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You and a couple of your friends are astute students at IIE MSA in the Engineering programme and have been requested to do an internship at Voltage Engineers based in Feather-Brook. The accountant has been diagnosed with COVID-19 as he has travelled to Wuhan this past summer to seek alternative suppliers. He has therefore not been able to complete his month end duties and the audit is due to start in two weeks' time. Voltage Engineers specialises in electrical engineering and has recently procured a lucrative deal with a large petroleum entity to assist with a full solar power solution given the recent surge in load shedding. The government has recently signed off the IPP agreement which will see a great amount of strain relieved from the grid. All transactions are recorded each day. The accounting records are only performed between Monday and Friday, being the normal working days. Financial Information (Accounting Balances and Transactions): The accountant was instructed by the CFO to provide you with the full accounting information and records of the following items in order to prepare for month end: Trade receivables . . Trade payables Trade inventories Cash and cash equivalents Non-Current Assets The information below was extracted from the records of Voltage Engineers for the month of September 2020: As at 31 August 2020: General Ledger accounts balances Trade Receivables Trade Payables Trade Inventories Bank Property, Plant and Equipment R 450 000.00 1500 500.00 (Credit) 1 800 000.00 1 300 000.00 500 760 000 The following transactions and events took place during the month of September 2019: Trade Receivable: Date 30 Sep Total-Sales journal Returns-out Details Returns - in R/D cheques received from debtors Credit losses for settlement discount Allowance for settlement discount Discount received R 950 560 99 000 27 918 46789 980 68590 9862 Total-Purchases journal Bad debts recovered Interest charged-debtors Cash and cheques received from debtors Cash sales for the month 750658 9500 1250 550350 350960 Payables: Totals of subsidiary ledgers on 30 September 2020: Cash receipts journal: Receivables column Sales column VAT output Cash payment journal: Receivable column Purchases column Payables column VAT input Total: Purchases book R Purchases returns book 843 000 930 000 105 000 19 500 930 000 558 000 114 000 856 000 9 800 Total of the general journal: Debit: Payables ledger General ledger Credits: Payables ledger General ledger Additional information: 24 500 ● 45 900 17 500 42 600 ● Airliner's debt of R45 000.00 should be written off. The account of Eishkom should be charged with interest of R8950. Inventories: Voltage Engineers purchased solar panels, invertors and solar control regulators from Germany on 3 September 2020. The purchase price is 158 000 Euros (spot rate is Euro 15: R?). The items were transported from Frankfort to OR Tambo on a Boeing A350 on 6 September. This cost to transport the inventory paid to the airliner is R178 000 on 5 September. Upon arrival, on 7 September, customs duties levied a further 10% on the purchase price when goods were acquired was levied. The entity spent a further R28 000.00 to transport the item to its warehouse in Little Falls. The spot rates on 6 and 7 September were 15.5 and 16 respectively. All the amount incurred were paid by EFT on the same day. Cash and cash equivalents: The following transactions were not processed and need to be accounted for: ● The bank statements reflected an interest income of R8500.00 interest on a money market account that was not accounted for. The bad debts recovered of R9500 from a debtor was not posted to the cashbook. Cheque 4540 for R650 000, which was on the outstanding cheque list at the end of August 2020, has still not been processed in the bank statement in September 2020. Bank charges were not accounted for an amount of R850. Property, Plant and Equipment: Looking at the entire 2020 financial year and also looking back in time as this will assist in ensuring that the month of September is done correctly. Machinery A machine was purchased on 01 January 2018 for R1 900 000 (VAT included). The estimated useful life of the machine is ten (10) years, and it was expected that the residual value at the end of the ten (10) years will be R150 000. Motor vehicles Fleet C of vehicles was also purchased on 02 January 2016 for R1 300 000 (VAT included). Vehicles incurred licence and registration costs of R35000 (excl. vat) upon acquisition. Motor vehicles are depreciated at 10% p.a. and it is expected that the residual value at the end of the useful life will be R 135 000. Additional information: Property, plant and equipment: Are held at cost model. Depreciation methods for different classes are as follows: Machinery - Diminishing Method Motor vehicles - Cost model 0 O Incomplete financial accounts drafted by the Accountant: 01/10/2020 DR Bank Opening balance Sales - credit R/D cheques Balance Cash sales Journal debit Balance b/d SJ CBP CBR b/d CBP GJ c/d SRJ Receivable (Debtors) control account. 