Graystone Traders is a partnership business formed by Gray and Stone. Graystone Traders supplies concrete products...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Graystone Traders is a partnership business formed by Gray and Stone. Graystone Traders supplies concrete products to building contractors and the partnership has a 28 February year-end. Graystone Traders Extract: Statement of financial position as at 28 February 2018 Equity R Capital account: Gray 210 000 Capital account: Stone 450 000 Current account: Gray 212 660 Current account: Stone 252 865 The statement of profit or loss and other comprehensive income for the year ended 28 February 2019 showed a profit of R615 200, before taking into account the information below. Additional information: (i) Stone is paid a regular annual salary of R125 000 for the services he renders to the partnership. Gray is paid an annual salary of R75 000 depending on partnership profits. (ii) Gray obtained a loan from the partnership. Interest income of R15 300 was earned on this loan. (iii) On 1 September 2018, Gray increased his capital contribution by contributing an item of machinery with a fair value of R190 000. Depreciation on this machinery has been correctly accounted for in the profit calculated above. (iv) Stone withdrew R25 000 cash from the partnership on 1 June 2018. Interest on drawings is charged at 8% per annum. (v) Partners are paid interest on capital accounts at a rate of 7.5% per annum. (vi) Gray and Stone share the remaining profits in the ratio of 2:1 respectively. REQUIRED Question 2 (a) Prepare the Statement of changes in equity of Graystone Traders for the year ended 28 February 2019 (Show all workings). (b) List and briefly explain the advantages and disadvantages of forming a partnership. Adjustments and additional information: 1. Issued share capital consists of: 200 000 - Ordinary shares. 5 000 Non-redeemable preference shares. 2. The stock count at year-end revealed the following: Inventory R21 600 Consumable Stores R450 3. The vehicles were purchased on 1 January 2015. Vehicles have a useful life of 5 years and are depreciated on the straight-line method. No depreciation was calculated for the current year. 4. Equipment must be depreciated at 15% per annum on the diminishing balance method. 5. The bank statement revealed that the following transactions still had to be taken into consideration. An annual insurance premium of R1 200 had been paid by stop order. - A credit customer had deposited an amount of R660 directly into the company's bank account. The bank charged R54 interest on overdraft and R29 other bank charges. 6. Salaries owing at year-end amounted to R1 900. 7. The allowance for doubtful debts needs to be adjusted to R1 000. 8. Goodwill is to be completely written off. 9. Share issue expenses are to be written off. 10. Commission owing to World Cup Limited at year-end is R750. 11. Trophy (Pty) Ltd declared a dividend of R2 750, but this amount has not yet been received or recorded by World Cup Limited. 12. Company tax amounted to R11 500 for the year and has not yet been paid. 13. No provision has been made for the interest on debentures for the year. 14. The directors declared a dividend of 120c per preference share. 15. World Cup Limited paid an interim dividend of 2c per ordinary share on 30 June 2018. The directors declared a final dividend of 7c per ordinary share. REQUIRED Note: Show and reference all workings. Round off to the nearest Rand. (a) Prepare the Statement of profit or loss and other comprehensive income for the year ended 31 December 2018. (b) Prepare the Statement of financial position as at 31 December 2018 (Equity and Liabilities section only) Graystone Traders is a partnership business formed by Gray and Stone. Graystone Traders supplies concrete products to building contractors and the partnership has a 28 February year-end. Graystone Traders Extract: Statement of financial position as at 28 February 2018 Equity R Capital account: Gray 210 000 Capital account: Stone 450 000 Current account: Gray 212 660 Current account: Stone 252 865 The statement of profit or loss and other comprehensive income for the year ended 28 February 2019 showed a profit of R615 200, before taking into account the information below. Additional information: (i) Stone is paid a regular annual salary of R125 000 for the services he renders to the partnership. Gray is paid an annual salary of R75 000 depending on partnership profits. (ii) Gray obtained a loan from the partnership. Interest income of R15 300 was earned on this loan. (iii) On 1 September 2018, Gray increased his capital contribution by contributing an item of machinery with a fair value of R190 000. Depreciation on this machinery has been correctly accounted for in the profit calculated above. (iv) Stone withdrew R25 000 cash from the partnership on 1 June 2018. Interest on drawings is charged at 8% per annum. (v) Partners are paid interest on capital accounts at a rate of 7.5% per annum. (vi) Gray and Stone share the remaining profits in the ratio of 2:1 respectively. REQUIRED Question 2 (a) Prepare the Statement of changes in equity of Graystone Traders for the year ended 28 February 2019 (Show all workings). (b) List and briefly explain the advantages and disadvantages of forming a partnership. Adjustments and additional information: 1. Issued share capital consists of: 200 000 - Ordinary shares. 5 000 Non-redeemable preference shares. 2. The stock count at year-end revealed the following: Inventory R21 600 Consumable Stores R450 3. The vehicles were purchased on 1 January 2015. Vehicles have a useful life of 5 years and are depreciated on the straight-line method. No depreciation was calculated for the current year. 4. Equipment must be depreciated at 15% per annum on the diminishing balance method. 5. The bank statement revealed that the following transactions still had to be taken into consideration. An annual insurance premium of R1 200 had been paid by stop order. - A credit customer had deposited an amount of R660 directly into the company's bank account. The bank charged R54 interest on overdraft and R29 other bank charges. 6. Salaries owing at year-end amounted to R1 900. 7. The allowance for doubtful debts needs to be adjusted to R1 000. 8. Goodwill is to be completely written off. 9. Share issue expenses are to be written off. 10. Commission owing to World Cup Limited at year-end is R750. 11. Trophy (Pty) Ltd declared a dividend of R2 750, but this amount has not yet been received or recorded by World Cup Limited. 12. Company tax amounted to R11 500 for the year and has not yet been paid. 13. No provision has been made for the interest on debentures for the year. 14. The directors declared a dividend of 120c per preference share. 15. World Cup Limited paid an interim dividend of 2c per ordinary share on 30 June 2018. The directors declared a final dividend of 7c per ordinary share. REQUIRED Note: Show and reference all workings. Round off to the nearest Rand. (a) Prepare the Statement of profit or loss and other comprehensive income for the year ended 31 December 2018. (b) Prepare the Statement of financial position as at 31 December 2018 (Equity and Liabilities section only)
Expert Answer:
Answer rating: 100% (QA)
a Profit loss Ac and Other Comprehensive Income Sales 250832 Sales Returns 2150 Commission ... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
Posted Date:
Students also viewed these accounting questions
-
Statement of profit or loss and other comprehensive income Year ended 31 Nine-month Dec-18 period ended 31 Dec-17 Revenue 2,200,228 1,561,138 Cost of sales -1,199,154 -877,354 Gross profit 1,001,074...
