Current Assets Valuation

The company's financial position is summarized as follows: Total current assets are $215,600. Non-current assets include property, plant and equipment ($627,000 + $462,000 - $303,600 = $786,400), office equipment ($330,000 - $217,000 = $113,000), and financial assets ($99,000 + $4,455 = $103,455). Total non-current assets are $1,001,855. Current liabilities are $142,450, while non-current liabilities are $130,000, resulting in total liabilities of $272,450. Equity includes capital ($826,769 - $54,744 = $772,025) and profit for the year ($172,980). Total equity is $945,005.

Contents
Solution -1....................................................................................................................................................2
Solution-2.....................................................................................................................................................3
2.1 ACCOUNTING EQUATION:............................................................................................................3
2.2 REDRAFTING THE DEBTOR CONTROL ACCOUNT...............................................................................4
Solution-3.....................................................................................................................................................6
3.1 PREPARATION OF BANK ACCOUNT..............................................................................................6
3.2 VAT INPUT / VAT OUTPUT LEDGERS............................................................................................9
Solution - 4.................................................................................................................................................11
4.1 PREPARATION OF CURRENT A/C – BLUE AND APPROPRIATION A/C..........................................11
4.2 EQUITY SECTION OF THE STATEMENT OF FINANCIAL POSITION................................................14
Solution-5...................................................................................................................................................15

Solution -1
1.1 B
1.2 D
1.3 C
1.4 A
1.5 A

Solution-2
2.1 ACCOUNTING EQUATION:
Transaction
No.
ASSET
=
LIABILITIE
S
+
EQUITY
Bank
Debtor
s Stationery Loan Drawings
Bad
debt
Interest
on fixed
deposit
2.1.1 500 (500) = - + - - -
2.1.2 - - (50) = - + (50) - -
2.1.3 - (400) - = - + - (400) -
2.1.4 100 - - = - + - - 100
2.1.5 (2,000) - - = (2,000) + - - -
Total (1,400) (900) (50) (2,000) (50) (400) 100

2.2 REDRAFTING THE DEBTOR CONTROL ACCOUNT
DEBTOR CONTROL ACCOUNT
Date Particulars Amount Date Particulars Amount
01-May-16 Balance b/d b/d
100,
000 31-May-16 Bad debts J
1,0
00
31-May-16 Bank
CP
J
2,
000 31-May-16 Bank and Discount
CR
J
90,0
00
31-May-16 Interest income J 200 31-May-16 Sales returns
SR
J
3,8
00
31-May-16 Sales SJ
80,
000 31-May-16
R. Smith's Balance
trnsfd @
1,0
00
31-May-16 Undercasted Sales* SJ
2,
000 31-May-16 Bad debts @#
1,2
00
31-May-16 Error rectified **
1,
000
31-May-16
Error in credit note amount
*** 450 31-May-16 Balance c/d
91,67
4
31-May-16 Cheque dishonoured #
3,
000
31-May-16 Interest income ## 24
188,
674
188,6
74
* Sales undercasted by R2000 rectified
** Invoice issued to debtor erroneously enetered in SRJ, rectified

*** Error in amount recording, recorded as R940 instead of R490
# Cheque returned by bank due to insufficient funds recorded
## Two months interest income recorded
@ Balance in R. Smith's account transferred R1000
@# Bad debts recorded (2000*0.60)

Solution-3
3.1 PREPARATION OF BANK ACCOUNT
IN THE BOOKS OF WALNUT STORES
Bank A/c
Date Particulars Amount Date Particulars Amount
31/01/2016 Fixed deposit
12,0
00 31/01/2016 Balance b/d 10,000
31/01/2016
Interest income on fixed
deposit
1
80 31/01/2016
Debtor (cheque
dishonoured) 900
31/01/2016 Donation (Soccer club)
2,0
00 31/01/2016 Bank charges 550
31/01/2016 Stationery (error in posting)
3,6
00 31/01/2016 Balance c/d 6,330
17,7
80 17,780
CONTRA ACCOUNTS
Debtor A/c
Date Particulars Amount Date Particulars Amount
31/01/2016 Bank 900 31/01/2016 Balance c/d 950
31/01/2016 Discount allowed 50
950 950

Discount Allowed A/c
Date Particulars Amount Date Particulars Amount
31/01/2016 Balance c/d 50 31/01/2016 Debtor 50
50 50
Bank Charges A/c
Date Particulars Amount Date Particulars Amount
31/01/2016 Bank 550 31/01/2016 Balance c/d 550
550 550
Fixed Deposit A/c
Date Particulars Amount Date Particulars Amount
31/01/2016 Balance c/d 12,000 31/01/2016 Bank 12,000
12,000 12,000
Interest income on Fixed Deposit A/c
Date Particulars Amount Date Particulars Amount
31/01/2016 Balance c/d 180 31/01/2016 Bank 180
180 180
Donation A/c

Date Particulars Amount Date Particulars Amount
31/01/2016 Balance c/d 2,000 31/01/2016 Bank 2,000
2,000 2,000
Stationery A/c
Date Particulars Amount Date Particulars Amount
31/01/2016 Balance c/d 3,600 31/01/2016 Bank 3,600
3,600 3,600

3.2 VAT INPUT / VAT OUTPUT LEDGERS
ZINHLE TRADERS
VAT INPUT
Date Particulars Amount Date Particulars Amount
June, 16
Purchased inventory on
credit from suppliers 700 June, 16
Returned inventory to
creditors
1
12
June, 16
Inventory purchased by
cheque 560 June, 16
Settlement discounts
received 42
June, 16
Equipment purchased on
credit 210 June, 16 SARS: VAT account
1,3
16
1,
470
1,4
70
VAT OUTPUT
Date Particulars Amount Date Particulars Amount
June, 16 Goods returned by debtors 70 June, 16 Cash sales
4
20
June, 16
Discount allowed to debtors in
settltment 28 June, 16 Goods sold on credit
8
40
June, 16 SARS: VAT account
1,
162