450,000 Returns 950,560 Allowance settlement discount GJ 46,789 350,960 167,485 Payable (Creditors) control account 558,000 24,500 Bad debts credit losses balance b/f 1,434,858 1,526,862 opening Balance Journal credits Discount received. GJ b/d GJ GJ 27,918 68,590 45,000 890 167,485 1,500,500 16,500 9,862 1,526,862 CR DR Date General Journal for September 2020 09-Mar-20 Inventories Balance Description 07/092020 Inventories Bank Bank Cash sales customs Inventories Payables Trade payables bad debts recovered B/d СВР GJ CBR 1,300,000.00 358,000 9,500 Bank R 350,960 2,018,460 2,212,000 221,200 Debit R Inventories/Consumables 2,212,000 221,200 2,212,000 СВР R Credit R 2,212,000 2,212,000 CR Date Machinery Cost excl Vat Depreciable amount Annual Depreciation 01/01/2018 31/12/2018 31/12/2019 Bank reconciliation Closing balance per general ledger Add Outstanding cheques: 30/09/2020 TOTAL Cheque 4530 Bank charges Closing balance per bank statements Cost 1,652,174 1,652,174 1,652,174 1,652,174 Depreciable amount Depreciation 1,652,174 1,652,174 1,486,957 1,321,739 Balance. 165,217.40. 165,217 165,217 123,913 454,348 Accumulated Depreciation 165,217 330,435 b/d 454,348 950,000 2 000 000*100/115= 1 652 174 358,000 Carrying Amount 2,212,000 -850 2,211,150 1,652,174 1,486,957 1,321,739 1,197,826 5,658,696 calc less Calc dep amount years depr Motor Vehicles Cost (exclusive of VAT) cost of vehicles includ licence Depreciable Amount First Depreciation Date TOTAL 01-Jan-16 31-Dec-16 31-Dec-17 31-Dec-18 30-Sep-19 1,652,174.00 1,652,174.00 1,652,174.00 165,217.40 Cost 10 1 300 000* 100/115 = 1500 000 1 535 000-135 000 1 405 000 1,535,000 1,535,000 1,535,000 1,535,000 Depreciable amount 1,405,000 1,405,000 1,405,000 1,405,000 1,405,000 Depreciation Accumulated Depreciation Carrying Amount 1,535,000 1,535,000 1,535,000 1,535,000 6,140,000 Date Date 30-Sep-20 30-Sep-20 Details Depreciation Accumulated depreciation: Motor vehicles Depreciation for the month Details Depreciation Accumulated depreciation: Machinery Depreciation for the month Fol. Dr Fol. Dr Cr Cr END OF ASSIGNMENT You and a couple of your friends are astute students at IIE MSA in the Engineering programme and have been requested to do an internship at Voltage Engineers based in Feather-Brook. The accountant has been diagnosed with COVID-19 as he has travelled to Wuhan this past summer to seek alternative suppliers. He has therefore not been able to complete his month end duties and the audit is due to start in two weeks' time. Voltage Engineers specialises in electrical engineering and has recently procured a lucrative deal with a large petroleum entity to assist with a full solar power solution given the recent surge in load shedding. The government has recently signed off the IPP agreement which will see a great amount of strain relieved from the grid. All transactions are recorded each day. The accounting records are only performed between Monday and Friday, being the normal working days. Financial Information (Accounting Balances and Transactions): The accountant was instructed by the CFO to provide you with the full accounting information and records of the following items in order to prepare for month end: Trade receivables . . Trade payables Trade inventories Cash and cash equivalents Non-Current Assets The information below was extracted from the records of Voltage Engineers for the month of September 2020: As at 31 August 2020: General Ledger accounts balances Trade Receivables Trade Payables Trade Inventories Bank Property, Plant and Equipment R 450 000.00 1500 500.00 (Credit) 1 800 000.00 1 300 000.00 500 760 000 The following transactions and events took place during the month of September 2019: Trade Receivable: Date 30 Sep Total-Sales journal Returns-out Details Returns - in R/D cheques received from debtors Credit losses for settlement discount Allowance for settlement discount Discount received R 950 560 99 000 27 918 46789 980 68590 9862 Total-Purchases journal Bad debts recovered Interest charged-debtors Cash and cheques received from debtors Cash sales for the month 750658 9500 1250 550350 350960 Payables: Totals of subsidiary ledgers on 30 September 2020: Cash receipts journal: Receivables column Sales column VAT output Cash payment journal: Receivable column Purchases column Payables column VAT input Total: Purchases book R Purchases returns book 843 000 930 000 105 000 19 500 930 000 558 000 114 000 856 000 9 800 Total of the general journal: Debit: Payables ledger General ledger Credits: Payables ledger General ledger Additional information: 24 500 ● 45 900 17 500 42 600 ● Airliner's debt of R45 000.00 should be written off. The account of Eishkom should be charged with interest of R8950. Inventories: Voltage Engineers purchased solar panels, invertors