Sizwe Furnitures Inc. (SFI) is an emerging entity that buys and sells furniture in Eastern Cape and surrounding provinces. It has suppliers both locally and internationally and its financial year ends on 31 October. SFI uses the perpetual inventory system and the cost model to account for its inventory and property, plant and equipment (PPE) respectively. Additional Information 1. Inventory On 1 July 2021, SFI ordered 450 top-class chairs from Global Furnitures, a supplier based in Chile on credit. The order was accepted at a price of R122 625 under the 'FOB shipping point' shipping term and this amount was to be settled exactly 12 months after the delivery the chairs that SFI ordered. This is regarded as beyond normal credit terms and an appropriate discount rate for SFI is 9%. On 1 August 2021, the order was finalized, and the chairs were loaded onto their ship in Chile for delivery. On 30 August 2021, the chairs arrived at the Durban harbour and were inspected at a cost of R10 890 cash. On 31 August 2021, a delivery truck was hired at a cost of R14 100 to transport the chairs from the harbour to SFI's head office, which is situated in Vosloorus, Johannesburg. A further amount of R2 630 was also incurred on the same day for packing the chairs onto the delivery truck, after which the truck left for SFI's head office. The truck arrived at SFI's head office on the same day. These costs were both incurred on credit and settled on 30 September 2021. On 1 September 2021, SFI experienced vandalism and looting at its head office in Vosloorus by members of its surrounding community. The community members were protesting against poor service delivery. The police took a long time to arrive at the scene of the protest and this resulted in 60% of the above chairs being stolen and 40% of them being damaged as part of the looting. SFI assessed the damage to the affected chairs on the same day and determined that they could be sold for R55 000 if they were first repaired at a cost R7 700 and if selling costs of R2 000 were incurred on them. 2. Property, plant and equipment SFI owns four vans which were all purchased on 1 May 2018 at a total cost of R1 600 000, each van cost the same price. These vans are depreciated on a straight-line method over a nariad of fv vars and have a residual value of DGO 000 och Activate Windows Go to Settings to activate Windows, SFI owns four vans which were all purchased on 1 May 2018 at a total cost of R1 600 000, each van cost the same price. These vans are depreciated on a straight-line method over a period of five years and have a residual value of R60 000 each. During the year, SFI decided to acquire a truck in order to increase its efficiency, as its business had grown to the extent that the vans had become too small to serve all of its customers. SFI purchased the truck on 1 August 2021 from a local truck manufacturer for a purchase price of R587 800. The truck was delivered to the premises of SFl at a cost of R4 600 cash on the same day. SFI could, however, not immediately use the truck as it first needed to undergo a roadworthy inspection. On 1 September 2021, the truck was fully inspected for roadworthiness at a cost of R11 900 cash, after which it was available for use. SFI did not have enough money to buy the truck and negotiated a trade-in with the truck manufacturer in order to finance part of its purchase price. SFI specifically traded-in one of its four vans (above) with the truck manufacturer for R155 000 cash as part of the deal for the truck. SFI delivered the van to the truck manufacturer on the same day that the manufacturer delivered the truck to the company. This truck is depreciated on the units of production method over a useful life of 400 000 kilometres (km) and it has a residual value of R95 000. The truck travelled 22 080 km during the current year ended 31 October 2021 In addition to the above, one of the other vans of the company was involved in an accident on 31 October 2021 and experienced significant engine damage. SFI inspected and assessed the van after the accident and found its value in use to be R129 000 and its net selling price (or fair value less cost to sell) to be R134 000. The bookkeeper of SFI has started to prepare the financial statement of the company for the current year ended 31 October 2021. The bookkeeper specifically attempted to prepare the Activate Windows Go to Settings to activate Windows, 1. Answer the following questions: (26 marks) 1.1. Explain how an entity should measure a liability that will be settled beyond normal credit terms. Your explanation should include a description of the process involved in measuring the liability as well as an explanation of the reasons why it is measured the way you would have described above. (3 marks) 1.2. Determine the cost of the chairs that were ordered by SFI before the vandalism and state the date when the company should have recognized the chairs in its financial records for the year ended 31 October 2021. (3 marks) 1.3. Prepare the journal entry/ies that SFI would need to prepare in order to recognize the following: (8 marks) a) The acquisition of the inventory b) The loss due to the theft of the inventory by the Vosloorus community members, and c) The loss due to the damage to the inventory by the Vosloorus community members Dates and narrations are not required. 