Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please advise what more details is required, this is the whole question Question 4 YZ is a manufacturing entity which produces and sells a range

Please advise what more details is required, this is the whole question

Question 4 YZ is a manufacturing entity which produces and sells a range of products. YZs trial balance at 30 September 2020 is shown below: Note R000 R000 Administrative expenses 910 Borrowings @ 7% per year 3,000 Buildings at cost at 30 September 2019 3,400 Cash and cash equivalents 130 Cash received on disposal of machinery (i) 8 Cost of raw materials purchased in year to 30 September 2020 2,220 Direct production labour costs 670 Distribution costs 515 Equity dividend paid 170 Equity shares R1 each, fully paid at 30 September 2020 (xi) 1,700 Income tax (viii) 30 Inventory of finished goods at 30 September 2019 (vii) 190 Inventory of raw materials at 30 September 2019 (vii) 275 Land at valuation at 30 September 2019 (ii) 9,000 Loan interest paid 210 Plant and equipment at cost at 30 September 2019 (i) 3,900 Production overheads (excluding depreciation) 710 Provision for deferred tax at 30 September 2019 (ix) 430 Accumulated depreciation at 30 September 2019: Buildings (iii) 816 Plant and equipment (iv) 2,255 Patent (v) 526 Retained earnings at 30 September 2019 3,117 Revaluation reserve at 30 September 2019 1,800 Sales revenue 9,820 Share premium 100 Trade payables 940 Trade receivables 1,130 _____ 23,986 23,986 Additional information: i) During the year YZ disposed of obsolete machinery for R8,000. The cash received is included in the trial balance. The obsolete machinery had originally cost R35,000 and had accumulated depreciation of R32,000. ii) On 30 September 2020 YZ revalued its land to R9,500,000. iii) Buildings are depreciated at 2% per annum on the straight line basis. Buildings depreciation should be treated as an administrative expense. No buildings were fully depreciated at 30 September 2019. iv) Plant and equipment is depreciated at 25% per annum using the reducing balance method and is treated as a production overhead. v) The patent for one of YZs products was purchased on 1 October 2017. The patent had a useful life of 10 years when it was purchased and is being amortised on a straight line basis with no residual value anticipated. Amortisation of the patent is treated as cost of sales when charged to the income statement. Research is carried out on a continuous basis to develop the patented process and ensure that the product range continues to meet customer demands. The patent figure in the trial balance is made up as follows: R000 Original cost of patent 420 less amortisation to 30 September 2019 (84) 336 Research costs incurred in the year to 30 September 2020 Total 190 526 vi) YZs accounting policy for amortisation and depreciation is to charge a full year in the year of acquisition and none in the year of disposal. vii) Inventory of raw materials at 30 September 2020 was R242,000. Inventory of finished goods at 30 September 2020 was R180,000. viii) The directors estimate the income tax charge on the years profits at R715,000. The balance on the income tax account represents the under-provision for the previous years tax charge. ix) The deferred tax provision is to be reduced by R47,000. x) YZ entered into a non-cancellable 4 year operating lease on 1 October 2019, to acquire machinery to replace the old machinery sold. Under the terms of the lease YZ will pay no rent for the first year. R8,000 is payable for each of 3 years commencing on 1 October 2020. The machine is estimated to have a useful economic life of 10 years. xi) During the year YZ issued 200,000 R1 equity shares at a premium of 50%. The total proceeds were received before 30 September 2020 and are reflected in the trial balance figures. Required: Prepare YZs statement of comprehensive income and a statement of changes in equity for the year to 30 September 2020 and a statement of financial position at that date, in accordance with the requirements of International Financial Reporting Standards. (All workings should be to the nearest R000). Notes to the financial statements are not required, but all workings must be clearly shown. Do not prepare a statement of accounting policies. (Total for Question Three = 25 marks) Total 100 marks

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting In Emerging Economies

Authors: Mathew Tsamenyi

1st Edition

1849506256, 9781849506250

More Books

Students also viewed these Accounting questions

Question

Explain the various techniques of Management Development.

Answered: 1 week ago