Financial Statements Analysis, Exams of Finance

Download Financial Statements Analysis and more Exams Finance in PDF only on Docsity! IMPORTANT INFORMATION: This tutorial letter contains the self-assessment assignment with solution as well as additional questions with solutions. FAC1502 FINANCIAL ACCOUNTING CONCEPTS, PRINCIPLES AND PROCEDURES WITH BEST SOLUTION Tutorial Letter 2024 Semesters 1 & 2 Department of Financial Accounting 2 CONTENTS Page 1. SELF-ASSESSMENT ASSIGNMENT......................................................................................... 3 2. ADDITIONAL QUESTIONS ...................................................................................................... 31 3. SOLUTIONS TO THE ADDITIONAL QUESTIONS ................................................................... 52 5 QUESTION 1 (30 marks)(35 minutes) The following information was extracted from the accounting records of SS Supermarket: 1. Balances at 1 March 20.1: R Vehicles at cost ................................................................................................................ 28 000 Equipment at cost .............................................................................................................. 2 800 Accumulated depreciation: Vehicles ................................................................................. 14 268 Accumulated depreciation: Equipment............................................................................ 543 2. The following transactions in respect of non-current assets took place during the year: 2.1 On 31 August 20.1, SS Supermarket sold their delivery vehicle to Mrs Peterson for R7 200 cash. The proceeds from this sales transaction was used to help finance the purchase of another vehicle on the same date from Cape Motors Ltd for R22 000 cash. The cost price of the vehicle sold was R12 000, and its accumulated depreciation amounted to R6 455 on 1 March 20.1. 2.2 On 28 February 20.2, SS Supermarket sold a used printer to Mr Moon for R720 cash. The cost price of the printer was R900. The accumulated depreciation on this printer amounted to R164 at 1 March 20.1. 3. Depreciation must still be provided for as follows: Vehicles at 20% per annum on the diminishing-balance method Equipment at 10% per annum on the diminishing-balance method 4. The financial year commences on 1 March. REQUIRED: Marks Prepare the following general ledger accounts of SS Supermarket, properly balanced/closed, for the year ended 28 February 20.2: (a) Vehicles (at cost) 4 (b) Equipment (at cost) 3 (c) Accumulated depreciation: Vehicles 8 (d) Accumulated depreciation: Equipment 5 (e) Realisation 4 (f) Depreciation 6 [30] QUESTION 2 (18 marks)(20 minutes) 6 1. The following information relates to Wise Limited: 1.1 Bank statement for October 20.1 Date Details Debit Credit Balance 1 2 4 5 10 13 15 18 22 28 29 30 Balance Deposit Cheque no. 797 Cheque no. 828 Deposit Cheque no. 829 Cheque no. 831 Cheque no. 830 Cheque no. 832 Deposit Cheque no. 834 Deposit Cheque no. 835 Deposit M Moosa (R/D Cheque) Direct transfer Bank charges R 250 216 294 740 80 628 278 340 48 12 R 13 242 700 320 547 510 484 1 200 R 13 242 13 942 13 692 13 476 13 796 13 502 12 762 12 682 12 054 12 601 12 323 12 833 12 493 12 977 12 929 14 129 14 117 1.2 Cash receipts journal for October 20.1 Date Details Amount 3 14 22 26 29 S Smith (debtor) Cash sales M Mohammed (debtor) Cash sales D de Beer (debtor) R 320 547 510 484 253 1.3 Cash payments journal for October 20.1 Date Details Cheque no. Amount 4 5 6 10 12 17 27 29 Telkom SA Ltd P Paxton (creditor) S Nel Ltd B Baloyi (creditor) Computer Sales Ltd J Johnson (creditor) W Wise W Wilson (creditor) S Nel Ltd 828 829 830 831 832 833 834 835 836 R 216 294 80 740 628 153 278 340 58 7 FAC1502/102 QUESTION 2 (continued) 2. Additional information 2.1 Wise Limited reconciled the cash payments journal, cash receipts journal and bank statement balance on 30 September 20.1, finding the following outstanding: Cheque number 794 R162 Cheque number 797 R250 Deposit R700 2.2 The bank account balance in the trial balance on 30 September 20.1 was R13 530 (favourable). 2.3 The transfer on 30 October 20.1 to the current bank account was for interest on an investment. REQUIRED: Marks (a) Complete the cash payments journal and cash receipts journal of Wise Limited (including transactions given) for October 20.1. (b) Prepare the bank account in the general ledger of Wise Limited, properly balanced at 31 October 20.1. (c) Prepare the bank reconciliation statement of Wise Limited as at 31 October 20.1. 