Given information for questions 17 to 18: Molapo Cycles is a Close Corporation which was started on 1 March 2003, by two friends, Ramogwerane and Hlogotlou. Molapo CC has a distribution license in the Southern African region to supply Specialized cycling merchandise and equipment. In order to finance their operations they admitted an additional member, Theka, a millionaire from Sehlakwane into the CC. The following information pertains to the business activities of the CC for the year ended 28 February 2020: Extract of balances as at 28 February 2020: R Member contribution: Ramogwerane............................................................................ 468 750 Member contribution: Hlogotlou.................................................................................... 468 750 Member contribution: Theka ......................................................................................... 468 750 Loans to member: Hlogotlou......................................................................................... 1 312 500 Loans from member: Theka.......................................................................................... 562 500 Land and buildings (at cost).......................................................................................... 8 250 000 Equipment (at cost)....................................................................................................... 1 781 250 Accumulated depreciation: Equipment (1 March 2019)................................................ 300 000 Trade receivables control ............................................................................................. 492 195 Bank.............................................................................................................................. 80 625 Investment in Lucau Ltd................................................................................................ 1 500 000 Inventory (1 March 2019).............................................................................................. 318 750 Allowance for credit losses ........................................................................................... 37 500 Settlement discount granted......................................................................................... 27 570 Additional information: (a) Provision must still be made for depreciation on equipment at 20% per annum according to the diminishing balance method. Included in the equipment at cost account is a machine which was purchased on 1 September 2019 for R137 250 cash, and immediately put to use. Machinery is depareciated at 16% per annum on a straight line method. No other purchases or sales of equipment occurred during the year. (b) A debtor who owes the business R33 295 was declared insolvent and his debt must be written off as irrecoverable. (c) Allowance for credit losses must be adjusted to R23 445. (d) Interest must still be provided for on the loan accounts to members at a rate of 15% per annum on the opening balances of any existing loans. No additional loans were granted this year. All loans are unsecured and immediately callable. (e) The investment in Starcatcher Ltd consist of 50 000 ordinary shares bought for R1 350 000 and was acquired in February 2019. Starcatcher Ltd is a listed company and the investment was required for trade purposes. On 28 February 2020, the fair value of the investment amounted to R1 800 000. FAC1601/RFA1601 MAY/JUNE 2020 TURN OVER 10 (f) The closing inventory amounted to R189 375. QUESTION 17 (4 marks) Which one of the following alternatives represents the correct amount that must be disclosed as noncurrent assets in the statement of financial position of Molapo Cycles for the year ended 28 February 2020? 1. R 9 731 250 2. R 9 561 270 3. R 9 451 470 4. R 9 440 490 QUESTION 18 (5 marks) Which one of the following alternatives represents the correct amount that must be disclosed as current assets in the statement of financial position of Molapo Cycles for the year ended 28 February 2020? 1. R3 714 830 2. R3 817 955 3. R4 038 275 4. R4 014 830 Given information for questions 19 to 20: The following information pertains to the head office and the branch of Ukhozi Sneakers. Branch inventory on hand at selling price R 1 October 2018 ................................................................................................................ 30 September 2019 ........................................................................................................... 60 000 40 000 Transactions of the branch for the year ended 30 September 2019 R Inventory transferred to the branch (selling price) ............................................................ Credit sales at the branch................................................................................................. Settlement discount granted to branch debtors ................................................................ Branch administrative expenses paid by head office........................................................ Damaged inventory written off (at cost) ............................................................................ 188 500 285 530 2 433 17 375 3 200 Additional information (a) Inventory is purchased by the head office and supplied to the branch at selling price, which is cost price plus 25%. (b) The branch held a clearance sale during June 2019. Inventory was sold at selling price less 30%. The proceeds of the sale amounted to R49 250 and were included in the credit sales amount of R285 530 as indicated above. FAC1601/RFA1601 MAY/JUNE 2020 TURN OVER 11 QUESTION 19 (3 marks) Which of the following represents the correct amounts for branch adjustment (mark-down on sales) and branch adjustment (mark-down on cost) in the branch inventory account as at 30 September 2019 after taking the additional information into account? 1. Branch adjustment (mark-down on sales) R12 313; Branch adjustment (mark-down on cost) R21107 2. Branch adjustment (mark-down on sales) R14 071; Branch adjustment (mark-down on cost) R7 036 3. Branch adjustment (mark-down on sales) R7 036; Branch expenses (mark-down on cost) R14 071 4. Branch adjustment (mark-down on sales) R14 071; Branch expenses (mark-down on cost) R7 036 QUESTION 20 (5 marks) Assuming the correct amount for branch adjustment (mark-down on sales) and branch adjustment (mark-down on cost) are R12 000 and R6 000 respectively. Which of the following represents the correct surplus/(deficit) in the branch inventory account as at 30 September 2019 after taking the additional information into account? 1. R 59 030 surplus 2. R 98 230 surplus 3. R 40 230 deficit 4. R 99 030 surplus