Exploring Financial Statements and Statutory Requirements in Close Corporations
Question 4 (15 Marks)
Sampi CC managed by Shapi and Haingura was incorporated on 1 March 2010 with each member contributing N$400,000 each. The members share profit and losses equally. The business deals with horticultural commodities. The financial year ends on 30 April each year.
Sampi CC post-adjustment trial balance at 30 April 2022 is as follows:
DR CR
Member’s contribution 800,000
Undrawn profit: 30 April 2021 120,000
Accounts payable 80,000
Accounts receivable 120,000
Furniture & Equipment: Cost 240,000
Accumulated depreciation: Furniture & Equipment 80,000
Land and Buildings (cost) 1,040,000
Accumulated depreciation: Building 80,000
Short-term loan: Shapi 126,000
Short-term loan: Haingura 42,000
Mortgage bond 112,000
Profit or loss 80,000
Inventory 100,000
Bank 20,000
Total Assets 1,410,000
Total Liabilities 356,000
Total Current Assets 290,000
How to solve
Current Assets
Accounts receivable 120,000
Inventory 100,000
Bank 70,000
Total Current Assets 290,000
Total Assets 1,410,000
Liabilities
Non-Current Liabilities
Mortgage bond 112,000
Current Liabilities
Accounts payable 80,000
Short-term loan: Shapi 124,000
Short-term loan: Haingura 40,000
Total Current Liabilities 244,000
Total Liabilities 356,000
Equity
Member's contribution 850,000
Undrawn profit 120,000
Profit or loss 84,000
Total Equity 1,054,000
Total Liabilities and Equity 1,410,000
Required:
1. Prepare the statement of financial position as at 30 April 2022. (10 Marks)
2. Explain the statutory requirements in respect of the appointment and duties of the Accounting Officer in close corporations. (5 Marks)
How can the statement of financial position be prepared for Sampi CC as at 30 April 2022?
The statement of financial position for Sampi CC as at 30 April 2022 can be prepared by calculating the total assets, total liabilities, and total equity based on the given information in the post-adjustment trial balance.
Assets include current assets such as accounts receivable, inventory, and bank balance, as well as non-current assets like land, buildings, and furniture & equipment. Liabilities consist of accounts payable, short-term loans, and mortgage bond. Equity comprises member's contributions, undrawn profit, and profit or loss.
By summing up the values in each category, the statement of financial position can be accurately presented for Sampi CC as at 30 April 2022.