8½ 2½ 7 [18] QUESTION 4 (27 marks)(30 minutes) 10 1. The following is an extract from the general ledger of Smart Boutique for December 20.1: Dr Trade receivables control Cr 20.1 Dec 1 31 Balance (correct) b/d Bank (total: trade receivables column) Settlement discount granted Credit sales Drawings Purchases returns (credit purchases) R 15 670 45 495 685 48 165 150 2 131 20.1 Dec 31 Sales returns (credit sales) Bank (R/D cheque) Credit purchases Cash purchases Settlement discount received Bank (total: trade payables column) Balance c/d R 2 220 425 33 801 1 008 275 3 980 70 587 112 296 112 296 20.2 Jan 1 Balance b/d 70 587 2. Additional information 2.1 An inexperienced bookkeeper prepared the trade receivables control account. 2.2 In addition to the errors made in the trade receivables control account above, an investigation revealed the following: ⚫ The total of the trade receivables balances as per the list of trade receivables at 31 December 20.1 amounted to R16 060. ⚫ An amount of R115, which has been written off as credit losses, has erroneously been added to the credit sales amount of R48 165. This entry has been posted correctly to the applicable account in the trade receivables ledger. ⚫ The sales journal was overcast by R420. ⚫ Credit sales of R170 was posted correctly to the sales account and the trade receivables control account in the general ledger, but was not posted to the specific debtor’s account in the trade receivables ledger. ⚫ Credit note number 003 for R70 was recorded correctly in the sales returns journal but posted to the wrong side of the personal account of the debtor in the trade receivables ledger. ⚫ The trade receivables column in the cash receipts journal includes an amount of R195 being a cash settlement discount received from a creditor. ⚫ The purchases journal was under-cast by R718. ⚫ An account of R1 603 for freight on credit sales was received from Quick Transport. The cost of the freight must still be accounted for in the accounting records. ⚫ The R/D cheque of R425 was the cheque of a debtor in payment of his account. The cheque was returned because the debtor had insufficient funds to cover the cheque. ⚫ On 1 December 20.1, the balance of the trade payables control account amounted to R8 340. REQUIRED: Marks (a) Prepare the correct, properly balanced trade receivables and trade payables control accounts for Smart Boutique for December 20.1. (b) Prepare the reconciliation of the total of the list of trade receivables balances with the final balance of the trade receivables control account as calculated in question (a) above. 23 4 [27] 11 QUESTION 5 (32 marks)(40 minutes) The following information pertains to the Sharks Diving Club: 1. Trail balance as at 31 March 20.1: Bar purchases ................................................................................................................... Bar inventory - 1 April 20.0 ................................................................................................ Bar sales ........................................................................................................................... Bar wages ......................................................................................................................... Crockery and linen at cost - 1 April 20.0 ............................................................................ Furniture at cost price - 1 April 20.0................................................................................... General expenses ............................................................................................................. Diving fees received .......................................................................................................... Equipment at cost.............................................................................................................. Vehicles at cost ................................................................................................................. Accumulated depreciation -1 April 20.0 - Furniture...................................................................................................................... - Equipment ................................................................................................................... - Vehicles....................................................................................................................... Insurance in arrears - 1 April 20.0 ..................................................................................... Maintenance...................................................................................................................... Salaries and wages ........................................................................................................... Stationery consumed......................................................................................................... Membership