Question 3 (21 marks) Brown and James are the sole members in Tendesius cc, a business enterprise which organises fun and walks. They have an equal share in the profits and losses and they each contributed N$ 2 500 to start the corporation in 2015. On 1 March 2018, Fun & Walks (Pty) Limited made an offer to take over the members loan was payable to James. Brown did not want to take up the offer so he asked to be paid out. The statement of financial position of Tendesius cc at 28 February 2018 was as follows: ASSETS Non-current assets Carrying amount Accumulated depreciation Land & Building Motor vehicles 12 500 5 000 12 500 3 000 2000 Current assets Inventory Accounts receivable Bank TOTAL ASSETS 39 000 22 500 7500 9 000 54.500 35 000 5 000 30 000 EQUITY AND LIABILITIES Members Funds Members contributions Undrawn profits Non-current liabilities Members loan 15 000 Current liabilities Accounts payable TOTAL EQUITY AND LIABILITIES 4500 54 500 Fun & Walk (Pty) Limited offered to pay Tendesius cc N$ 100 000 to take over the business as a going concern. The payment was structured as follows: N$ 42 500 paid in cash-to pay Brown for his share of business N$ 42 500 by a fresh issue of ordinary share Fun & Walk (Pty) Limited at N$ 1 each- to pay James for his share of the business. N$ 15 000 by an issue of 150 debentures of N$ 100 each in Fun & Walk (Pty) Limited to repay the members loan to James in the cc. The land and building taken over were considered to be worth N$ 37 500. . Page 17 of 19 The statement of financial position of Fun & Walk (Pty) Limited at 28 February 2018 was as follow: ASSETS Non-current assets Carrying amount Accumulated depreciation Land & Building Motor vehicles 100 000 40 000 100 000 25 000 15 000 Current assets Inventory Accounts receivable Bank TOTAL ASSETS 100 000 15 000 25 000 60 000 225.000 140 000 EQUITY AND LIABILITIES Capitals and reserves Ordinary share capital Accumulated profits Non-current liabilities 10% Debentures Shareholders loans 40 000 70 000 50 000 20 000 Current liabilities Accounts payable TOTAL EQUITY AND LIABILITIES 15 000 225 000 You are required to: 1. Prepare the entries in the journal of Fun & Walk (Pty) Limited to record the takeover of Tendesius cc. (8 marks) 2. Preapare a statement of financial position of Fun & Walk (Pty) Limited as at 01 March 2018. (12 Marks) 3. Name one characteristic of a cc. (1 mark) Page 18 of 19 Question 3 (21 marks) Brown and James are the sole members in Tendesius cc, a business enterprise which organises fun and walks. They have an equal share in the profits and losses and they each contributed N$ 2 500 to start the corporation in 2015. On 1 March 2018, Fun & Walks (Pty) Limited made an offer to take over the members loan was payable to James. Brown did not want to take up the offer so he asked to be paid out. The statement of financial position of Tendesius cc at 28 February 2018 was as follows: ASSETS Non-current assets Carrying amount Accumulated depreciation Land & Building Motor vehicles 12 500 5 000 12 500 3 000 2000 Current assets Inventory Accounts receivable Bank TOTAL ASSETS 39 000 22 500 7500 9 000 54.500 35 000 5 000 30 000 EQUITY AND LIABILITIES Members Funds Members contributions Undrawn profits Non-current liabilities Members loan 15 000 Current liabilities Accounts payable TOTAL EQUITY AND LIABILITIES 4500 54 500 Fun & Walk (Pty) Limited offered to pay Tendesius cc N$ 100 000 to take over the business as a going concern. The payment was structured as follows: N$ 42 500 paid in cash-to pay Brown for his share of business N$ 42 500 by a fresh issue of ordinary share Fun & Walk (Pty) Limited at N$ 1 each- to pay James for his share of the business. N$ 15 000 by an issue of 150 debentures of N$ 100 each in Fun & Walk (Pty) Limited to repay the members loan to James in the cc. The land and building taken over were considered to be worth N$ 37 500. . Page 17 of 19 The statement of financial position of Fun & Walk (Pty) Limited at 28 February 2018 was as follow: ASSETS Non-current assets Carrying amount Accumulated depreciation Land & Building Motor vehicles 100 000 40 000 100 000 25 000 15 000 Current assets Inventory Accounts receivable Bank TOTAL ASSETS 100 000 15 000 25 000 60 000 225.000 140 000 EQUITY AND LIABILITIES Capitals and reserves Ordinary share capital Accumulated profits Non-current liabilities 10% Debentures Shareholders loans 40 000 70 000 50 000 20 000 Current liabilities Accounts payable TOTAL EQUITY AND LIABILITIES 15 000 225 000 You are required to: 1. Prepare the entries in the journal of Fun & Walk (Pty) Limited to record the takeover of Tendesius cc. (8 marks) 2. Preapare a statement of financial position of Fun & Walk (Pty) Limited as at 01 March 2018. (12 Marks) 3. Name one characteristic of a cc. (1 mark) Page 18 of 19
