$-$FA$2-$AA$-$V$3-19072024$QUESTION $1(25$ marks$)$John is the owner of a local gardening service company called Green Gardens $($Pty$)$Ltd $($Green Gardens$).$ Green Gardens has a $30$ June financial year$-$end.You have been presented with the pre$-$adjustment trial balance of Green Gardens $($Pty$)$Ltd as at $30$ June $2024$:Account NoteDebit$($R$)$Credit$($R$)$Lawnmowers cost $(1$ July $2023)1,23500$Lawnmowers$-$ accumulated depreciation $(1$ July $2023)1,23000$Vehicles $-$ cost $(1$ July $2023)3450000$Vehicles $-$ accumulated depreciation $(1$ July $2023)3??=$ To be calculated.During the year ended $30$ June $2024,$ the following transactions took place thathave not yet been accounted for:Note $1$: New lawnmowers:$1$ February $2024$: Green Gardens placed an order for $3$ new lawnmowers from BreezLtd, a foreign supplier situated in Germany. The price of the new lawnmowers wasR$5000$ each$\mathrm{.}15$ February $2024$: The lawnmowers were shipped free on board $($FOB$)$ shipping pointand Green Gardens paid the outstanding balance to Breez Ltd on the same day$\mathrm{.}1$ March $2024$: The shipment arrived at the Durban harbour$\mathrm{.}1$ March $2024$: An additional R$500$ was paid in cash for the delivery of the newlawnmowers to Green Gardens premises.ANNEXURE I: FORMATIVE ASSESSMENT $25$ HFAC$130-1-$Jul$-$Dec$2024-$FA$2-$AA$-$V$3-190720241$ March $2024$: The lawnmowers came in $2$ parts, namely the engine and the body.Green Gardens needed to hire a technician to assemble the parts of the lawnmowers.The technician charged Green Gardens total of R$600$ for all three of the lawnmowersassembly. With this technician, Green Gardens has an arrangement to pay all invoicesat the end of each month. On $1$ March $2024,$ the new lawnmowers were ready for use.Note $2$: Old lawnmower:On $1$ May $2023,$ Green Gardens sold their old lawnmower at a loss of R$600.$ Thisoriginal lawnmower was purchased on $1$ July $2019$ when the business was started.Note $3$: Vehicles:Green Gardens owns one vehicle that they bought when they started the business on$1$ July $2019\mathrm{.}31$ July $2023$: Green Gardens serviced the vehicle at a cost of R$2000\mathrm{.}30$ June $2024$: Green Gardens sold the vehicle for R$250000.$ On this day, thecompany also bought a new vehicle for R$500000.$ The new vehicle has a useful lifeof $7$ years with a residual value of R$150000.$Old vehicle New vehicleDate of purchase $1$ July $201931$ December $2023$Purchase price R$450000$ R$500000$Useful life $6$ years $7$ yearsResidual value R$200000$ R$150000$Depreciation method Straight line Straight lineNote $4$: Land:On $31$ October $2023,$ Green Gardens purchased a piece of land for R$800000,$ withthe intention of building an office.Additional information:ANNEXURE I: FORMATIVE ASSESSMENT $26$ HFAC$130-1-$Jul$-$Dec$2024-$FA$2-$AA$-$V$3-19072024$ All lawnmowers, old and new, have a useful life of $5$ years, with no residualvalue and are depreciated on the straight$-$line method. Green Gardens pays cash for all transactions unless otherwise stated.REQUIRED:$1\mathrm{.}1$ With reference to Note $1$: New lawnmowers, calculate the cost price of the newlawnmowers. $(3$ marks$)1\mathrm{.}2$ With reference to Note $3$: Vehicles, calculate the profit or loss on the sale ofthe vehicle for the year ended $30$ June $2024.$ Show all workings and reference accordingly. Round off to the nearest Rand.$(6$ marks$)1\mathrm{.}3$ Prepare the general ledger account for Accumulated depreciation $-$Lawnmowers for the financial year ended $30$ June $2024$ of Green Gardens $($Pty$)$Ltd$.