1.4. Explain your reasoning behind the adjusting entry prepared in 1.3b above. Ignore explanations that relate to amounts. (5 marks) 1.5. State, with brief reasons, whether or not SFI would account for the theft of its chairs in the same way as you have indicated above (in requirement 1.3.), if the company was Activate Windows Go to Settings to activate Windows, using the periodic system (instead of the perpetual system) to record its inventory. You should ignore the damaged chairs in your answer. (4 marks) 1.6. Prepare the necessary journal entry/ies that would be prepared by SFI on 31 October 2021, the last day of the financial year with regards to the liability to Global Furnitures. Part of a month should be considered a full month. (3 marks) 2. Answer the following questions (8marks) Prepare the following general ledger accounts of SFI for the year ended 31 October 2021: Contra-entries are required. Dates are not required. Vehicles-Truck account only Asset disposal (8 marks) 3. Answer the following questions (20 Marks) 3.1. Prepare, to the extent of the available information, an extract of the statement of Comprehensive Income of SFI for the year ended 31 October 2021 to show how the information related to the vehicles and inventory of the company should be presented in it. (12 marks) 3.2. State, with brief reason(s), whether or not the number of months or weeks that SFI's truck was available for use in the current year ended 31 October 2021 should have had an impact on the amount of depreciation that the company recognized for it. (2 marks) 3.3. Provide three possible reasons why the bookkeeper has not been able to reconcile his PPE reconciliation note in general.. (6 marks) Activate Windows Go to Settings to activate Windows, Sizwe Furnitures Inc. (SFI) is an emerging entity that buys and sells furniture in Eastern Cape and surrounding provinces. It has suppliers both locally and internationally and its financial year ends on 31 October. SFI uses the perpetual inventory system and the cost model to account for its inventory and property, plant and equipment (PPE) respectively. Additional Information 1. Inventory On 1 July 2021, SFI ordered 450 top-class chairs from Global Furnitures, a supplier based in Chile on credit. The order was accepted at a price of R122 625 under the 'FOB shipping point' shipping term and this amount was to be settled exactly 12 months after the delivery the chairs that SFI ordered. This is regarded as beyond normal credit terms and an appropriate discount rate for SFI is 9%. On 1 August 2021, the order was finalized, and the chairs were loaded onto their ship in Chile for delivery. On 30 August 2021, the chairs arrived at the Durban harbour and were inspected at a cost of R10 890 cash. On 31 August 2021, a delivery truck was hired at a cost of R14 100 to transport the chairs from the harbour to SFI's head office, which is situated in Vosloorus, Johannesburg. A further amount of R2 630 was also incurred on the same day for packing the chairs onto the delivery truck, after which the truck left for SFI's head office. The truck arrived at SFI's head office on the same day. These costs were both incurred on credit and settled on 30 September 2021. On 1 September 2021, SFI experienced vandalism and looting at its head office in Vosloorus by members of its surrounding community. The community members were protesting against poor service delivery. The police took a long time to arrive at the scene of the protest and this resulted in 60% of the above chairs being stolen and 40% of them being damaged as part of the looting. SFI assessed the damage to the affected chairs on the same day and determined that they could be sold for R55 000 if they were first repaired at a cost R7 700 and if selling costs of R2 000 were incurred on them. 2. Property, plant and equipment SFI owns four vans which were all purchased on 1 May 2018 at a total cost of R1 600 000, each van cost the same price. These vans are depreciated on a straight-line method over a nariad of fv vars and have a residual value of DGO 000 och Activate Windows Go to Settings to activate