fees received ................................................................................................ Membership fees in arrears - 1 April 20.0 .......................................................................... Membership fees prepaid - 1 April 20.0 ............................................................................. Donation received ............................................................................................................. R 60 000 5 000 100 000 15 000 10 000 30 000 8 200 33 900 24 000 35 000 9 000 4 800 5 000 600 20 100 48 000 6 000 101 000 15 000 20 000 2 000 2. Additional information 2.1 Bar inventory at 31 March 20.1 was R10 000. 2.2 At 31 March 20.1, the crockery and linen were valued at R3 000. 2.3 Furniture with a cost price of R5 000 and accumulated depreciation of R1 500 on 1 April 20.0 was sold for R3 000 on 30 June 20.0. This transaction must still be recorded in the accounting records. 2.4 Depreciation must be provided for as follows: Furniture at 10% per annum on the cost price. Equipment at 20% per annum on the diminishing balance method. Vehicles at 25% per annum on the diminishing balance method. 2.5 Insurance premiums to the amount of R2 600 was paid during the year and debited to the general expenses account. This included an amount of R1 000 in prepaid insurance premiums. 2.6 The club had 190 members during the current financial year. Membership fees amounts to R500 per member per annum. All of the members paid their membership fees for the current year. R7 500 of the membership fees that were in arrears of on 1 April 20.0, must be written off as irrecoverable. 2.7 During the current year, 20 new members joined the club. Each member paid their entrance fee of R50. However, the entrance fees received were erroneously included with the amount for membership fees received and recorded as such. According to the constitution of the club, entrance fees must be capitalised. The error must be corrected. 2.8 The salary of the club secretary for March 20.1 of R1 500 must still be paid and provided for. QUESTION 5 (continued) 12 REQUIRED: Marks Prepare the following for Sharks Diving Club: (a) The membership fees general ledger account for the year ended 31 March 20.1, properly balanced. 8 (b) The income and expenditure statement for the year ended 31 March 20.1. (Show a separate calculation for the gross profit of the bar.) 24 [32] QUESTION 6 (20 marks)(25 minutes) F Fortune runs a small business from home and does not keep proper accounting records. He needs to calculate his profit or loss for income tax purposes and requests your assistance. You establish the following: 1. Balances on 30 April 20.1 R 20.2 R Furniture at cost (Purchased on 30 April 20.1) ............................................. Tools and equipment at cost (Purchased on 30 April 20.1)........................... Inventory: Trading ........................................................................................ Bank (favourable) ......................................................................................... Bank overdraft .............................................................................................. Long-term borrowing .................................................................................... Trade payables ............................................................................................ Income received in advance ......................................................................... Accrued expenses........................................................................................ 12 500 23 250 4 900 - 3 250 7 000 2 600 1 900 800 12 500 23 250 5 100 1 240 - 4 600 3 060 2 500 650 2. Additional information 2.1 F Fortune drew R50 000 during the year for own use. 2.2 Provision still needs to be made for depreciation at 20% per annum on the cost price of furniture and that of tools and equipment. REQUIRED: Marks (a) Calculate the estimated profit/loss of F Fortune for the year ended 30 April 20.2. (b) Prepare the statement of financial position of F Fortune as at 30 April 20.2. 