$ Close off the account at the financial year$-$end. Ignore dates. Show all workings, and reference accordingly. Ignore VAT. Round off to the nearest Rand.$(10$ marks$)1\mathrm{.}4$ Prepare an extract of the Statement of Financial Position of Green Gardens$($Pty$)$ Ltd as at $30$ June $2024,$ showing only the non$-$current assets. Totals are not required. Notes to the financial statement are not required.$(6$ marks$)$ANNEXURE I: FORMATIVE ASSESSMENT $27$ HFAC$130-1-$Jul$-$Dec$2024-$FA$2-$AA$-$V$3-19072024$QUESTION $2(30$ marks$)$Hills Investors $($Pty$)$ Ltd $($Hills$)$ is a property development company that has a $31$December financial year$-$end.You are provided with an extract of the Statement of Financial Position as at $31$December $2024.$Statement of Financial Position of Hills Investors $($Pty$)$ Ltd as at $31$ December $2024.$Notes REquity and liabilitiesEquityOrdinary share capital: Class A shares$(125000$ shares$)1,2,31250000$Retained earnings$/($accumulated loss$)(1$ January $2024)1,2,3(25450)$Total equity $1224550$LiabilitiesNon$-$current liabilitiesLoan $55000005500000$Current liabilitiesTrade payables $246500$Other payables $120000366500$Total equity and liabilities $7091050$During the year ending $31$ December $2024,$ the following transactions took place andhave not yet been recorded:Note $1$: Class B share capitalOn $1$ January $2024,$ Hills invited the public to buy Class B shares. Hills offered $55000,5\%$ Class B shares with a face value of R$25$ per share. The share issue wasANNEXURE I: FORMATIVE ASSESSMENT $28$ HFAC$130-1-$Jul$-$Dec$2024-$FA$2-$AA$-$V$3-19072024$underwritten by Capital Under Ltd at a commission of $2\%$ on the selling price. Theclosing date for the applications was on $31$ January $2024,$ and on that date, $95\%$ ofthe shares had been applied for by the public. The underwriters took up the other $5\%$of shares on $31$ January $2024.$ On $29$ February $2024,$ the shares were issued. Shareissue costs of R$10000,$ excluding underwriters commission, were paid on the sameday.Note $2$: Class A share capitalOn $1$ April $2024,$ Hills offered $30000$ Class A shares to the public at a price of R$40$ pershare. On $1$ May $2024,$ the closing date for applications, shares have beenoversubscribed by $12\%.$ On $15$ May $2024,$ the $30000$ shares were issued, share issuecosts of R$12000$ were paid in cash.Note $3$: DividendsOn $31$ December $2024,$ Hills directors were so happy with the fact that they made aprofit of R$570890$ for the year, that they declared a Class A dividend of $25$ cents pershare.Additional information: Class A shares have voting rights but no right to a fixed dividend. Class B shares have no voting rights but have a right to fixed, cumulative dividenddistribution. During the $2024$ financial year, Hills made a profit of R$570890.$ Ignore VAT and dividends tax.ANNEXURE I: FORMATIVE ASSESSMENT $29$ HFAC$130-1-$Jul$-$Dec$2024-$FA$2-$AA$-$V$3-19072024$REQUIRED:$2\mathrm{.}1$ Prepare the general ledger accounts as at $31$ December $2024$ for Hills Investors$($Pty$)$ Ltd for the following accounts:$2\mathrm{.}1\mathrm{.}1$ Application for allotment $-$ Class A and Class B $(15$ marks$)2\mathrm{.}1\mathrm{.}2$ Dividends $(5$ marks$)$ Dates are required. Close off of the account is required.$(20$ marks$)2\mathrm{.}2$ Prepare the extract of the Statement of Financial Position of Hills Investors $($Pty$)$Ltd for the year ended $31$ December $2024,$ showing only the Equity.$(10$ marks$)$ANNEXURE I: FORMATIVE ASSESSMENT $210$ HFAC$130-1-$Jul$-$Dec$2024-$FA$2-$AA$-$V$3-19072024$QUESTION $3(25$ marks$)$Raw $($Pty$)$ Ltd$,$ Raw, is a company that sells organic nuts to the public. The companyis a registered VAT vendor and has a $30$ June financial year$-$end.The following transactions occurred during the year ended $30$ June $2024$ and havenot been recorded yet: When posting the totals from the sales journal to the generalledger at the end of August $2023,$ the sales column was posted as R$258000$ insteadof R$285000.$ All amounts, including VAT$\mathrm{.}1.$ Total credit sales for the year amounted to R$1450000($including VAT$)\mathrm{.}2.$ Total cash sales for the year amounted to R$987000($including VAT$)\mathrm{.}3.$ On $1$ August $2024$ a trade receivable, Nature Den Ltd paid their debt of R$7450($including VAT$).$ This amount has been written off as irrecoverable in the year$2023\mathrm{.}4.$ The one trade receivable, White Cat Ltd$,$ was declared insolvent in $2024.$ Thetotal debt owed by White Cat Ltd amounted to R$152000($including VAT$).$ WhiteCat Ltd$\text{'}$s lawyers confirmed that White Cat Ltd$\text{'}$s creditors would receive $55$c foreach Rand owed to the business. Raw received the settlement in June $2024$and decided to write the remainder of White Cat Ltd$.$s debt off as irrecoverable$\mathrm{.}5.$ During the year, Raw received R$2000000($including VAT$)$ from tradereceivables towards their accounts$\mathrm{.}6.$ On $30$ June $2024,$ a trade receivable amounting to R$8750($including VAT$)$ wasconsidered to be irrecoverable, and Raw decided to write the debt off asirrecoverable$\mathrm{.}7.$ Raw reliably estimated that it was unlikely that $5\%$ of outstanding tradereceivables on $30$ June $2024$ would be collected.Additional information: Trade receivables has an opening balance of R$1258000$ on $1$ July $2023.$ Allowance for doubtful debts has an opening balance of R$50320$ on $1$ July $2023.$REQUIRED:ANNEXURE I: FORMATIVE ASSESSMENT $211$ HFAC$130-1-$Jul$-$Dec$2024-$FA$2-$AA$-$V$3-190720243\mathrm{.}1$ Prepare the general journal entries to account for transaction $3$ for the yearended $30$ June $2024$ of Raw $($Pty$)$ Ltd$.$ Remember to show your workings. Round up to the nearest rand where applicable.$(4$ marks$)3\mathrm{.}2$ Prepare the Trade Receivables general ledger account to account for thetransactions for the year ended $30$ June $2024$ of Raw $($Pty$)$ Ltd$.$ Dates are not required. The account must be closed$-$off at the end of the month. Remember to show your workings.$(17$ marks$)3\mathrm{.}3$ Explain two advantages of allowing customers to purchase on credit. Give abrief explanation of each advantage.$(4$ marks$)$ANNEXURE I: FORMATIVE ASSESSMENT $212$ HFAC$130-1-$Jul$-$Dec$2024-$FA$2-$AA$-$V$3-19072024$QUESTION $4(20$ marks$)$Below is an extract from the pre$-$adjustment trial balance of Jumping For Fun, acompany that rents out jungle gyms for childrens parties, as at $31$ October $2024.$Trade receivables $1,355,000$Allowance for doubtful debts $103,500$The following information became available to the Accountant on $31$ October $2024$:Please note that the following information has not been processed in the books ofJumping For Fun:a$)$ When posting the totals from the sales journal to the General Ledger at the endof October $2024,$ the sales column was posted as R$1750000$ instead of R$1705000.$b$)$ A sale return by debtor We Jump on $15$ October had been recorded in thedebtor Like To Jumps account in the Debtors Ledger.c$)$ The October bank statement included transactions up to and including $27$October $2024.$d$)$ The April $2024$ bank statement reflected a dishonoured $($R$/$D$)$ cheque for anamount of R$25600.$ This cheque was received from debtor Jump A Lot on