Accounting Answers

You are planning to invest $10,000 into the stock for one company. You research various investment options and identify two possibilities: Citigroup and Wells Fargo. You decide to invest in Citigroup. A year later, your Citigroup investment is worth $13,340. You look at Wells Fargo. Had you invested in Wells Fargo, your investment would now be worth $10,320. What is your economic profit?

What is the difference between Revenue and sales

Presented below are eight business transactions. Indicate the effect of each transaction on each element of the accounting equation.

(a)Purchased $296 of supplies on account.

(b)Performed $501 of services on account.

(c)Paid $345 of operating expenses.

(d)Paid $296 cash on account for the supplies purchased in item (a) above.

(e)Invested $1,080 cash in the business.

(f)Owner withdrew $386 cash.

(g)Hired an employee to start working the following month.

(h)Received $501 from a customer who had been billed previously in item (b) above.

(i)Purchased $489 of equipment in exchange for a note payable.

Q.1.1 Hybrid Dealers bought computer equipment for R54 000 on 1 July 2018. The equipment is depreciated at 20% according to the diminishing balance method.

Required:

Prepare the depreciation and closing transfer entries in the general journal of

Hybrid Dealers on 31 March 2019 and 31 March 2020. (15)

What is the relationship between the term cash cost and the cash flow concept?

On 2 June 2018 BB acquired 15% interest in Chick Ltd for R2 500 000 excluding transaction costs as a long-term investment by purchasing 140 000 ordinary shares of the total issued shares in the company. On 15 January 2019 Chick Ltd declared an interim dividend of R15 per share to its registered shareholders as at this date. The dividend cash payment was done on 29 January 2019. As at 28 February 2019 the market value of Chick Ltd shares was R25.86 per share.

REQUIRED

Provide the journal entries to record the transactions above 

BB (Pty) Ltd is a company in the Capricorn district. The company is in the business of manufacturing clothes. The company has a financial reporting period of 28 February. Currently the company is preparing the financial statements for the period ending 28 February 2019.

Scenario A

On 1 June 2018 BB (Pty) Ltd purchased 6 000 000 (60% interest) of the issued ordinary shares in Brexit (Pty) Ltd for R8 000 000. Brexit (Pty) Ltd on 1 February 2019 declared dividends amounting to R10 000 000 payable to the shareholders registered on this date. On the 18^th of February 2019 Brexit paid out the dividend payable. There was no change in the issued share capital since 1 June 2018 in Brexit (Pty) Ltd.

REQUIRED

Provide the journal entries to record the transactions above. 

QUESTION 1                                                                                                                      

AA Entity and all its suppliers are registered VAT vendors. Where applicable, VAT is charged at 15%.

AA Entity sells crockery at a mark-up percentage of 25% gross profit on cost price. AA Entity is insured for potential inventory losses due to fire for an amount of R218 500 (including VAT).

On 21 July 2019, a fire broke out in the store room of AA Entity which destroyed almost all of AA Entity’s trade inventories, except for trade inventories with a cost price of R80 000 that the entity could salvage. This salvaged trade inventory items are still in a very good condition and will be sold at the normal selling price.

AA Entity uses the periodic inventory system and therefore does not know what the value of trade inventories on hand was on 21 July 2019. The last inventory count was performed at the reporting date on 30 June 2019 and the inventory records reflected trade inventories on hand at a cost price of R341 000 on that date.

The total value of supplier’s invoices for trade inventories purchased since the reporting date until the date of the fire, amounted to R59 280. The total value of sales invoices made out to customers since the reporting date until the date of the fire amounted to R159 600.

REQUIRED

1.1Calculate the value of the insurance compensation that will probably be paid by the insurance company in respect of the trade inventories destroyed in the fire.    

What Refers to the fact that all economic resources that a society needs to produce good and services are finite or limited on supply

__________ Refers to the fact that all economic resources that a society needs to produce good and services are finiet or limited on supply