Accounting Case Study Analysis with Solutions by Experts

Looking for Expert Accounting Assignment Help for your NQF Level 6 Advanced Certificate in Management Studies? Access free assignment samples and high-quality Accounting Case Study Solutions with in-depth analysis. Our professional writers provide well-researched and plagiarism-free answers to help you achieve top grades. Don’t struggle with complex financial concepts—get expert guidance today! Order now and boost your academic success!

Question 1 [30 marks]

You are provided with information relating to Kakula Limited for the year ended 31 December 2022.

REQUIRED:

• Prepare the Statement of Comprehensive Income (20 marks)
• Comment on whether the company can meet its short-term debts in the next financial year. Quote and explain TWO financial indicators (10 marks)

INFORMATION:

Extract from Pre-adjustment Trial Balance on 31 December 2022:

Balance sheet accounts section	Debit	Credit
Ordinary share capital		1,000,000
Retained Earnings: (1 January 2022)		628,000
Loan from Teflon Bank		540,800
Debtors’ control	2 125,000
Creditors’ control		96,200
Provision for bad debts		7,150
Trading stock	376,000
SARS Income tax	315,000
Nominal Accounts section
Sales		7,883,395
Cost of sales	4,955,000
debtors’ allowance	112,000
Sundry expenses	257,400
Bank charges	41,905
Audit fees	75,600
Packing materials	15,400
Repairs and maintenance	107,500
Commission Income		64,140
Directors’ fees	736,000
Salaries and wages	1,176,000
Interest on current bank account		3,000
Bad debts	17,600
Rent Income		87,720

 

Other Information

	28-Feb-2022	28-Feb-2021
Net Profit After Tax	857 500	850 500
Shareholder’s Equity	10 892 500	10 447 000
Current Ratio	1.4:1	2.0:1
Acid Test Ratio	0.6:1	1.2:1
Stock turnover rate	6.4 times	8.4 times

 

Adjustments and additional information:

• Provide for R15 000 depreciation for the financial
• On 27 December 2022 P Maine, a debtor, returned merchandise. A credit note for R1 600 was issued to her. (The cost price was R900.) No entries were made for the return of the These items were returned to stock.
• The debtor’s insolvent estate, J Jabaroo, paid out 45 cents in the rand and made a direct deposit of R2 025 on 31 December 2022. The outstanding balance must be written off. No entries were made to record the direct deposit and the amount written off.
• The provision for bad debts must be increased to R8
• The stock count on 31 December 2022 revealed:

Trading stock R369 100

Packing material R2 400

• The company has two directors. Each director receives the same monthly One of the directors did not receive his directors’ fee for December 2022.
• Interest on the loan from Teflon Bank has not been entered yet. Interest is capitalised. The loan statement received from Teflon Bank reflected the following:

Balance on 1 January 2022	R601 600
Repayments made during the year	R100 800
Balance on 31 December 2022	R540 800

 

• The monthly rent did not change during the financial year. The tenant paid R6 000 for repairs to the premises. As Kakula Limited is responsible for all repairs, the tenant deducted this amount from the rent he paid for November. The repairs have not been recorded, and the rent for December 2022 has not yet been received.

• An employee was left out of the Salaries His details are:

Net Salary	R12 150
Deductions	R6 350
Employer’s contributions	R5 050

• Income tax for the year was correctly calculated at R30

 

For REF… Use: #getanswers2002702