-
The statement of financial position as at 31 December 20X2 of Zoom Products Ltd included: Trade receivables...............................85,360 The financial statements for the year ended 31...
-
The statement of comprehensive income for the years ended December 31, 2006 and 2007, plus selected items from comparative balance sheets of McClain Wholesalers, Inc., are as follows: There were no...
-
Historically, investment spending has experienced more extreme upward and downward swings than consumer spending. Why do you think this is so?
-
The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $800...
-
Using the solubility rules in Table 4.1 as a guide, predict whether an insoluble product forms when each of the following pairs of solutions is mixed. Write the balanced chemical equation if a...
-
A reversible process is a process (a) Which proceeds with no driving force (b) Which takes place spontaneously (c) Which is quasi-static (d) Which is frictional process.
-
Shannon Company is planning to produce 2,000 units of product in 2014. Each unit requires 3 pounds of materials at $5 per pound and a half-hour of labor at $15 per hour. The overhead rate is 70% of...
-
In the definition of culture, the key words are values, belief , idea and feelings a) Explain how each of those words fit in the definition of culture. b) Discuss the importance of those words in the...
-
i need an actual expert in Electrical engineering to help me solve this question as it has a part that requires "draw by hand" and another coding part, i need to have the actual correct full answer...
-
Be sure to refer to the OSI model while thinking about organizational needs as they apply to the following questions: Discuss when performance baselines should be taken, and how they should be used...
-
A man experiencing alcohol withdrawal is prescribed Hydroxyzine 40 mg IM q4h as needed. Hydroxyzine 50 mg per mL is available. How many milliliters contain the correct dose?
-
Children's Chewable Tylenol contains 8 0 mg of aceataminophen per tablet. If the reccomended dosage is 1 2 mg / kg , how many tablets are needed for a 6 6 lb child?
-
Organic Food Company's Cash account shows a $6,400 debit balance and its bank statement shows $5,790 on deposit at the close of business on August 31. August 31 cash receipts of $2,140 were placed in...
-
Mount Horse Company sells only two products, Product A and Product B. Product A Product B Total Selling price $40 $50 Variable cost per unit $24 $40 Total fixed costs $840,000 Mount Horse...
-
Your accounting firm is a medium-sized, national CPA firm with over 6,000 professionals. It is mid-January 2021, and you have been promoted to audit manager of the Pacific Northwest office. Your...
-
What is the cost of matching Enterprise? How much should Olympic be willing to spend for its Medalist program?
-
An example of prescriptive analytics is when an action is recommended based on previously observed actions. For example, an analysis might help determine procedures to follow when new accounts are...
-
Dare County, NC reports the following information about its compensated absence liabilities for fiscal 2010: Assume that liability reductions were cash payments to employees, andthat internal service...
-
Asiamart, Inc. was a U.S. company that operated shopping centers in Hong Kong. The shopping centers offered discounted international brands, to Chinese tourists brought to the shopping centers by...
-
Peak Entertainment acquires 60 percent of its subsidiary Saddlestone Inc. on January 1,2013. In preparing to consolidate Peak and Saddlestone at December 31,2013, we assemble the following...
-
Consider the equity prices of the United States companies Microsoft and Walmart for the period April 1990 to July 2004 ( \(T=172)\). (a) Compute the continuously compounded (log) returns on Microsoft...
-
(a) Use a histogram to graph the empirical distribution of the duration times between American Airline trades. Compare the graph with Figure 2.9. Figure 2.9. (b) Interpret the shape of the...
-
The forward market is efficient if the lagged forward rate is an unbiased predictor of the current spot rate. (a) Estimate the following model of the spot and the lagged 1-month forward rate \[...
Study smarter with the SolutionInn App