Financial Reporting and Analysis (Fundamentals of Financial Accounting)

I need answers to Questions 1, 2, 3 & 4.

SECTION A [100 Marks] Answer ALL questions in this section. QUESTION 1 (20 Marks) REQUIRED Use the information provided below to prepare the Statement of Comprehensive Income for the year ended 28 February 2022. INFORMATION The trial balance, adjustments and additional information given below were extracted from the accounting records of Whetstone Stores on 28 February 2022 , the end of the financial year. Adjustments and additional information 1. According to stocktaking done on 28 February 2022 , the following were on hand: 1.1 Trading inventory R240 000 1.2 Stationery R6 000. 2. A debtor who was declared insolvent paid R4 200, which represented 60% of the amount owed, to Whetstone Stores. The amount that was received has been recorded but the rest of his account must now be written off. 3. The provision for bad debts must be adjusted to R20 000 . 4. Interest is outstanding on the investment, which was made on 01 February 2021 . The maturity date is 31 July 2022. 5. The long-term loan from Med Bank was obtained on 01 March 2021. A repayment of R100 000 was made and recorded on 31 August 2021. Provide for the outstanding interest. Interest is not capitalised. 6. An account for R2 000 to replace broken window panes has been received. This has not been recorded and payment was due to be made during March 2022. 7. The advertising amount includes a contract for R30000, in respect of monthly advertisements of equal value, that was taken for the period 01 December 2021 to 31 May 2022. 8. Rent has been received for the period 01 March 2021 to 31 March 2022. Note: Rent was increased by 10% with effect from 01 September 2021. 9. The telephone account for February 2022 was due to be paid on 02 March 2022, R10 000. 10. Provide for depreciation as follows: 10.1 On vehicles at 20% p.a. on the diminishing balance. QUESTION 2 (20 MARKS) REQUIRED Use the information provided below to prepare the Statement of Changes in Equity for the year ended 28 February 2022. INFORMATION The information given below was extracted from the accounting records of Clairwood Traders, a partnership business with Claire and Woody as partners. Balances in the ledger as at 28 February 2022 The following must be considered: (a) The net profit for the financial year ended 28 February 2022 amounted to R900000. (b) The partnership agreement makes provision for the following: Interest on capital must be provided at 15% per annum on the balances in the capital accounts. Note: Claire increased her capital by R100 000 on 01 September 2021. On the same date, Woody decreased his capital by R100 000. The capital changes have been recorded. The partners are entitled to the following monthly salaries: Claire R7000 Woody R6 000 Note: The partners' salaries were increased by 12% with effect from 01 November 2021. Claire is entitled to a bonus equal to 80% of her salary for February 2022. Claire and Woody share the remaining profit or loss equally. QUESTION 3 (20 MARKS) REQUIRED Prepare the Statement of Financial Position as at 28 February 2022. The notes to the financial statements are not required. Show workings in the space provided in the answer book. INFORMATION The trial balance, adjustments and additional information given below were extracted from the accounting records of Metro Limited on 28 February 2022, the end of the financial year. METRO LIMITED PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2022 Adjustments and additional information 1. According to physical stocktaking done on 28 February 2022 , trading inventory on hand amounted to R680 000. 2. Consumable stores unused according to stocktaking amounted to R2 000 on 28 February 2022. 3. No entry has been made for a commission of 10% earned but not received on 500 items that were sold for R600 each. 4. Received a cheque for R6 000 from an insolvent debtor, J. Marsh, who was only able to pay 30% of her debt. The balance of her account must now be written off. No entries were made for these transactions. 5. The provision for bad debts must be decreased to R15000. 6. The telephone account for February 2022 was due to be paid on 03 March 2022, R7 000 . 7. The rental agreements signed with the lessor (landlord) are as follows: R300 000 for the period 01 January 2021 to 31 December 2021, and R360 000 for the period 01 January 2022 to 31 December 2022. Make the necessary adjustment. 8. The loan from Aries Bank was obtained on 01 September 2021. Provide for the outstanding interest. (Interest is not capitalised.) Loan repayments (excluding interest) are expected to amount to R120 000 in the next financial year. 9. The insurance total includes an annual premium of R18 000 that was paid for the period 01 June 2021 to 31 May 2022. 10. The bank statement for February 2022 reflected bank charges of R1 800 that have not been recorded. 11. The electricity and water statement for February 2022 included an amount of R10 000 for a deposit required by the municipality. This was recorded in the water and electricity account. 12. Provide for depreciation as follows: 12.1 On equipment at 15% per annum using the fixed instalment method. 12.2 On vehicles at 25% per annum on the carrying value (as at 01 March 2021). 13. An account received from Heidi Motors to replace the tyres on the delivery vehicle of the business, R20 000, has not been recorded. 14. The profit after tax for the year ended 28 February 2022 , after taking the above into account, was R272 790. 15. The company tax for the financial year amounted to R116 910 . 16. The directors proposed a final dividend of 36 cents per share. REQUIRED Use the information provided below to prepare the Cash Flow Statement of Nascar Limited for the year ended 31 December 2021. INFORMATION The following Information was extracted from the records of Nascar Limited for the past two years: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER: STATFMFNT OF FINANCIAI POSITION ST31 DFC.FMRFR. \begin{tabular}{|r|} \hline 2020 (R) \\ \hline 24440000 \\ \hline 24440000 \\ \hline 3360000 \\ \hline 2500000 \\ \hline 640000 \\ \hline 220000 \\ \hline 27800000 \\ \hline \hline \\ \hline 27800000 \\ \hline 2833000 \\ \hline 17600000 \\ \hline 2283000 \\ \hline 60000 \\ \hline 6000000 \\ \hline 1917000 \\ \hline 1290000 \\ \hline 67000 \\ \hline 56000 \\ \hline 27 \\ \hline \end{tabular} Additional information - The issue price of all the shares is R10 each. New shares were issued on the first day of the financial year. - Interim and final dividends for the year ended 31 December 2021 amounted to R1 413000 . - Fixed assets were sold at carrying (book) value during the year for R1440000. Fixed assets were also purchased. - The shares in Nascar Limited are currently selling for R12 each. - All purchases and sales of inventories are on credit. - The following ratios have been calculated: \begin{tabular}{|l|c|c|} \hline & 2021 & 2020 \\ \hline Profit margin (Net profit margin) & 9.84% & 9.68% \\ \hline Acid test ratio & 1.38:1 & 0.45:1 \\ \hline Return on equity & 7.45% & 5.84% \\ \hline \end{tabular} QUESTION 5 20 MARKS REQUIRED Use the information provided in Question 4 to answer the following questions: 5.1 Calculate the following ratios for 2021 only. Express the answers to two decimal places. 5.1.15.1.25.1.35.1.45.1.55.1.65.1.7InventoryturnoverCreditorpaymentperiodReturnonassetsDebttoassetsDividendpershareCurrentratioEarningsyield(2marks)(2marks)(2marks)(2marks)(2marks)(2marks)(2marks) 5.2 Comment briefly but meaningfully on the following ratios which have been calculated: 5.2.1 Profit margin (Net profit margin) (2 marks) 5.2.2 Acid test ratio (2 marks) 5.2.3 Return on equity (2 marks) END OF PAPER