Answered: QUESTION 3 Which one of the following…

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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Terms of the partnership agreement: 1.1 The partners are entitled to a salary of R18 000 each per month. 1.2 Zozi and Sethu share profits in the ratio of 1:1 respectively. 2. Year-end adjustments: 2.1 An outstanding debt of R2 200 is irrecoverable and must be written off. The allowance for credit losses must be increased to R6 500. 2.2 An amount of R4 500 owed by a debtor was written off as irrecoverable during the year ended 29 February 20.1. The debtor has settled the amount previously written off in full on 25 February 20.2. This transaction is still to be recorded in the books of the business. 2.3 Depreciation for the year must still be provided as follows: Office equipment: 20% according to diminishing balance method. Vehicles: 15% according to straight-line method and have a R15 000 residual value. 2.4 Inventories on hand on 28 February 20.1: Merchandise R45 100 2.5 Only 65% of salaries were paid to partners during the year and the amount paid is included in the salaries and wages figure above. 2.6 On 1 November 20.1 a delivery vehicle was sold for R26 000, on the date of the sale, it’s cost price and accumulated depreciation (on 1 March 20.1) was R66 000 and R43 000 respectively. The bookkeeper forgot to record the transaction. The depreciation for the sold vehicle is correctly calculated at R1 500 for the year. 2.7 Included in the office equipment above is office equipment purchased on 1 December 20.1 for R45 000.

QUESTION 3
Which one of the following alternatives represents the correct amount that must be
disclosed as profit on sale of delivery vehicle in the statement of profit or loss and
other comprehensive income of Zethu Jewelleries for the year ended 28 February
20.2?
A. 4 500
B. 26 500
C. 3 000
D. 26 000
E. 4 100
F. 38 500

ZETHU JEWELLERIES
EXTRACT OF FINANCIAL INFORMATION AT 28 FEBRUARY 20.2:
Note
R
Capital: Zozi
Capital: Sethu
Current account: Zozi (1 March 20.1) Cr
Current account: Sethu (1 March 20.1) Dr
Long-term loan from Zozi
Land and buildings
Trade receivables control
Office equipment at cost
Vehicle at cost
Accumulated depreciation: Office equipment (1 March 20.1)
Accumulated depreciation: Vehicles (1 March 20.1)
Allowance for credit losses
Allowance for settlement
Inventory
Purchases
Interest expense on long-term loan
Carriage on purchases
Carriage on sales
Settlement discount received
Sales
Settlement discount granted
Salaries and wages
Advertising expense
Stationery expenses
Water and electricity
546 000
824 500
42 000
52 800
63 400
855 000
90 300
494 010
669 620
60 180
165 280
7 160
8 000
264 470
1 033 700
10 940
6 120
7 590
15 190
2 160 380
21 510
1313 930
16 210
18 980
62 970
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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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