Holly Hunter had been working as a nurse in Long Tong Hospital in Hong Kong when theoutbreak of SARS (Severe Acute Respiratory Syndrome) became a real threat to her in herworkplace. As a safety precaution, Holly decided to return home to South Africa. She shippeda container of various fashion items (clothes, handbags, and accessories) from Hong Kong toSouth Africa and on her return, set up shop in the Red Shed market at the Victoria and AlfredWaterfront in Cape Town. After three months of trading, it appeared to Holly that her businesswas performing well. However, when she read the financial statements, there were a numberof things that Holly did not understand. She decided to have lunch with you, her accountant,in order to discuss the questions and concerns that she had about her business.Below is an extract of the conversation that Holly Hunter had with you. The extract out- linesher questions and concerns:1. There are a number of customers that have ordered and paid for various goods to bedelivered after the current financial year end, 30 June 2022. The total value of the ordersamounted to R37,000. Can you explain in detail how this transaction has been treatedin the financial statements, for the year ended 30 June 2022?2. Advertising amounting to R55,000 was paid in cash before the 30 June 2022 financialyear end, however, only R33,000 appears in the Statement of Profit or Loss and OtherComprehensive Income? Was the advertising expense not understated or is thereanother explanation?You are required to:Answer Holly's questions, giving a brief explanation in each case.

holly hunter's first question : that how to record the value of orders, which has been received but…

Below is an extract of the conversation that Holly Hunter had with you. The extract out- lines her questions and concerns: 1. There are a number of customers that have ordered and paid for various goods to be delivered after the current financial year end, 30 June 2022. The total value of the orders amounted to R37,000. Can you explain in detail how this transaction has been treated in the financial statements, for the year ended 30 June 2022? 2. Advertising amounting to R55,000 was paid in cash before the 30 June 2022 financial year end, however, only R33,000 appears in the Statement of Profit or Loss and Other Comprehensive Income? Was the advertising expense not understated or is there another explanation?

Below is an extract of the conversation that Holly Hunter had with you. The extract out- lines her questions and concerns: 1. There are a number of customers that have ordered and paid for various goods to be delivered after the current financial year end, 30 June 2022. The total value of the orders amounted to R37,000. Can you explain in detail how this transaction has been treated in the financial statements, for the year ended 30 June 2022? 2. Advertising amounting to R55,000 was paid in cash before the 30 June 2022 financial year end, however, only R33,000 appears in the Statement of Profit or Loss and Other Comprehensive Income? Was the advertising expense not understated or is there another explanation?

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter3: The Judicial System

Section: Chapter Questions

Problem 8QAP

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