BrightSun Electronics is a retail company specialising in the sale of electronic devices and accessories. They offer a wide range of products, including smartphones, laptops. and home entertainment systems. The company has a financial 31 December yearend. You are provided with an extract from the pre-adjustment trial balance of BrightSun Electronics as at 31 December 2023: The following transactions have not yet been processed in the company's records: 1. Sale of goods or services on credit: On 15 December 2023, BrightSun Electronics made credit sales to various customers for a total amount of R450 000 and cash sales of R50 000 . 2. Cash collections from customers: During December 2023, customers made cash payments amounting to R200 000 towards their outstanding balances. 3. Sales returns and allowances: On 20 December 2023, a customer retumed defective merchandise valued at R10 000. The company issued a credit note to the customer for the returned items. The customer's original purchase was on credit and was not yet paid for. 4. Irrecoverable debt On 1 December 2023, it was confirmed that debtor Mr. Johnson, with an outstanding balance of R5 000 , was declared insolvent and was only able to repay 20% of the total ANNEXURE F: FORMATIVE ASSESSMENT 1 successfully installed and fully functional on the same day. The replacement part is depreciated using the diminishing balance method at a rate of 20% per year. Additional information: - Ignore VAT. - The company has credit terms established with all of its suppliers and purchases all assets exclusively on credit. REQUIRED: 2.1 Prepare the general ledger account for Machinery-Cost of DEF Ltd. for the financial year ended 31 December 2023. The account must be closed off. (8 marks) 2.2 Prepare the general ledger account for Machinery - Accumulated Depreciation of Machinery-Asset of DEF Ltd. for the financial year ended 31 December 2023. The account must be closed off. (11 marks) 2.3 Prepare all the general journal entries to account for all vehicle-related transactions of DEF Ltd. for the financial year ended 31 December 2023. (10 marks) 2.4 Prepare all the general journal entries to account for all equipment-related transactions of DEF Ltd. for the financial year ended 31 December 2023. (10 marks) 2.5 Prepare the reconciliation note for Property. Plant, and Equipment. focusing specifically on the Machinery category only as at 31 December 2023. (6 marks) GreenVille Landscaping specialises in providing landscaping design and maintenance services. The company's financial year-end is 31 December, and it is not VAT registered. GreenVille Landscaping decided to upgrade and replace some of its equipment during the 2023 financial year. The following transactions took place: Vehicle A (Truck): This truck was purchased on 1 January 2019 for R300 000 with an estimated useful life of 6 years. On 1 April 2023, the truck was replaced with a new truck that cost R400 000. The old truck was sold for R120 000 cash. The new truck has an estimated useful life of 5 years. Equipment B (Lawnmower): A new lawnmower was purchased on 1 January 2023 for R150 000. The lawnmower has an estimated useful life of 4 years. The lawnmower was used from 1 January 2023. The company also incurred additional costs as follows: On 31 December 2023, the owner noticed that the services for this lawnmower have changed dramatically. They estimated that the lawnmower has a value in use of R85 000 and a net selling price of R70 000 as at 31 December 2023. All assets are depreciated on the straight-line method with nil residual values. Ignore VAT and tax. BrightSun Electronics is a retail company specialising in the sale of electronic devices and accessories. They offer a wide range of products, including smartphones, laptops. and home entertainment systems. The company has a financial 31 December yearend. You are provided with an extract from the pre-adjustment trial balance of BrightSun Electronics as at 31 December 2023: The following transactions have not yet been processed in the company's records: 1. Sale of goods or services on credit: On 15 December 2023, BrightSun Electronics made credit sales to various customers for a total amount of R450 000 and cash sales of R50 000 . 2. Cash collections from customers: During December 2023, customers made cash payments amounting to R200 000 towards their outstanding balances. 3. Sales returns and allowances: On 20 December 2023, a customer retumed defective merchandise valued at R10 000. The company issued a credit note to the customer for the returned items. The customer's original purchase was on credit and was not yet paid for. 4. Irrecoverable debt On 1 December 2023, it was confirmed that debtor Mr. Johnson, with an outstanding balance of R5 000 , was declared insolvent and was only able to repay 20% of the total ANNEXURE F: FORMATIVE ASSESSMENT 1 2. Machinery The existing machinery is depreciated using the straight-line depreciation method over a period of 8 years, with no residual value. On 1 February 2023, the company purchased a new laser culting machine for R2 500000 . In addition, installation costs of R50 000 were incurred. The manager in charge of overseeing the installation of the machine received a monthly salary of R40 000. The machine was ready for use on 1 March 2023. The useful life of the laser cutting machine is 5 years, with no residual value, and the straight-line depreciation method will be applied. This machine has a shorter life span than the rest of the machinery of the business. On 1 August 2023, the company imported a new CNC machine from Germany for 200,000, FOB shipping point. The exchange rate on that day was R16: 1. The shipment arrived at Cape Town harbour on 1 September 2023. The exchange rate on that day was R17: 1. On 1 September 2023, the company incurred additional costs of R25 000 for customs duties and shipping. The company started using the machine on 1 September 2023. The CNC machine has a useful life of 8 years and no residual value. The straight-line depreciation method is applicable. 