FAC1601
Assignment
3 Semester
1 2023
(366858)FAC1601 Assignment 2 Semester 1 2023/2024 Update
Question 1
Which of the following statements is correct:
1. When revaluing an asset or liability in terms of a change in ownership structure, the current account is used. The current account is ...
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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. The services provided by the CC
include VIP protection, Communitysecurity services, Surveillance monitoring
and Access control. The close corporation provides services within Gauteng in
the Sandton Area. The financial period for the CC ends 28February. The
following extract of balances as at 28 February 2023 from the accounting
records ofBester 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 toassist 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.Thecarrying 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 interestrate 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 withinterest 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 R,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 netinvestments 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
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