QUESTION 1

PART A
Commission would be regarded as an expense in the current year.
definition of an expense
Cost incurred, which will result in a decrease in an asset or increase in a liability other than distributions
a liability is a present obligation, a
as a result of a past event,
which is expected to result in an outflow of the entity's resources
The business would need to pay the commission to the sales manager in the next financial year
The business transaction - every sale the manager makes he earns commission
The outflow, the actual payment made
PART B

a) 150 000 x 12 1800000

100 000 x 12 1200000
3000000

b) Liabiity
a present obligation, a
as a result of a past event,
which is expected to result in an outflow of the entity's resources
The business would need to provide the service as the money/ cash has already been received
The business transaction - the upfront payment received
The outflow, the services which the business would have to provide for the cash received
c)
Assets

An asset is a resource,
controlled by
the entity as a result of a past event, which future economic benefits are expected to flow to the entity

The resource would be the amount outstanding, the business was able to provided the services on credit
Control, access to the resource - the future economic benefit would be the cash received
The past event was the actual transaction which transpired which was when the contract was entered into
When the cash was received
 than distributions

o flow to the entity

e services on credit

ract was entered into

QUESTION 2

a) Statement of Changes of Equity

Opening Balance (128200+65000) 193200

Contribution 80000
Drawings -164530
Profit (322200-202850) 119350
Closing Balance 228020

b) 1 Juy 2018 - 31 December 2018

6 months
The business received R240 000 not all of this can be classified as income
240 000/ 24 000
10
The business received cash for 10 months

24 000 x 6
144000
Only R144 000 can be classified income for the period
Income is recorded when it is earned regardless of when payment is received
Income is increases in economic benefits during the accounting period in the form of
inflows or enhancements of assets or decreases of liabilities that result in increases in
equity, other than those relating to contributions from equity participants

240 000 - 144 000

96000
R96 000 should be regarded as a liability as the entity has not earned this portion

c) Expense. Expenses are decreases in economic benefits during the accounting

period in the form of outflows or depletions of assets or incurrences of liabilities that result in
decreases in equity, other than those relating to distributions to equity participants.

31 August 2018 - 28 February 2019

6 months
Only 6 months can be regarded as an expense for the period
68 600 / 9
R7622.22 per month
45733.33 will be advertising expense for the period
The remainder will be classified as an asset

Assets

An asset is a resource,
controlled by
the entity as a result of a past event,
which future economic benefits are expected to flow to the entity
Date ASSETS Owners Equity Liabilities
Effect Account Capital Income Expenses Drawings Effect Account
+195000 Bank +195000 2
+240000 Equipment +240000 Accounts Payable 2
3 -850 Bank 850 1
3 -5 670 Bank +22 680 Accounts Payable 1
+28 350 Supplies 1
5 +1 250 Accounts Receivable 1 250 1
+720 Bank +720 1
-2 820 +2 820 1
-22 680 Bank -22 680 Accounts Payable 1
+3 950 bank +3 950 Income received in advance 1
11 -65 Supplies +65 1
+500 Accounts Receivable +500 1
14 -6 320 +6 320 1
19 +500 Accounts Receivable +500 1
+2 250 Bank 1
-2 250 Accounts Receivable 1
+28 945 +28 945 1
25 -475 Bank +475 1
+265 Bank +265 1
+1 720 +1 720 Water and Electricity Payable 1
28 -24 530 Supplies -24 530 1

Statement of Profit or Loss for the month ended

Income 33030
Services Rendered
Expenses
Advertising 6320
Bank Charges 475
Supplies expense 24530
Water and Electricty 1720

Profit before interest

Interest incme 265

Profit for the year ended

QUESTION 3

PART A
Assets

An asset is a resource,
controlled by
the entity as a result of a past event,
which future economic benefits are expected to flow to the entity

The building is a resource to the business as it aids in providing the service needed
The resource is accessible for the aim of providing the service
The past event is the transcaction which transpired when entering the agreement
The building will unfortunately not be deemed as an asset to the business as the contractual
agreement in place between Sapho and the University.
He does not meet the 70% rate and is in arrears with payments

Liabiity
a present obligation, a
as a result of a past event,
which is expected to result in an outflow of the entity's resources

The present obligation would be that Sapho still owes students the service for the 2017 academic year
The students made upfront payment which raised the liability
The outflow of the resources would be the services which will be provided.
17 academic year
QUESTION 4
BANK
1 Capital 100,000 2 Rent Expense 1,800
4 Services Rendered 18,000 3 Stationery 3,200
15 Capital 20,000 24 water and Electricity 700
18 Accounts Receivable 10,500 25 Security Company 1,200
24 Services Rendered 23,000 26 Accounts Payable 3,200
balance c/d 161,400
171,500 171,500
Balance b/d 161,400

ACCOUNTS RECEIVABLE
10 Services Rendered 10,500 18 Accounts Receivable 18,000
12 Sales 5,600
17 Services Rendered 1,850 Balance c/d 18,050
21 Sales 18,100

36,050 36,050

Balance b/d 18,050

ACCOUNTS PAYABLE
26 Bank 3,200 8 Stationery 3,200
11 Equipment 12,200
18 Inventory 8,100
Balance c/d 27,720 23 Supplies 3,200
27 Inventory 4,220

30,920 30,920

balance b/d 27,720