Terrilson Trading is a company in the business of manufacturing parts for train wagons. Terri and Nilson formed this company in 2015 after they were both retrenched from their employment. The following information pertains to the business activities of the partnership for the year ended 31 August 2022. Extract from the statement of financial position as at 31 August 2022: 2022 2021 R R Land and buildings (at cost) 1,010,600 660,600 Equipment (at cost) 624,900 569,400 Accumulated depreciation: Equipment 175,200 74,400 Long-term loan 283,600 198,200 Members’ contributions 1,276,500 1,080,100 Retained earnings 231,200 79,700 Loans to members 98,100 34,100 Loans from members 118,700 - Distribution to members payable 78,200 108,600 Inventory 59,100 33,200 Dividend receivable 21,600 101,200 Trade payables control 137,000 66,900 Accrued security expenses 7,700 3,400 Current tax payable 62,200 40,000 Accrued rental income 6,200 5,500 Trade receivables control 108,600 101,800 Prepaid advertising expense 20,800 17,100 Investment (at cost) 202,900 - Bank 198,000 276,900 Extract from the statement of profit or loss and other comprehensive income for the year ended 31 August 2022: R Revenue from parts sold 832,200 Cost of sales 389,300 Fair value gain on listed investments 20,000 Investment income: dividend income 14,300 Rental income 41,100 Interest income on loans to members 13,700 Loss on sale of machinery 8,900 Other operating expenses 23,400 Telephone expenses 31,200 Interest expense on loans from members 16,400 Interest expense on long term loans 13,300 Income tax expense 124,600 Water and electricity 53,100 Repairs and maintenance 28,500 Depreciation on equipment 93,600 Additional information 1. Cash flows from operating activities are presented using the direct method. 2. Interest on loans advanced to and received from members is capitalised. All loans to members are immediately callable whilst the total amount owing to members is payable on 31 August 2024. 3. Equipment with a cost price of R32 200 and accumulated depreciation of R10 100 was sold for cash. A replacement equipment was bought on 30 June 2020. 4. The additional member’s contributions include a piece of land worth R90 000. 5. Investments consist of the following: · R58 900 Fixed deposit at Langa Bank (Maturity date – 30 Nov 2028) · 18 000 Ordinary shares in Kingston Limited, held for trading. 6. Profit distribution to members amounted to R44 000. 7. All inventories are purchased and sold on credit. Which of the following alternatives represents the correct amount that must be disclosed as cash receipts from customers under cash flows from operating activities section in the statement of cash flows for Terrilson Trading CC for the year ended 31 August 2022? a. (824,700) b. 865,800 c. (865,800) d. 824,700

