FINANCIAL ACCOUNTING

AMOUNTS IN THESE TABLES ARE GIVEN IN ( 1 000s)

Question two Fresh Meats CC was registered on 1 August 2015. The founding statement of the CC sets out the following: i. Names of members, their interests and contributions: Amounts in R 1 000 Name % interest Contribution N. Moeti 50% R260 B. Faith 50% R240 ii. The accounting date: 30 June. The following abbreviated trial balance of the close corporation was available on 30 June 2017: (Amounts in R1000) Debit Credit Members 500 00 Retained earnings 200 00 Mortgage bond 2 000 00 Loan to B. Faith 00 Land and buildings 2 500 00 Bank 140 00 R2 700 00 R2 700 00 iii. With regard to the 2017/2018 financial year the following was available: . N. Moeti transferred 20.00 % (nominal value R 52 000) of her contribution on 30 June 2018 to B. Faith. N. Moeti lent the CC R 40 000, repayable on 30 June 2019. . . . On 31 March 2018, the land and buildings were re-valued at R 3 000 000. All interest was paid and received promptly on 30 June. Retained earnings for the year ended 30 June 2018 amounted to R 300 000. . The distribution of income is equal to 50.00 % of retained earnings at the end of the financial year. Required . Calculate the change in members' % interest and members' funds at 30 June 2018. (15 marks) 2. Calculate the values of the members' net investment at 30 June 2018. (5 marks)5.2.6. Special statements peculiar to a CC There are two statements in particular that are often used when preparing the financial statements of a CC. These are: A Statement of changes in Members' Net Investment Transactions with Members In the event that these statements are not present, the information must be disclosed in the notes to the financial statements. Figure 5.2.1 Statement of changes in members' net investment Members Revaluation Retained Total Loans Total Net contribution surplus earning members from change in interest Members members D E investment A B C Opening XXX XXX XXX XXX XXX XXX balance Members XXX XXX loans' raised Members XXX XXX XXX XXX contributio n Revaluatio XXX Xxx Xxx n reserve Profit for XXX XXX XXX the year Closing XXX XXXX XXXX XXXX XXXX Xxxx balance Source: Flynn and Koornhof (2016) As shown in the figure 2.1 (Statement of changes in the members net investment) we notice that any movement that took place during the financial period affects the member's interest/fund that was already there, as shown by row A row D(movements during the year), with their effects shown on column A to E. Therefore, the closing balance as per each column, added together, they must aggregate to the closing balance as per total net change in members investments