Financial Accounting N6 Assignment 2

Assignment Task

Question

The following information was extracted from the financial records of Zanzi Ltd. The preadjustment trial balance on 30 June 2016 is reflected below:

Additional information

1. On 1 July 2015, the reserves consisted of the following:

Retained income R65 000

General reserve R125 000

Revaluation reserve on land and buildings R210 000

2. Zanzi Ltd was incorporated on 1 July 2002 with an authorised share capital of R2 062 500, which consists of:

• 1 000 000 ordinary shares at R1.50 each.
• 250 000 8% preference shares at R2.25 each.

A fresh issue of 50 000 ordinary shares was made during the July 2015/June 2016 financial year at an issuing price of R2.25 per share. The issue has been properly recorded. On 30 June 2016, only 75% of the ordinary shares and all 8% preference shares had been issued.

3. The land and buildings are situated on Lot 412, Montague Gardens, which was purchased on 10 June 2006 at a cost of R630 000 and was valued at R840 000 on 30 June A second revaluation was done on 30 June 2016, by Mr Motto, and the value was increased to R1 000. The valuations will be done every five years. The second revaluation, done during the past financial year, has not been recorded.

4. During the financial year, the following transactions were recorded with regard to equipment and vehicles:

• An old vehicle (cost price R235 000, accumulated depreciation R85 000 on date of sale) was traded in for a new vehicle (cost price R365 000). Depreciation on vehicles of R68 770 was written off at the end of this financial year and recorded as
• New equipment of R90 000 was bought during this financial Depreciation on equipment of R32 350 was written off at the end of this financial year and recorded as such.

5. The long-term loan was negotiated on 1 July 2013, and is redeemable in 10 equal annual instal- ments as from 1 July

6. Included in the amount for ‘debtors’ is a provisional tax payment to SARS of R36 000 which was made on 31 August

7. The following must still be taken into account: Rent income of R39

R16 000 of the preliminary expenses must be written off against the share premium. Transfer to general reserve of R15 500.

Dividends on preference shares.

Dividends on ordinary shares at 4c per share. SA normal taxation for the year equals R55 060

Required

1. Draft the statement of changes in equity for the year ended 30 June 2016 [60]

2. Draft the statement of financial position (balance sheet) of Zanzi Ltd at 30 June 2016 in com- pliance with the requirements of the Companies Act (Act 71 of 2008) and the International Financial Reporting Standards (IFRS).

3. ONLY the following note to the statement of financial position is required: Land and buildings, equipment and vehicles.

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