1,260 1,260

WORKING NOTE:
CALCULATION OF AMOUNT OF VAT
Particulars Amount
excluding VAT
Amount
including
VAT
Amount of
VAT
Purchased inventory on credit
from suppliers
5,00
0
5,700.
00 700.00
Returned inventory to creditors
80
0
912.
00 112.00
Cash sales
3,00
0
3,420.
00 420.00
Goods sold on credit
6,00
0
6,840.
00 840.00
Inventory purchased by cheque
4,00
0
4,560.
00 560.00
Goods returned by debtors
50
0
570.
00 70.00
Discount allowed to debtors in
settlement
20
0
228.
00 28.00
Settlement discounts received
30
0
342.
00 42.00
Equipment purchased on credit
1,50
0
1,710.
00 210.00

Solution - 4
4.1 PREPARATION OF CURRENT A/C – BLUE AND APPROPRIATION A/C
Current a/c: Blue
Date Particulars Amount Date Particulars Amount
01-Mar-15 Balance b/d
24,00
0 29-Feb-16 Interest on capital
37,50
0
29-Feb-16 Drawings
160,00
0 29-Feb-16 Partners Salary
152,40
0
29-Feb-16 Balance c/d
84,68
0 29-Feb-16 Special Bonus
13,20
0
29-Feb-16 Appropriation of Profit
65,58
0
268,68
0
268,68
0
Appropriation a/c
Date Particulars Amount Date Particulars Amount
29-Feb-16 Interest on capital (WN1) 29-Feb-16 Profit for the year 500,000
- Blue 37,500
- Berry 22,500
29-Feb-16 Partners Salary (WN 2)
- Blue 152,400
- Berry 165,100
29-Feb-16
Bonus to Blue
(12000*110%) 13,200

29-Feb-16 Appropriation of Profit
- Blue 65,580
- Berry 43,720
500,000 500,000
WORKING NOTES:
1 Calculation of Interest on capital
Particulars Blue Berry Total
Opening balance 200,000 100,000 300,000
Addition in capital 100,000 100,000 200,000
Total Capital 300,000 200,000 500,000
Interest on capital on opening bal 30,000 15,000 45,000
Interest on capital in addition 7,500 7,500 15,000
Total Interest 37,500 22,500 60,000
2 Calculation of Partner's Salaries
Particulars Blue Berry Total
From 01 March 2015 to 31 July
2015 60,000 65,000 125,000
From 01 August 2015 to 29 Feb
2016 92,400 100,100 192,500
Total Salary 152,400 165,100 317,500
3 Current A/c: Berry

Current a/c: Berry
Date Particulars Amount Date Particulars Amount
29-Feb-16 Drawings 180,000 01-Mar-15 Balance b/d 20,000
29-Feb-16 Balance c/d 71,320 29-Feb-16 Interest on capital 22,500
29-Feb-16 Partners Salary 165,100
29-Feb-16 Appropriation of Profit 43,720
71,320 251,320

4.2 EQUITY SECTION OF THE STATEMENT OF FINANCIAL POSITION
BLUEBERRY TRADERS
STATEMENT OF FINANCIAL POSITION
For the year ended on 29th February, 2016
Particulars Amount
Equity Section
Capital A/c
- Blue 300,000
- Berry 200,000 500,000
Current A/c
- Blue 84,680
- Berry 71,320 156,000
Total Equity 656,000

Solution-5
MARBURG TRADERS
STATEMENT OF FINANCIAL POSITION
For the year ended on 29 February, 2016
Particulars As at
29 February, 2016
Current assets
Cash and cash equivalents
Bank 57,600
Cash Float 4,000 61,600
Trade and other receivables
Debtors 84,000
Less: Allowance for dountful debts (4,400) 79,600
Inventories
Trading Inventory 73,000
Stationery 500 73,500
Other current assets
Prepaid 900 900
Total current assets 215,600
Non-current assets
Property, plant and equipment
Land and Buildings 627,000 627,000
Vehicle 462,000

Less: Accumulated depreciation - Vehicle (303,600) 158,400
Office Equipment 330,000
Less: Accumulated depreciation - Office
Equipment
(217,000) 113,000
Financial assets
Fixed deposit 99,000
Interest receivable on fixed deposit 4,455 103,455
Total non-current assets 1,001,855
Total assets - (a) 1,217,455
Current liabilities
Trade and other payables
Creditors 96,000
Current Maturities of Long term borrowings 35,000 131,000
Other liabilities
Interest on loan payable 2,750
Telephone expense payable 2,100
Rent received in advance 6,600 11,450
Total current liabilities 142,450
Non-current liabilities
Financial liabilities
Mortagage Loan 130,000 130,000
Total non-current liabilities 130,000
Total liabilities - (b) 272,450
Net assets (a-b) 945,005
Equity

Capital 826,769
Less: Drawings (54,744)
Add: Profit for the year (refer WN-2) 172,980 945,005
Total equity 945,005
WORKING NOTES
WN-1 TRIAL BALANCE
Unadjusted Adjustments
Dr. Cr. Dr. Cr.
826,769
54,744
627,000
462,000
330,000
264,000 39600
184,000 33000
99,000
4455
77,000 4000
500
88,000 4000
5,000 4000 3400