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tions shows the correct amount that must be disclosed as retained earnings in the statement of financial position of T-SmartCC as at 28 February 2017?...

Which one of the following options shows the correct amount that must be disclosed as 

retained earnings in the statement of financial position of T-SmartCC as at 28 February 

2017? 


1. R375 565 

2. R336 164 

3. R384 945 

4. R384 999 


Steve and Robert are the only members of T-SmartCC. They have an equal interest in 

the corporation and distribute profits accordingly.  

The following information is taken from the accounting records of the CC as at 28 February 2017, 

the financial year-end of the corporation. 


Member's contribution: Steve...................................................................R 80 000

Member's contribution: Robert ................................................................R 60 000

Retained earnings (1 March 2016) .........................................................R 285 817 

Loan from member: Steve (1 March 2016).............................................R 46 900 

Loan to member: Robert ........................................................................R 35 250 

Inventory (1 March 2016) ........................................................................R 33 006 

Trade receivables control ......................................................................R 45 900 

Trade payables control...........................................................................R 252 050 

Bank (Dr) .............................................................................................. R 36 200 

Sales.......................................................................................................R 552 262 

Investment (Lion Ltd) ..............................................................................R 130 000 

Interim profit distribution paid to members..............................................R 40 000 

Income received in advance ...................................................................R 7 330 

Prepaid expenses ...................................................................................R 5 500 

Rental income .........................................................................................R 36 650 

Purchases................................................................................................R 300 090 

Administrative, distribution and other expenses ......................................R 57 900 

Settlement discount on sales ..................................................................R 5 700 

SARS (Income tax) (Dr) ..........................................................................R 36 348 


Additional information: 


1. An invoice relating to carriage on purchases amounting to R9 450 was received on 28 February 2017 

and must still be taken into account.  

2. The closing inventory amounted to R40 500. 

3. The investment in Qabaqongo Ltd consist of 80 000 shares bought for R130 000 and was acquired in 

February 2016. The investment was acquired for trade purposes, on 15 February 2017 Qabaqongo 

Ltd declared a dividend of 20 cents per share payable on April 2017. On 28 February 2017 the fair 

value of the investment amounted to R170 000. 

4. Each member received a monthly salary of R4 500 paid in cash. Robert the managing member of 

T-SmartCC is entitled to a bonus of R10 000 payable in March 2017. These transactions 

were not recorded in the books of the close corporation. 

5. The actual income tax for the financial year amounted to R68 900 and must still be recorded. 

6. Interest must be recorded on the loan accounts to members at 11% per annum on the opening 

balance of any existing loans as well as on any additional loans granted. On 30 September 2016, an 

additional loan of R18 800 was granted to Robert and was correctly accounted for in the books of the 

close corporation. Interest on the loans to members is capitalised. All loans are unsecured and 

immediately callable. 

7. Interest on loans from members is calculated at 10% per annum and is not capitalised. 

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