Debtors control 39600
Interest on loan from member ?
Telephone expense 7680
Stationery 3960
Water and electricity 8580
Advertising expense 5160
Insurance expense ?
Additional information:
Extract from the member’s arrangement:
1.Patrick and David are entitled to a monthly salary of R6 000 each. Patrick as the managing members is entitled to an additional amount of
R12 000 per annum.
Year-end adjustments:
1.The allowance for credit losses must be adjusted to R5 760.Mr Johny a debtor who owe the business R1 300 was declared insolvent and
must be written off as irrecoverable.
2.Inventory on hand on 28 February 2023 amounted to R82 000
3.The partners salaries were paid during the year and are included in salaries and wages amount.
4.On 15 August 2022 Roses CC entered into an insurance contract with Orange Insurance. The policy came into effect from the 1
September 2023 at a premium of R1200 per month. A total of R15 000 was paid to Orange by the CC as insurance premium. No entries
have been made in the books of The Roses regarding the premiums.
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, 9/30/23, 9:40 PM Assessment 3
5.On 30 November 2022, a profit distribution of R40 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 10% per annum. This transaction is yet to be accounted for.
6.Interest on the mortgage from City Bank at 18% per annum must still be considered. The interest is payable on 1 March 2023. The
mortgage was obtained on 1 September 2022 and is secured by a first mortgage over land and buildings. The mortgage is repayable in five
equal instalments as from 31 March 2024.
Rounds off all amounts to the nearest rand.
PART A
QUESTION 1
Which alternative represents the correct amount for revenue in the statement of profit or loss and other comprehensive income of The
Roses CC for the year ended 28 February 2023?
A. R625 200
B. R648 000
C. R670 800
D. R650 000
Clear my choice
Question 2
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Which alternative represents the correct amount for cost of sales in the statement of profit or loss and other comprehensive income of The
Roses CC for the year ended 28 February 2023?
A. R228 800
B. R305 820
C. R392 800
D. R223 820
Clear my choice
Question 3
Answer saved
Marked out of 1.00
Which alternative represents the correct amount for salaries and wages in the statement of profit or loss and other comprehensive income
of The Roses CC for the year ended 28 February 2023?
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