Windows, SFI owns four vans which were all purchased on 1 May 2018 at a total cost of R1 600 000, each van cost the same price. These vans are depreciated on a straight-line method over a period of five years and have a residual value of R60 000 each. During the year, SFI decided to acquire a truck in order to increase its efficiency, as its business had grown to the extent that the vans had become too small to serve all of its customers. SFI purchased the truck on 1 August 2021 from a local truck manufacturer for a purchase price of R587 800. The truck was delivered to the premises of SFl at a cost of R4 600 cash on the same day. SFI could, however, not immediately use the truck as it first needed to undergo a roadworthy inspection. On 1 September 2021, the truck was fully inspected for roadworthiness at a cost of R11 900 cash, after which it was available for use. SFI did not have enough money to buy the truck and negotiated a trade-in with the truck manufacturer in order to finance part of its purchase price. SFI specifically traded-in one of its four vans (above) with the truck manufacturer for R155 000 cash as part of the deal for the truck. SFI delivered the van to the truck manufacturer on the same day that the manufacturer delivered the truck to the company. This truck is depreciated on the units of production method over a useful life of 400 000 kilometres (km) and it has a residual value of R95 000. The truck travelled 22 080 km during the current year ended 31 October 2021 In addition to the above, one of the other vans of the company was involved in an accident on 31 October 2021 and experienced significant engine damage. SFI inspected and assessed the van after the accident and found its value in use to be R129 000 and its net selling price (or fair value less cost to sell) to be R134 000. The bookkeeper of SFI has started to prepare the financial statement of the company for the current year ended 31 October 2021. The bookkeeper specifically attempted to prepare the Activate Windows Go to Settings to activate Windows, 1. Answer the following questions: (26 marks) 1.1. Explain how an entity should measure a liability that will be settled beyond normal credit terms. Your explanation should include a description of the process involved in measuring the liability as well as an explanation of the reasons why it is measured the way you would have described above. (3 marks) 1.2. Determine the cost of the chairs that were ordered by SFI before the vandalism and state the date when the company should have recognized the chairs in its financial records for the year ended 31 October 2021. (3 marks) 1.3. Prepare the journal entry/ies that SFI would need to prepare in order to recognize the following: (8 marks) a) The acquisition of the inventory b) The loss due to the theft of the inventory by the Vosloorus community members, and c) The loss due to the damage to the inventory by the Vosloorus community members Dates and narrations are not required. 1.4. Explain your reasoning behind the adjusting entry prepared in 1.3b above. Ignore explanations that relate to amounts. (5 marks) 1.5. State, with brief reasons, whether or not SFI would account for the theft of its chairs in the same way as you have indicated above (in requirement 1.3.), if the company was Activate Windows Go to Settings to activate Windows, using the periodic system (instead of the perpetual system) to record its inventory. You should ignore the damaged chairs in your answer. (4 marks) 1.6. Prepare the necessary journal entry/ies that would be prepared by SFI on 31 October 2021, the last day of the financial year with regards to the liability to Global Furnitures. Part of a month should be considered a full month. (3 marks) 2. Answer the following questions (8marks) Prepare the following general ledger accounts of SFI for the year ended 31 October 2021: Contra-entries are required. Dates are not required. Vehicles-Truck account only Asset disposal (8 marks) 3. Answer the following questions (20 Marks) 3.1. Prepare, to the extent of the available information, an extract of the statement of Comprehensive Income of SFI for the year ended 31 October 2021 to show how the information related to the vehicles and inventory of the company should be presented in it. (12 marks) 3.2. State, with brief reason(s), whether or not the number of months or weeks that SFI's truck was available for use in the current year ended 31 October 2021 should have had an impact on the amount of depreciation that the company recognized for it. (2 marks) 3.3. Provide three possible reasons why the bookkeeper has not been able to reconcile his PPE reconciliation note in general.. (6 marks) Activate Windows Go to Settings to activate Windows