13 7 [20] QUESTION 1 (continued) 15 Calculations 1. Depreciation on vehicle sold (31 August 20.1) Cost Less: Accumulated depreciation R 12 000,00 6 455,00 Carrying amount at 1 March 20.1 5 545,00 Depreciation for next 6 months (R5 545,00 x 20/100 x 6/12) 554,50 Total accumulated depreciation on vehicle sold (R6 455,00 + R554,50) 7 009,50 2. Depreciation on vehicles (28 February 20.2) Existing vehicle New vehicle Cost (R28 000 - R12 000) Less: Accumulated depreciation (R14 268 - R6 455) R 16 000,00 7 813,00 R 22 000,00 - Carrying amount 8 187,00 22 000,00 Depreciation: current year (R8 187 x 20/100) and (R22 000 x 20/100 x 6/12) 1 637,40 2 200,00 Total (R1 637,40 + R2 200,00) = R3 837,40 3. Depreciation on equipment (28 February 20.2) Existing equipment Equipment sold Cost (R2 800 - R900) Less: Accumulated depreciation (R543 - R164) R 1 900,00 379,00 R 900,00 164,00 Carrying amount 1 521,00 736,00 Depreciation: current year (R1 521 x 10/100) and (R736 x 10/100) 152,10 73,60 Total (R152,10 + R73,60) = R225,70 NB: The equipment was sold on the last day of the financial year. A proportional calculation of depreciation is thus unnecessary. QUESTION 2 (18 marks) 16 (a) WISE LIMITED CASH RECEIPTS JOURNAL (BANK COLUMN ONLY) - OCTOBER 20.1 Date Details Bank R 3 S Smith/trade receivables control 320 14 Cash sales 547 22 M Mohammed/trade receivables control 510 26 Cash sales 484 29 D de Beer/trade receivables control 253 30 Interest income 1 200 3 314 (3) WISE LIMITED CASH PAYMENTS JOURNAL (BANK COLUMN ONLY) - OCTOBER 20.1 Date Details Cheque No Bank R 4 Telkom 828 216 5 P Paxton/trade payables control 829 294 6 S Nel Ltd 830 80 10 B Baloyi/trade payables control 831 740 Computer Sales Ltd 832 628 12 J Johnson/trade payables control 833 153 17 W Wise 834 278 27 W Wilson/trade payables control 835 340 29 S Nel Ltd 836 58 M Moosa/trade receivables control 48 30 Bank charges 12 2 847 (51/2) (b) Dr Bank Cr 20.1 Oct 1 31 Balance Total receipts b/d CRJ R 13 530 3 314 20.1 Oct 31 Total payments Balance CPJ c/d R 2 847 13 997 16 844 16 844 20.1 Nov 1 Balance b/d 13 997 (2½) FAC1502/102 QUESTION 2 (continued) 17 (c) WISE LIMITED BANK RECONCILIATION STATEMENT AT 31 OCTOBER 20.1 Debit Credit R R Credit balance (favourable) as per bank statement 14 117 Outstanding cheques: No 794 162 No 833 153 No 836 58 Outstanding deposit 253 Debit balance (favourable) as per bank account 13 997 14 370 14 370 (7) QUESTION 3 (96 marks) (a) SINAMUVA DISTRIBUTORS GENERAL JOURNAL - 31 DECEMBER 20.1 20.1 Dec 31 Inventory: Packaging material Packaging material Packaging material on hand at 31 December 20.1 Fol Debit Credit R 980 R 980 Interest on loan Accrued expenses Interest on loan still payable (a) 1 125 1 125 Prepaid expenses Advertisements Advertisements paid in advance 400 400 Rental income Income received in advance Rent received in advance (b) 1 200 1 200 Accrued income Interest on investment Interest on investment not yet received (c) 1 000 1 000 Prepaid expenses Insurance Insurance prepaid (d) 625 625 QUESTION 3 (continued) 20 (b) Closing journal entries - December 20.1 Sales Settlement discount granted Closing off and transfer of settlement discount granted to sales R 380 R 380 Sales Sales return Closing off and transfer of sales returns to sales 1 200 1 200 Sales (R381 790 – R380 – R1 200) Trading account Closing off and transfer of sales to trading account 380 210 380 210 Settlement discount received Cost of sales Closing off and transfer of settlement discount to cost of sales 650 650 Trading Account Cost of sales (R165 400 – R650) Closing off and transfer of cost of sales account to trading account 164 750 164 750 Trading Account Profit or loss Transfer of gross profit 215 460 215 460 Rental income (R15 600 - R1 200) Interest on investment (R5 000 + R1 000) Credit losses recovered Profit or loss Closing off of above accounts against profit or loss account 14 400 6 000 120 20 520 Profit or loss Wages Salaries Assessment rates Licences Vehicle expenses Credit losses (R550 + R200 - R50) Packaging material (R4 700 - R980) Insurance (R2 250 - R625) Water and electricity Telephone expenses (R1 400 + R165) Advertising (R2 000 - R400) Interest on loan Depreciation Closing off of above accounts against profit or loss account 51 824 2 000 25 000 1 500 1 000 3 500 700 3 720 1 625 2 100 1 565 1 600 1 125 6 389 Profit or loss Capital Transfer of profit to capital account 184 156 184 156 (16) FAC1502/102 QUESTION 3 (continued) 21 Dr Trading account Cr 20.1 Dec 31 Cost of sales (R165 400 - R650) Profit or loss account (Gross profit) R 20.1 Dec 31 Sales (R381 790 – R380 – R1 200) R 164 750 215 460 380 210 380 210 380 210 (2) Dr Profit or loss account Cr 20.1 R 20.1 R Dec 31 Wages 2 000 Dec 31 Trading account Salaries 25 000 (Gross profit) 215 460 Assessment rates 1 500 Rental income 14 400 Licences 1 000 Interest on investment 6 000 Vehicle expenses 3 500 Credit losses recovered 120 Credit losses 700 Packaging material 3 720 Insurance 1 625 Water and electricity 2 100 Telephone expenses 1 565 Advertising 1 600 Interest on loan 1 125 Depreciation 6 389 Capital (Total comprehen- sive income for the year) 184 156 235 980 235 980 (16) QUESTION 3 (continued) 22 (c) SINAMUVA DISTRIBUTORS STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 20.1 R Revenue (R381 410 - R1 200) 380 210 Cost of sales (164 750) Gross