Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › BPP question Number 240
- This topic has 3 replies, 3 voices, and was last updated 8 months ago by P2-D2.
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- January 5, 2021 at 11:21 pm #601694
Hi Sir.
Question states :Platt Co has owned 60% of the issued equity share capital of Serpi Co for many years. At 31 October 20X7
the individual statements of financial position included the following
Platt Co
Serpi Co
Current assets
Current liabilities
700,000
300,000
500,000
200,000
Neither had a bank overdraft at 31 October 20X7.
During the year ended 31 October 20X7, Platt Co made $100,000 salesson credit to Serpi Co. Serpi Co had one-quarter of these goods in inventory at 31 October 20X7. Platt Co makes a 20% gross profit margin on all sales.On 31 October 20X7, Serpi Co sent a cheque for $50,000 to pay all of the outstanding balance due to Platt Co. Platt Co did not receive this cheque until 2 November 20X7.
Platt Co’s policy for in-transit items is to adjust for them in the parent company.
In respect of current assets and current liabilities, what amounts will be reported in Platt Co’s
consolidated statement of financial position at 31 October 20X7?—
It’s okay with PUP
But for Receivable and Payable I assume the question like this.
If the transaction has taken place for 100k and i am given 50k cheque to pay all the debt, then that means that there is still 50k receivable in Plattco, and 50k in serpi co. Because the overall amount of transaction was 100k, but we were sent 50k one to settle the all outstanding amount. Then Why dont we subtract 50 from both receivable and payable ?January 9, 2021 at 9:37 am #605327Hi,
It states in the question that the $50,000 is to pay all of the outstanding balance, so once this payment has been made there is then no further payments due on no receivable/payable in the accounts. What must have happened is that an initial payment of $50,000 has already been made prior to this final payment.
Thanks
February 28, 2024 at 4:41 pm #701387Hi Sir! Suppose that the company pays only part of its outstanding balance, should we then subtract the remaining balance from rec and payables
March 2, 2024 at 11:09 am #701666Yes, we only adjust for the outstanding balances.
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