Terrilson Trading is a company in the business of manufacturing parts for train wagons. Terri and Nilson formed this company in 2015 after they were both retrenched from their employment. The following information pertains to the business activities of the partnership for the year ended 31 August 2022. Extract from the statement of financial position as at 31 August 2022: 2022 2021 R R Land and buildings (at cost) 1,010,600 660,600 Equipment (at cost) 624,900 569,400 Accumulated depreciation: Equipment 175,200 74,400 Long-term loan 283,600 198,200 Members’ contributions 1,276,500 1,080,100 Retained earnings 231,200 79,700 Loans to members 98,100 34,100 Loans from members 118,700 - Distribution to members payable 78,200 108,600 Inventory 59,100 33,200 Dividend receivable 21,600 101,200 Trade payables control 137,000 66,900 Accrued security expenses 7,700 3,400 Current tax payable 62,200 40,000 Accrued rental income 6,200 5,500 Trade receivables control 108,600 101,800 Prepaid advertising expense 20,800 17,100 Investment (at cost) 202,900 - Bank 198,000 276,900 Extract from the statement of profit or loss and other comprehensive income for the year ended 31 August 2022: R Revenue from parts sold 832,200 Cost of sales 389,300 Fair value gain on listed investments 20,000 Investment income: dividend income 14,300 Rental income 41,100 Interest income on loans to members 13,700 Loss on sale of machinery 8,900 Other operating expenses 23,400 Telephone expenses 31,200 Interest expense on loans from members 16,400 Interest expense on long term loans 13,300 Income tax expense 124,600 Water and electricity 53,100 Repairs and maintenance 28,500 Depreciation on equipment 93,600 Additional information 1. Cash flows from operating activities are presented using the direct method. 2. Interest on loans advanced to and received from members is capitalised. All loans to members are immediately callable whilst the total amount owing to members is payable on 31 August 2024. 3. Equipment with a cost price of R32 200 and accumulated depreciation of R10 100 was sold for cash. A replacement equipment was bought on 30 June 2020. 4. The additional member’s contributions include a piece of land worth R90 000. 5. Investments consist of the following: · R58 900 Fixed deposit at Langa Bank (Maturity date – 30 Nov 2028) · 18 000 Ordinary shares in Kingston Limited, held for trading. 6. Profit distribution to members amounted to R44 000. 7. All inventories are purchased and sold on credit. Which of the following alternatives represents the correct amount that must be disclosed as cash receipts from customers under cash flows from operating activities section in the statement of cash flows for Terrilson Trading CC for the year ended 31 August 2022? a. (824,700) b. 865,800 c. (865,800) d. 824,700

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter23: Accounting For Partnerships

Section: Chapter Questions

Problem 3AP

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Question

Extract from the statement of financial position as at 31 August 2022:

	2022	2021
	R	R
Land and buildings (at cost)	1,010,600	660,600
Equipment (at cost)	624,900	569,400
Accumulated depreciation: Equipment	175,200	74,400
Long-term loan	283,600	198,200
Members’ contributions	1,276,500	1,080,100
Retained earnings	231,200	79,700
Loans to members	98,100	34,100
Loans from members	118,700	-
Distribution to members payable	78,200	108,600
Inventory	59,100	33,200
Dividend receivable	21,600	101,200
Trade payables control	137,000	66,900
Accrued security expenses	7,700	3,400
Current tax payable	62,200	40,000
Accrued rental income	6,200	5,500
Trade receivables control	108,600	101,800
Prepaid advertising expense	20,800	17,100
Investment (at cost)	202,900	-
Bank	198,000	276,900

Extract from the statement of profit or loss and other comprehensive income for the year ended 31 August 2022:

	R
Revenue from parts sold	832,200
Cost of sales	389,300
Fair value gain on listed investments	20,000
Investment income: dividend income	14,300
Rental income	41,100
Interest income on loans to members	13,700
Loss on sale of machinery	8,900
Other operating expenses	23,400
Telephone expenses	31,200
Interest expense on loans from members	16,400
Interest expense on long term loans	13,300
Income tax expense	124,600
Water and electricity	53,100
Repairs and maintenance	28,500
Depreciation on equipment	93,600

Additional information

1. Cash flows from operating activities are presented using the direct method.

2. Interest on loans advanced to and received from members is capitalised. All loans to members are immediately callable whilst the total amount owing to members is payable on 31 August 2024.

3. Equipment with a cost price of R32 200 and accumulated depreciation of R10 100 was sold for cash. A replacement equipment was bought on 30 June 2020.

4. The additional member’s contributions include a piece of land worth R90 000.

5. Investments consist of the following:

· R58 900 Fixed deposit at Langa Bank (Maturity date – 30 Nov 2028)

· 18 000 Ordinary shares in Kingston Limited, held for trading.

6. Profit distribution to members amounted to R44 000.

7. All inventories are purchased and sold on credit.

Which of the following alternatives represents the correct amount that must be disclosed as cash receipts from customers under cash flows from operating activities section in the statement of cash flows for Terrilson Trading CC for the year ended 31 August 2022?

(824,700)

865,800

(865,800)

824,700

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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