You have been appointed to assist the accountant of Catalyst (Pty) Ltd to prepare the financial statements for the year ended 31 December 2023. You have been provided with the following financial information for the year ended 31 December 2023: Rands Ordinary shares (5 200 000) Retained earnings at 1 January 2023 (850 000) Inventory at 1 January 2023 5 400 000 Land at cost 3 600 000 Buildings at cost 10 800 000 Buildings accumulated depreciation at 1 January 2023 (2 700 000) Plant at cost 12 000 000 Plant accumulated depreciation at 1 January 2023 (4 500 000) Motor vehicles at cost 4 000 000 Motor vehicles accumulated depreciation at 1 January 2023 (1 400 000) Trade payables (10 800 000) Trade receivables 7 200 000 Provision for credit losses at 1 January 2023 (300 000) Purchases 24 500 000 Revenue (36 000 000) Administrative expenses 2 500 000 Distribution expenses 2 900 000 Other expenses 600 000 Bank 1 300 000 4% Redeemable Preference shares at R1 each (6 000 000) 8% Loan (6 000 000) 23 2023 c The Independent Institute of Education (Pty) Ltd 2023 Page 3 of 4 Additional information: 1. No Interest has been paid or accrued on the loan. 2. No Preference dividend has been paid or accrued for. Preference share dividends must be treated as interest expense as these shares are redeemable. 3. A utility bill for R360 000 relating to December 2023 was received in January 2024. Payment of this bill was made in January 2024. 4. Provision for credit losses is maintained at a percentage of 7.5% of the gross trade receivables balance. 5. Closing Inventory on 31 December 2023 has been valued at R6 000 000. 6. An expert independent valuer determined the fair value of the buildings at the beginning of the year as R10 500 000. The revaluation surplus will be realized through use of the asset over its remaining useful life. The company applies the elimination method to account for revaluations. Assume no tax implications on the revaluation. 7. Depreciation is calculated using the following methods: . Buildings . 5.00% on straight]line basis. This depreciation is allocated to administrative expenses. . Plant . 10.00% on reducing balance method. This depreciation is allocated to cost of sales. . Motor vehicles] units of production method. Motor vehicles are expected to travel 100 000 kms over their useful life. Kilometres travelled during the year amounted to 25 000kms. This depreciation is allocated to distribution costs. 8. Motor vehicles with a cost of R800 000 and accumulated depreciation of R480 000 were sold at the end of the current year for R570 000 which was received on the date of sale. 9. New land was purchased on 30 December 2023 for R2 400 000 of which R1 200 000 was paid immediately and the remaining R1 200 000 will be paid in 2 yearsf time. It is assumed that this transaction has a significant financing element, and an appropriate market related discount rate is 12% per annum. Round off the final answer to the nearest rand. 10. Taxation accrual for the year ended 31 December 2023 was estimated at R680 000. 11. An ordinary share dividend of R500 000 was declared at the end of 2023. 12. A transfer of R1 000 000 was made from retained earnings to general reserves at the end of the financial year. 13. The company prepares its Statement of profit or loss and other comprehensive income in accordance with the function method. Prepare all the journal entries for additional information 1 to 13. Journal narrations are not required. Prepare all the journal entries for additional information 1 to 13. Journal narrations are not required.
You have been appointed to assist the accountant of Catalyst (Pty) Ltd to prepare the financial
statements for the year ended 31 December 2023. You have been provided with the following
financial information for the year ended 31 December 2023:
Rands
Ordinary shares (5 200 000)
Inventory at 1 January 2023 5 400 000
Land at cost 3 600 000
Buildings at cost 10 800 000
Buildings
Plant at cost 12 000 000
Plant accumulated depreciation at 1 January 2023 (4 500 000)
Motor vehicles at cost 4 000 000
Motor vehicles accumulated depreciation at 1 January 2023 (1 400 000)
Trade payables (10 800 000)
Trade receivables 7 200 000
Provision for credit losses at 1 January 2023 (300 000)
Purchases 24 500 000
Revenue (36 000 000)
Administrative expenses 2 500 000
Distribution expenses 2 900 000
Other expenses 600 000
Bank 1 300 000
4% Redeemable Preference shares at R1 each (6 000 000)
8% Loan (6 000 000)
23 2023
c The Independent Institute of Education (Pty) Ltd 2023
Page 3 of 4
Additional information:
1. No Interest has been paid or accrued on the loan.
2. No Preference dividend has been paid or accrued for.
treated as interest expense as these shares are redeemable.
3. A utility bill for R360 000 relating to December 2023 was received in January 2024. Payment
of this bill was made in January 2024.
4. Provision for credit losses is maintained at a percentage of 7.5% of the gross trade
receivables balance.
5. Closing Inventory on 31 December 2023 has been valued at R6 000 000.
6. An expert independent valuer determined the fair value of the buildings at the beginning of
the year as R10 500 000. The revaluation surplus will be realized through use of the asset
over its remaining useful life. The company applies the elimination method to account for
revaluations. Assume no tax implications on the revaluation.
7. Depreciation is calculated using the following methods:
. Buildings . 5.00% on straight]line basis. This depreciation is allocated to administrative
expenses.
. Plant . 10.00% on
. Motor vehicles]
kms over their useful life. Kilometres travelled during the year amounted to 25 000kms.
This depreciation is allocated to distribution costs.
8. Motor vehicles with a cost of R800 000 and accumulated depreciation of R480 000 were
sold at the end of the current year for R570 000 which was received on the date of sale.
9. New land was purchased on 30 December 2023 for R2 400 000 of which R1 200 000 was
paid immediately and the remaining R1 200 000 will be paid in 2 yearsf time. It is assumed
that this transaction has a significant financing element, and an appropriate market related
discount rate is 12% per annum. Round off the final answer to the nearest rand.
10.
11. An ordinary share dividend of R500 000 was declared at the end of 2023.
12. A transfer of R1 000 000 was made from retained earnings to general reserves at the end of
the financial year.
13. The company prepares its Statement of profit or loss and other comprehensive income in
accordance with the function method. Prepare all the
are not required.
Prepare all the journal entries for additional information 1 to 13. Journal narrations
are not required.
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