Part A Energiser Electricity Ltd is a supplier of prepaid electricity meters in South Africa. Its product range includes the supply of electricity meter boxes and electricity tokens. The financial statements of Energiser Electricity Ltd for the year ended 31 December 2019 were presented to the board of directors on 31 March 2020 to be authorised for issue. Uncertainty still exists on the following matters that have taken place after the reporting date: 1. On 15 March 2020, the board of directors of Energiser Electricity Ltd declared and approved a dividend of R80 000, to all existing ordinary shareholders. The dividend will be paid on 4 April 2020. 2. Boost Ltd, a debtor of Energiser Electricity Ltd, was placed in liquidation on 10 January 2020 after having experienced financial difficulties for a period of six months. Boost Ltd owed Energiser Electricity Ltd an amount of R90 000, which was included in trade and other receivables at the reporting date in the financial statements of Energiser Electricity Ltd. Booster Ltd.'s liquidator notified all creditors on 15 March 2020 that the estimated liquidation dividend would be 25c for every Rand. On 18 January 2020, one of the accountants resigned from Energiser Electricity Ltd with immediate effect. Upon further investigation, the entity concluded that this individual had been defrauding the entity by making payments to himself, from Energiser Electricity Ltd.'s bank account, in relation to fictitious rental invoices amounting to R25 000. With the help of the South African Police Service, the individual was tracked down and the misappropriated cash was repaid to the entity on 25 January 2020.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Hi, the practice question I am currently working with only has these 2 complete questions. Please assist. Required: Q1 Use the information from Part A and do the following: Identify each event as an adjusting or non-adjusting event and briefly discuss the effect. of each event on the financial statements of Energiser Electricity Ltd for the financial year ended 31 December 2019. If the event requires an adjustment in the annual financial statements, prepare the journal entry to be recorded. Your answer must comply with the requirements of the International Financial Reporting Standards (IFRS). Q2. Prepare the Inventory note to the financial statements of Chem Ltd for the year ended 31 December 2019, from the information in Part B Your answer must comply with the requirements of the International Financial Reporting Standards (IFRS).

Part A
Energiser Electricity Ltd is a supplier of prepaid electricity meters in South Africa. Its product range
includes the supply of electricity meter boxes and electricity tokens.
The financial statements of Energiser Electricity Ltd for the year ended 31 December 2019 were
presented to the board of directors on 31 March 2020 to be authorised for issue. Uncertainty still
exists on the following matters that have taken place after the reporting date:
1.
On 15 March 2020, the board of directors of Energiser Electricity Ltd declared and approved a
dividend of R80 000, to all existing ordinary shareholders. The dividend will be paid on 4 April
2020.
2.
Boost Ltd, a debtor of Energiser Electricity Ltd, was placed in liquidation on 10 January 2020
after having experienced financial difficulties for a period of six months. Boost Ltd owed
Energiser Electricity Ltd an amount of R90 000, which was included in trade and other
receivables at the reporting date in the financial statements of Energiser Electricity Ltd.
Booster Ltd.'s liquidator notified all creditors on 15 March 2020 that the estimated liquidation
dividend would be 25c for every Rand.
On 18 January 2020, one of the accountants resigned from Energiser Electricity Ltd with immediate
effect. Upon further investigation, the entity concluded that this individual had been defrauding the
entity by making payments to himself, from Energiser Electricity Ltd.'s bank account, in relation to
fictitious rental invoices amounting to R25 000. With the help of the South African Police Service, the
individual was tracked down and the misappropriated cash was repaid to the entity on 25 January
2020.

Part B
Chem Ltd, a subsidiary of Energiser Electricity Ltd is a company that manufactures chemical cleaning
products for the domestic and industrial markets. The company is a VAT vendor and its financial year
end is 31 December. The following information was made available to the financial accountant of
Chem Ltd for the financial year ended 31 December 2019, to be used in the preparation of the annual
financial statements.
Inventory
.
Raw materials on hand on 31 December 2018, were 500 litres at a cost of R9 per litre.
During the current financial year, 16 000 litres of raw materials were purchased for an amount
of R175 800.
.
●
Transportation costs of R1 200 were incurred to transport the raw materials to the premises of
Chem Ltd.
It is expected that there will be a 1% loss of raw materials during the production process due to
evaporation.
During December 2019, 430 litres of raw materials were wasted in the production process due
to a malfunction of one of the engines. The cost incurred to repair the engine amounted to R4
750.
.
The balance of raw materials at 31 December 2019 is 300 litres.
.
The factory supervisor earns a salary of R190 000 per annum.
The wage cost of R170 000 was incurred as follows: factory workers 75%, cleaning staff in the
factory 5%, administrative workers in the head office 20%.
●
Storage costs of R980 were incurred to store the finished goods until they were sold.
.
Water and electricity incurred for the current financial year amounted to R48 000, of which
80% is variable and 20% is fixed.
No work in progress was on hand at the end of the year.
●
The number of units produced and sold for the current financial year amounted to the
following:
Units produced
Units sold
Budgeted
12 500
Actual
11 700
10 700
The budgeted fixed production overhead costs amounted to R265 000.
.
Chem Ltd uses the weighted average cost formula to calculate the cost of its inventories.
The selling price per unit produced and completed is R75.
The sales commission on each unit sold is R15.
The replacement cost for the raw materials per litre is R12.
.

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