3. Vehicles Existing vehicles are depreciated using the straight-line depreciation method over a period of 5 years, with a residual value of 10% on the total cost price. On 1 May 2023, the company purchased and started using a new delivery truck for R400 000. The truck has a useful life of 5 years and a residual value of R40 000. The straight-line depreciation method is applicable. 4. Equipment Existing equipment is depreciated using the diminishing balance method at a rate of 20% per year, with a residual value of R100 000 . On 1 October 2023, the company purchased an improvement part on the existing equipment in the factory for R330000, with a residual value of R30000. The part was 61 HFAC132-1-Jul-Dec2023-FA1-tVN-20230717-V3 ANNEXUAE F- FORMATIVE ASSESSMENT 1 outstanding amount. The company received the 20% payment from Mr. Johnsons. attorneys by the end of the year. 5. Bad debt recovery: On 5 December 2023, Mr. Smith, who had a previously written-off balance of R12 500 (recognized as a bad debt), made full payment towards his outstanding balance, demonstrating his intention to settle the debt. In accordance with the company's policy. debtors with previously written-ot balances are reinstated when payments are received subsequently. 6. Bad debt write-oft: It was delermined on 31 December 2023 that a specific customer's outstanding balance of R30 000 was uncollectible. The company decided to write this amount off as a bad debt expense. 7. Allowance for doubthul debts: Based on historical collection experience, BrightSun Electronics estimated that 4% of the cutstanding trade receivables at 31 December 2023 would become uncollectible. The allowance for doubtul debts needs to be adjusted accordingly. REQUIRED: 4.1 Prepare the Trade Receivables Account as it would appear in the General Ledger of BrightSun Electronics for the year ended 31 December 2023. Instructions: - Include the necessary adjustments which wece not yot recorded. - Include the necessary calculations. - Close off the account appropriately. - VAT and tax may be ignored for this question. - Assume that there were no other transactions. (10 marks) 67 HFAC132-1-Jul-Dec2023-FA1-1VN-20230717-V3 ANNEXUAE F: FORMATIVE ASSESSMENT 1 4.2 Prepare an extract of the Statement of Financial Position to present only the Current Assets for BrightSun Electronics for the financial year ended on 31 December 2023. Notes are required where applicable. Totals and subtotals are required where applicable. QUESTION 2 (45 marks) DEF Ltd. is a manufacturing company that produces custom-made furniture. The company's year-end is 31 December. You are presented with an extract of the final trial balance of DEF Ltd, for the financial year ended 31 December 2022: The following information still needs to be recorded for the current financial year ending 31 December 2023: Notes: 1. Factory Building The factory building was purchased for R5 000000 in 2020 . The company has chosen to depreciate its factory buildings using the straight-line depreciation method over a period of 25 years, with no residual value. No changes were made to the factory building since it was initially purchased. QUESTION 1 (24 marks) Royal Confectionery Lid produces high-quaily conlectionery products. The company is a registered VAT vendor. The company/s current financial year ends on 31 December 2023. Royal Confectionery Lid. purchased a new piece of equigment, an industrial oven for R230 000 (nduding VAT) on 1 June 2022. The over was ready for use sn 1 July 2022. The estimated useful the of the oven was initaly set as 7 years with a residual value of R18 000 (excluding VAT). On 1 danuary 2023, after discussions with the Production Manager, the company decided to change the estimated useful life of the oven from 7 years to 5 years. starting from the date the oven was ready for use (1 July 20022). The resiobal value remained unchanged. Additional Information: - All asses are deprecianed on the straight line method. - Assume a Value Added Tax (VAT) rate of 15%. REQUIRED: 1.1 Calculate the depreciation expense of Royal Confectionery Lat, for the oven. for the years ended 31 December 2022 and 31 December 2023 considering the change in the estimatod useful tle. Round all arswors to the nearest Rand. (11 marks) 1.2 Prepare the general joumal entries for the depreciation expense of Royal Confectionery Lid. for the year ended 31 Decerrber 2023. (3 marks) ss AWNEURE FI FOMMATIVE ASSESSMENT I 1.3 Calculate the carrying amount of the oven of Roysi Condectionery Lid, as at 31 December 2023. Dates are required. Narrations are not required. Round all answers to the nearest Rand. (4 marka) 1.4 Prepare the disclosure note to the financial statsments of Royal Confectionery Ltd. for the year ended 31 December 2023 relating to the change in estimate. (5 marks) All assets are depreciated on the straight-line method with nil residual values. Ignore VAT and tax. 64 HFAC132-1-Jul-Dec2023-FA1-LVN-20230717-V3 ANNEXURE F: FORMATIVE ASSESSMENT 1 REQUIRED: Prepare the Statement of Profit or Loss of GreenVille Landscaping for the financial year ended 31 December 2023. Instructions: - Start with a Gross Profit of R500 000. - Include all necessary headings and sub-headings in your statement. - Provide all workings and reference appropriately. - Assume that there were no other transactions for the year. - Round all answers to the nearest Rand