Ask Question, Ask an Expert


Ask Financial Management Expert

problem1) The following information has been extracted from the books of HMN Branding Solutions (Pty) Ltd for the year ended 28 February 2013:

Balances as at 1 March 2012:
Vehicles @ Cost                       R 340000
Accumulated Depreciation:
Vehicles                                   R 140000

Additional Information:

• A new vehicle was purchased at a cost of R 140000 on 1 September2012.

• The depreciation rate is as follows:
Vehicles: 20% diminishing balance method

• The current financial year end is the 28 February 2013.

•  Ignore VAT.


1.1 Complete the following note to the balance sheet for property, plant and equipment
(vehicles) for the year ended 28 February 2013. (Be sure to show all workings clearly referenced in order to be awarded part marks.)

Property, Plant and Equipment Vehicles                                          (R)

Opening carrying amount/ Book value–1 March 2012
Cost (1/3/2012) Accumulated Depreciation (1/3/2012)                  ()
Additions at cost
Depreciation for the period                                                              ()
Closing carrying amount/ Book value–28 February 2013
Accumulated Depreciation (28/2/2013)                                           ()

1.2 Process the journal entry to account for the depreciation expense for the 2013 financial year find out d in 1.1 above. (Clearly show the account to be debited and the account to be credited.)

1.3 Briefly describe your understanding of the ‘diminishing balance method’ for calculating depreciation.

1.4 Would ‘accumulated depreciation’ impact the elements under current assets, current liabilities, non-current assets or non-current liabilities?

problem2) The following information relates to the books of Highveld Traders (Pty) Ltd. The year end of the company is 31 December 2012.

Additional information:

a) Stationery on hand as at 31 December 2012 was R 1050. R5000 worth of stationery was purchased and recorded as stationeryexpense during the year.

b) Long term borrowings of R 32000 were established on 1 September 2012.Interest is accounted for at 15% per annum payable annually from the date of inception of the borrowings. The entity has accounted for the receipt of the funds but not the accrual of the outstanding interest on the loan as at year end.

c) Advertising expense includes an amount of R 1200 paid for January 2013.

d) Rent income includes an amount in respect of January 2013. Rent income as per the Trial Balance is R 15600.

e) Interest on the fixed deposit has not yet been received for the last 2 months of the financial year. Interest is find outd at a rate of 8 % per annum. The Fixed Deposit was reflected at the correct amount of R 60000 on the Trial Balance.

f) Insurance expense includes an annual premium of R750 paid for 1 November 2012 to 31 October 2013.

g) The telephone account of R355 for December 2012 was paid by electronic funds transfer but has not yet been recorded in the accounting records.

h) The account of a debtor, Mr Wong, owing an amount of R560 must be written off as irrecoverable.

i) An amount of R5700 was paid to settle an account with a creditor. No entry was made for this.


For each of the transactions identified above, show the effect on the elements of the accounting equation (by showing the amount and a ‘+’ or ‘ -‘) as well as the account to be debited and account to be credited for each adjustment. You must show supporting calculations where applicable. An ex and suggested format have been provided below:
Bought Inventory on account from a supplier for R2500. No entry has been processed for his.
EG        +2 500              0            +2 500          Inventory               Accounts Payable /Creditors

problem5) Below is an extract from the books of PG Batteries Ltd as at 31 December 2012, the end of the financial period:

Sales                                      R250000
Purchases                               R157000
Sales Returns                            R15500
Purchases Returns                      R7800
Carriage on purchases              R27000
Carriage on sales                        R9800
Stock (01/01/2012)                 R50000

A physical inventory count was performed on 31 December 2012, which revealed that stock to the value of R 37000 was on hand.


find out the gross profit for the period.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M93099

Have any Question? 

Related Questions in Financial Management

An investor purchases one gold futures contract for

An investor purchases one gold futures contract for delivery in August 2007. Using the information in Table 23.3, determine the settle price for the contract on July 25, 2007. What is the total futures price for the cont ...

Suppose cisco system pays no dividends but spent 5 billion

Suppose Cisco System pays no dividends but spent $5 billion on share repurchases last year. If Cisco’s equity cost of capital is 12%, and if the amount spent on repurchases is expected to grow by 8% per year, estimate Ci ...

Bud and lou unrelated taxpayers own all of whose on

Bud and Lou, unrelated taxpayers, own all of Whose On, Inc.’s stock. Bud owns 60% and Lou 40%. One year before the complete liquidation of Whose On, Bud transfers (a) land (basis: $200,000; FMV $130,000) and (b) equipmen ...

A german company manufactures a specialized piece of

A German company manufactures a specialized piece of manufacturing equipment and leases it to a U.K. enterprise. The lease calls for five end-of-year payments of £1 million. The German firm spent €3.5 million to produce ...

Suppose that holding yield constant investors are

Suppose that, holding yield constant, investors are indifferent as to whether they hold bonds issued by the federal government or bonds issued by state and local governments (that is, they consider the bonds the same wit ...

On december 1 2015 bernadine sold a machine for 100000the

On December 1, 2015, Bernadine sold a Machine for $100,000. The Machine had originally cost $140,000 and, over the years, Bernadine had claimed $60,000 in depreciation. How much gain will Bernadine recognize on the sale ...

Drew recently purchased a new machine for his business the

Drew recently purchased a new machine for his business. The price of the machine was $12,000, but Drew also paid $100 in sales tax, $300 in freight, and $1,000 in installation and testing costs. What is Drew's basis in t ...

Consider three financing alternatives alternative a finance

Consider three financing alternatives: Alternative A: Finance solely with equity Alternative B: Finance using 50% debt, 50% equity Alternative C: Finance solely with debt a. Which of the three alternatives involves the g ...

Discuss how sensitivity analysis can be utilized in cost

Discuss how sensitivity analysis can be utilized in cost control using examples when preventative or detective objective measure values are not available.

Statement of retained earnings night scapes corp began the

Statement of Retained Earnings Night Scapes, Corp. began the year 2008 with $14 million in retained earnings. The firm suffered a net loss of $2.4 million in 2008 and yet paid $2.04 million to its preferred stockholders ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro