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ASSESSMENT 0 1 ( First semester ) ( 3 0 marks ) WRITTEN ASSESSMENT Ndlovu Jam Ltd is a company specializing in the manufacturing of

ASSESSMENT 01(First semester)(30 marks)
WRITTEN ASSESSMENT
Ndlovu Jam Ltd is a company specializing in the manufacturing of various types of
jams and sauces.
The following is an extract of Ndlovu Jam Ltds trial balance for the year
ended 31 December 2023:
Notes Debit
R
Credit
R
Administration building cost 1.11500000
Delivery vehicles cost 1.21150000
Administration building accumulated depreciation 1.1150000
Delivery vehicles accumulated depreciation 1.2330000
Trade receivables 2115000
Profit before tax 3962000
Additional information
1. Property, plant and equipment
1.1 Administration building
Ndlovu Jam Ltd acquired an administration building at a cost of R1500000 on
1 January 2022. On this date the administration building was available for use as
intended by management. The administration building has a residual value of Rnil
and is depreciated over 20 years according to the straight-line method. The
SA Revenue Service does not allow a capital allowance on the administration
building.
1.2 Delivery vehicles
On 1 January 2023 Ndlovu Jam Ltd purchased a new delivery vehicle for
R650000. The delivery vehicle was available for use, as intended by management,
and brought into use on this date.
Ndlovu Jam Ltd sold a delivery vehicle for R550000 at year end on
31 December 2023. The delivery vehicle was originally acquired on
1 January 2022 at a cost price of R500000. The delivery vehicle was available for
use, as intended by management, and brought into use on this date. On the date
the delivery vehicle was sold, the accumulated depreciation amounted to
R200000. Only the following journal entry was recorded for the sale of the delivery
vehicle in the accounting records of Ndlovu Jam Ltd for the year ended
31 December 2023:
Dr
R
Cr
R
Bank (SFP)550000
Sale of delivery vehicle (P/L)550000
Recording of sale of delivery vehicle
FAC3701/101/1/2024
2
ASSESSMENT 01(First semester)(continued)
The delivery vehicles are depreciated according to the straight-line method over
five (5) years with no residual value.
The SA Revenue Service allows a capital allowance over four (4) years (not prorata) on the delivery vehicles.
No other delivery vehicles were acquired or sold during the year.
2. Trade receivables are as follows:
2022
R
2023
R
Trade receivables 130000150000
Allowance for credit losses (25000)(35000)
105000115000
The SA Revenue Service allows 25% of the allowance for credit losses as a
deduction. Actual credit losses incurred are written off directly to the statement of
profit or loss and other comprehensive income and not against the allowance for
credit losses.
3. Profit before tax
Included in profit before tax are the following line-items:
2023
R
Foreign income received from China. The foreign income is not
taxable in South Africa in terms of a double taxation agreement.
Ndlovu Jam Ltd paid foreign taxes of R27000 on this income.
180000
Allowance for credit losses (refer 2)10000
Sale of delivery vehicle (refer 1.2)550000
Donation (not tax deductible)13000
Depreciation administration building 75000
Depreciation delivery vehicles 230000
Insurance premium paid for the year 1 November 2023 to
31 October 2024.
84000
4. Taxation
The company provides for deferred tax on all temporary differences according
to the statement of financial position approach. There are no exempt or
temporary differences except those mentioned in the question. There is
certainty beyond any reasonable doubt that the company will have sufficient
taxable profit in future against which any deductible temporary differences can
be utilised.
The deferred tax liability balance was R1750 on 31 December 2022, which you
may assume to be correct.
FAC3701/101/1/2024
3
ASSESSMENT 01(First semester)(continued)
The SA Normal tax rate changed from 28% in 2022 to 27% in 2023. The capital
gains tax inclusion rate is 80%.
Ignore the implications of Value Added Tax (VAT).
The following is an extract of the statement of financial position SA Revenue
Service - current tax general ledger account of Ndlovu Jam Ltd for the year
ended 31 December 2023:
SA Revenue Service - current tax
Debit R Credit
R
31/07/2023 Bank (1
st
provisional tax
payment for
2023, including
penalties for
late payment
of R2000)
4000001/01/2023 Opening balance
(relating to 2022
tax assessment) b/d
20000
31/12/2023 Bank (2
nd
provisional tax
payment for
2023)
52000
28/02/2023 Bank (Final
payment for
2022 tax
assessment)
2300031/12/2023 Closing balance c/d 95000
115000115000
01/01/2024 Opening balance b/d 95000
The accountant of Ndlovu Jam Ltd has not yet made provision for current tax
in the financial statements of Ndlovu Jam Ltd for the year ended
31 December 2023.
Ndlovu Jam Ltd agrees with the 2022 tax

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