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    Assignment 2

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    Amanda Hove Hove
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    Assignment 2

    Uploaded by

    Amanda Hove Hove
    44 views4 pages
    Assignment 2

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    ASSIGNMENT 2

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    Assignment 2

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    © All Rights Reserved
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    Download as pdf or txt
    44 views4 pages

    Assignment 2

    Uploaded by

    Amanda Hove Hove
    Assignment 2

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    FACULTY OF COMMERCE

    DEPARTMENT OF ACCOUNTING & AUDITING


    BACC130: FINANCIAL ACCOUNTING 1B
    ASSIGNMENT 2
    AUGUST- DECEMBER 2024

    Instructions
    1. All assignments must be typed using New Times Roman font size 12, 1.5 line spaced,
    referenced using 6th Edition APA Guidelines, justified both sides, include a standardized
    cover page and uploaded as a SINGLE PDF file.
    2. It is the responsibility of the student to upload their assignments in time to avoid
    inconveniences due to internet failure, system failure, power outages or any other
    unforeseen circumstances. NO submission extensions will be granted by the Department
    after the deadline.
    3. All queries for this assignment must be directed to the Course Leader whose contact
    details are on the List of Course Leaders available on MyVista.
    4. Plagiarism is a serious academic offence. Credit will be given for well written and
    referenced assignments. Please refer to the Tutorial Letter and other resources for more
    information on academic writing.
    ANSWER ALL QUESTIONS
    Question 1
    The comparative statements of financial position of Mr. Moosani show the following information:
    2021 2020
    Cash 5200 41400
    Accounts Receivable 31700 21500
    Inventory 25000 19400
    Investments - 16900
    Furniture 80000 64000
    Equipment 86000 43000
    Total 227900 206200

    Allowance for doubtful accounts 6500 9700


    Accumulated depreciation on equipment 24000 18000
    Accumulated depreciation on furniture 8000 15000
    Trade creditors 10800 6500
    Accrued expenses 4300 10800
    Bills payable 6500 8600
    Long-term loans 31800 53800
    Capital 136000 83800
    Total 227900 206200

    Additional data related to 2021 is as follows


    i. Equipment that had cost 23,000 and was 40% depreciated at the time of disposal was sold
    for 6,500.
    ii. Payments against long-term loans amounted to 22,000 of which 12,000 was paid by Mr.
    Moosani out of his personal account to 60,000
    iii. On 1 January 2021, the furniture was destroyed by fire. Proceeds received from the
    insurance company amounted to 60,000
    iv. Investments were sold at 7,500 above their cost
    v. Mr. Moosani withdraws 15,000 each month for personal use.
    Required:
    Prepare a statement cash flows for the year ended 31 December 2021 (25 marks)
    Question 2

    Delta Company uses a periodic inventory system. The beginning balance of inventory and
    purchases made by the company during the month of July 2016 are given below:

    • July 01: Beginning inventory, 500 units @ $20 per unit.

    • July 18: Inventory purchased, 800 units @ $24 per unit.

    • July 25: Inventory purchased, 700 units @ $26 per unit.

    Delta Company sold 1,400 units during the month of July.

    Required: Compute inventory on July 31, 2016, and cost of goods sold for the month of July using
    following inventory costing methods:

    1. First in, first out (FIFO) method (5 marks)

    2. Last in, first out (LIFO) method (5 marks)

    3. Average cost method (5 marks)

    (b) From the following information calculate:

    (i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio (v) Net
    Profit Ratio (10 marks)

    Revenue from Operations 25,20,000

    Net Profit 3,60,000

    Cast of Revenue from Operations 19,20,000

    Long-term Debts 9,00,000

    Trade Payables 2,00,000

    Average Inventory 8,00,000


    Current Assets 7,60,000

    Fixed Assets 14,40,000

    Current Liabilities 6,00,000

    Net Profit before Interest and Tax 8,00,000

    Question 3

    (i) What is the difference between bad debts, provisions for bad-debts and bad debts
    recovered? (6 marks)
    (ii) What are liquidity ratios? Explain the importance of current and liquid ratio. (10
    marks)
    (iii) Distinguish between ordinary shares and prefers shares (5 marks)
    (iv) What are debentures? (2 marks)
    (v) Define a dividend (2 marks)

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