and solar control regulators from Germany on 3 September 2020. The purchase price is 158 000 Euros (spot rate is Euro 15: R?). The items were transported from Frankfort to OR Tambo on a Boeing A350 on 6 September. This cost to transport the inventory paid to the airliner is R178 000 on 5 September. Upon arrival, on 7 September, customs duties levied a further 10% on the purchase price when goods were acquired was levied. The entity spent a further R28 000.00 to transport the item to its warehouse in Little Falls. The spot rates on 6 and 7 September were 15.5 and 16 respectively. All the amount incurred were paid by EFT on the same day. Cash and cash equivalents: The following transactions were not processed and need to be accounted for: ● The bank statements reflected an interest income of R8500.00 interest on a money market account that was not accounted for. The bad debts recovered of R9500 from a debtor was not posted to the cashbook. Cheque 4540 for R650 000, which was on the outstanding cheque list at the end of August 2020, has still not been processed in the bank statement in September 2020. Bank charges were not accounted for an amount of R850. Property, Plant and Equipment: Looking at the entire 2020 financial year and also looking back in time as this will assist in ensuring that the month of September is done correctly. Machinery A machine was purchased on 01 January 2018 for R1 900 000 (VAT included). The estimated useful life of the machine is ten (10) years, and it was expected that the residual value at the end of the ten (10) years will be R150 000. Motor vehicles Fleet C of vehicles was also purchased on 02 January 2016 for R1 300 000 (VAT included). Vehicles incurred licence and registration costs of R35000 (excl. vat) upon acquisition. Motor vehicles are depreciated at 10% p.a. and it is expected that the residual value at the end of the useful life will be R 135 000. Additional information: Property, plant and equipment: Are held at cost model. Depreciation methods for different classes are as follows: Machinery - Diminishing Method Motor vehicles - Cost model 0 O Incomplete financial accounts drafted by the Accountant: 01/10/2020 DR Bank Opening balance Sales - credit R/D cheques Balance Cash sales Journal debit Balance b/d SJ CBP CBR b/d CBP GJ c/d SRJ Receivable (Debtors) control account. 450,000 Returns 950,560 Allowance settlement discount GJ 46,789 350,960 167,485 Payable (Creditors) control account 558,000 24,500 Bad debts credit losses balance b/f 1,434,858 1,526,862 opening Balance Journal credits Discount received. GJ b/d GJ GJ 27,918 68,590 45,000 890 167,485 1,500,500 16,500 9,862 1,526,862 CR DR Date General Journal for September 2020 09-Mar-20 Inventories Balance Description 07/092020 Inventories Bank Bank Cash sales customs Inventories Payables Trade payables bad debts recovered B/d СВР GJ CBR 1,300,000.00 358,000 9,500 Bank R 350,960 2,018,460 2,212,000 221,200 Debit R Inventories/Consumables 2,212,000 221,200 2,212,000 СВР R Credit R 2,212,000 2,212,000 CR Date Machinery Cost excl Vat Depreciable amount Annual Depreciation 01/01/2018 31/12/2018 31/12/2019 Bank reconciliation Closing balance per general ledger Add Outstanding cheques: 30/09/2020 TOTAL Cheque 4530 Bank charges Closing balance per bank statements Cost 1,652,174 1,652,174 1,652,174 1,652,174 Depreciable amount Depreciation 1,652,174 1,652,174 1,486,957 1,321,739 Balance. 165,217.40. 165,217 165,217 123,913 454,348 Accumulated Depreciation 165,217 330,435 b/d 454,348 950,000 2 000 000*100/115= 1 652 174 358,000 Carrying Amount 2,212,000 -850 2,211,150 1,652,174 1,486,957 1,321,739 1,197,826 5,658,696 calc less Calc dep amount years depr Motor Vehicles Cost (exclusive of VAT) cost of vehicles includ licence Depreciable Amount First Depreciation Date TOTAL 01-Jan-16 31-Dec-16 31-Dec-17 31-Dec-18 30-Sep-19 1,652,174.00 1,652,174.00 1,652,174.00 165,217.40 Cost 10 1 300 000* 100/115 = 1500 000 1 535 000-135 000 1 405 000 1,535,000 1,535,000 1,535,000 1,535,000 Depreciable amount 1,405,000 1,405,000 1,405,000 1,405,000 1,405,000 Depreciation Accumulated Depreciation Carrying Amount 1,535,000 1,535,000 1,535,000 1,535,000 6,140,000 Date Date 30-Sep-20 30-Sep-20 Details Depreciation Accumulated depreciation: Motor vehicles Depreciation for the month Details Depreciation Accumulated depreciation: Machinery Depreciation for the month Fol. Dr Fol. Dr Cr Cr END OF ASSIGNMENT
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Answer rating: 100% (QA)
Trade Receivables Opening balance R45000000 Sales during September R95056000 Allowance for settlement discount R2791800 Bad debts recovered R950000 Closing balance R Trade Payables Opening balance R15... View the full answer
Related Book For
Conceptual Physical Science
ISBN: 978-0134060491
6th edition
Authors: Paul G. Hewitt, John A. Suchocki, Leslie A. Hewitt
Posted Date:
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