FAC3701 ASSIGNMENT 2 SEMESTER 1

FAC3701 ASSIGNMENT SEMESTER 1 THIS QUESTION CONSISTS OF 2 INDEPENDENT PARTS P RTA A (21 marks) The profit before tax of Blue Ltd for the year ended 31 December 2013 amounted to R896 000, after taking the following into account: R Dividends received 25 000 Penalty on VAT paid 2 200 The following is an extract from the trail balance of Blue Ltd: 31 December 2013 31 December 2012 R R Dr/(Cr) Dr/(Cr) Rent received in advance (80 000) (35 000) Subscriptions paid in advance After the draft financial statements for the year ended 31 December 2013 had been prepared, the directors of the company decided to change the accounting policy with respect to the valuation of inventory from the weighted average method to the first-in, first-out (FIFO) method, in order to comply with International Financial Reporting Standards. This change in inventory valuation method has already been recorded in the accounting records of Blue Ltd for the year ended 31 December 2013. The value of inventory based on the different valuation methods is as follows: First-in, first out method R 31 December 31 December 31 December 201