Financial Accounting II / © ICG / Page 54Question 1On 2 July 2005, H Ltd. purchased the entire issued ordinary share capital ofS Ltd. On this date, S Ltd. had a retained income balance of R4 000 and nogeneral reserve. Any purchase difference is to be attributed to the fixed assetsof S Ltd. On 30 June 2007, the trial balances of the two companies were asfollows:H Ltd.S Ltd.RRShare capital (R1 ordinary shares)General reserveRetained incomeAccumulated depreciation40 00020 00010 0005 00034 00010 0006 000R90 000R35 000Fixed assets at cost30 00036 00014 000Investments in S Ltd.Net current assets24 00021 000R90 000R35 000Included in the net current assets of both companies is a dividend dueby S Ltd. to H Ltd. of R2 000.Note:RequiredDraw up a consolidated balance sheet of H Ltd. and subsidiary S Ltd. on30 June 2007.Question 2H Ltd. bought all the shares in S Ltd. on 30 June 2004 when the retainedincome of S Ltd. was R8 000 and the general reserve was R12 000. Thefollowing list of balances appeared in the books of the two companies on30 June 2007.H Ltd.S Ltd.RRDebitsLand and buildings at costEquipment at costInvestment in S Ltd.StockBank60 00028 00044 00024 00080 00048 00024 00060 00028 000R292 000R104 000CreditsShare capital (ordinary R1 shares)General reserveRetained incomeCreditorsAccumulated depreciation on equipment120 00048 00088 00020 00020 00018 00052 00010 00012 0008 000R292 000R104 000Financial Accounting II / © ICG / Page 55 Cash price:RT 500 per setDeposit:Interest:20% of cash price per set20% per annumInstalments:35 monthly payments of R54 and a final payment of R30.The cost price per set amounted to R900, and 200 sets were sold during theyear ended 30 June 2006. Instalments totalling R64 800 were received. Profit isregarded as realised in the year of sale, but finance charges are written off onthe basis of the ratio of instalments received to total instalments.Financial Accounting II / © ICG / Page 62Required(a)Show the following accounts:instalment sales debtors;instalment sales trading account; andinterest suspense account(b)Show how instalment sales debtors will be reflected in the balance sheetat 30 June 2006.Question 4HP Sellers Ltd. sells TV sets under instalment-purchase agreements. Thecompany credits its profit and loss account each financial year with the profiton deposits and instalments received.This is done by multiplying the gross profit percentage for a particularcontract by the deposits and instalments received on that contract.The following transactions took place during the financial year ended31 December 2007.Name of buyerCost of TVInstalment-Deposit paidInstalmentspurchase priceof TV setR 800R 600R 500R 900R1 000setspaidR400R150R 80R200R100R500R200QR400R150R120RR300SR600R700R250R300TR's TV set was repossessed and sold for R350 cash.Show the instalment credit debtors' account, the instalment credit trainingaccount and the second-hand trading account in the books of HP Sellers Ltd.for the year ended 31 December 2007.Financial Accounting II / © ICG / Page 63

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Question 1 On 2 July 2005, H Ltd. purchased the entire issued ordinary share capital of S Ltd. On this date, S Ltd. had a retained income balance of R4 000 and no general reserve. Any purchase difference is to be attributed to the fixed assets of S Ltd. On 30 June 2007, the trial balances of the two companies were as follows: H Ltd. S Ltd. R Share capital (R1 ordinary shares) General reserve Retained income Accumulated depreciation 40 000 20 000 10 000 5 000 34 000 10 000 6 000 R90 000 R35 000 Fixed assets at cost Investments in S Ltd. Net current assets 30 000 14 000 36 000 24 000 21 000 R90 000 R35 000 Included in the net current assets of both companies is a dividend due by S Ltd. to H Ltd. of R2 000. Note: Required Draw up a consolidated balance sheet of H Ltd. and subsidiary S Ltd. on 30 June 2007.

Question 1 On 2 July 2005, H Ltd. purchased the entire issued ordinary share capital of S Ltd. On this date, S Ltd. had a retained income balance of R4 000 and no general reserve. Any purchase difference is to be attributed to the fixed assets of S Ltd. On 30 June 2007, the trial balances of the two companies were as follows: H Ltd. S Ltd. R Share capital (R1 ordinary shares) General reserve Retained income Accumulated depreciation 40 000 20 000 10 000 5 000 34 000 10 000 6 000 R90 000 R35 000 Fixed assets at cost Investments in S Ltd. Net current assets 30 000 14 000 36 000 24 000 21 000 R90 000 R35 000 Included in the net current assets of both companies is a dividend due by S Ltd. to H Ltd. of R2 000. Note: Required Draw up a consolidated balance sheet of H Ltd. and subsidiary S Ltd. on 30 June 2007.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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