profit 215 460 Other income 20 520 Rental income 14 400 Credit losses recovered 120 Interest on investment 6 000 Distribution, administrative and other expenses 235 980 (50 699) Wages 2 000 Salaries 25 000 Assessment rates 1 500 Licences 1 000 Vehicle expenses 3 500 Credit losses [R550 + R200 – (R300 – R50)] 700 Packaging material 3 720 Insurance 1 625 Water and electricity 2 100 Telephone expenses 1 565 Advertising 1 600 Depreciation 6 389 Finance charges: Interest on loan (1 125) Profit for the year 184 156 Other comprehensive income for the year - Total comprehensive income for the year 184 156 (21) (d) SINAMUVA DISTRIBUTORS STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 20.1 Balance at 1 January 20.1 Total comprehensive income for the year Capital R 141 700 184 156 Balance at 31 December 20.1 325 856 (4) FAC1502/102 QUESTION 4 (27 marks) 25 (a) SMART BOUTIQUE GENERAL LEDGER Dr Trade receivables control Cr 20.1 Dec 1 31 Balance Bank (R/D cheques) Sales (R48 165 - R115 - R420) b/d R 15 670 425 47 630 20.1 Dec 31 Bank and settlement discount granted (R45 495 - R195) Sales returns Credit losses Balance c/d R 45 300 2 220 115 16 090 63 725 63 725 20.2 Jan 1 Balance b/d 16 090 (13) Dr Trade payables control Cr 20.1 Dec 31 Purchases returns Bank and settlement discount received Balance c/d R 2 131 3 980 38 351 20.1 Dec 1 31 Balance Purchases (R33 801 + R718) Freight on sales b/d R 8 340 34 519 1 603 44 462 44 462 20.2 Jan 1 Balance b/d 38 351 (10) (b) Reconciliation: R Total of list of trade receivables balances 16 060 Add: Sales 170 16 230 Less: Sales returns correction (R70 x 2) 140 Balance trade receivables control account 16 090 (4) QUESTION 5 (32 marks) 26 (a) SHARKS DIVING CLUB GENERAL LEDGER Dr Membership fees Cr 20.0 Apr 1 20.1 Mar 31 Accrued income Entrance fees Income and expenditure (190 x R500) Income received in advance R 15 000 1 000 95 000 17 500 20.0 Apr 1 20.1 Mar 31 Income received in advance Bank Credit losses R 20 000 101 000 7 500 128 500 128 500 20.1 Apr 1 Income received in advance 17 500 (8) *Analysis of membership fees received: Membership fees in arrear at the beginning of the year Membership fees received for the current year (R95 000 - R20 000) Membership fees received in advance at the end of the year R 7 500 75 000 17 500 100 000 (b) SHARKS DIVING CLUB INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 31 MARCH 20.1 Income R 160 900 Membership fees 95 000 Donation received 2 000 Diving fees received 33 900 Bar income 30 000 Bar gross profit (a) 45 000 Bar wages (15 000) Expenditure (111 040) General expenses (R8 200 - R2 600) 5 600 Insurance (R2 600 - R1 000 - R600) 1 000 Maintenance 20 100 Salaries and wages (R48 000 + R1 500) 49 500 Stationery 6 000 Credit losses 7 500 Depreciation [(R2 625 + R3 840 + R7 500 + R7 000] (b) 20 965 Loss on sale of furniture (c) 375 Surplus for the year 49 860 (24) FAC1502/102 QUESTION 5 (continued) 27 Calculations (a) Bar gross profit Bar sales Cost of sales R 100 000 (55 000) Bar inventory - 1 Apr 20.0 Bar purchases 5 000 60 000 Bar inventory - 31 Mar 20.1 65 000 (10 000) Gross profit 45 000 (b) Depreciation (i) Furniture - 10% per annum on cost price R30 000 - R5 000 = R25 000 R25 000 x 10% = R2 500 R5 000 x 10% x 3/12 = R 125 R2 625 (ii) Equipment - 20% per annum on the diminishing-balance method (R24 000 - R4 800) = R19 200 x 20% = R3 840 (iii) Vehicles - 25% per annum on the diminishing-balance method (R35 000 - R5 000) = R30 000 x 25% = R7 500 (iv) Crockery and linen (R10 000 - R3 000) = R7 000 (c) Loss on sale of furniture R5 000 - (R1 500 + R125) = R3 375 R3 375 - R3 000 = R375 QUESTION 6 (continued) 30 F FORTUNE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 20.2 1 Property, plant and equipment Furniture Tools and Equipment Total Carrying amount: Beginning of year R 12 500 R 23 250 R 35 750 Cost Accumulated depreciation 12 500 - 23 250 - 35 750 - Additions Depreciation for the year - (2 500) - (4 650) - (7 150) Carrying amount: End of year 10 000 18 600 28 600 Cost Accumulated depreciation 12 500 (2 500) 23 250 (4 650) 35 750 (7 150) FAC1502/102 31 2. ADDITIONAL QUESTIONS QUESTION 1 (28 marks)(34 minutes) At 31 March 20.5, Moon Traders had the following general ledger balances before any adjustments were made: MOON TRADERS PRE-ADJUSTMENT BALANCES AT 31 MARCH 20.5 R Rental income ........................................................................................................................ 64 000 Stationery ............................................................................................................................... 3 350 Capital .................................................................................................................................... 149 000 Drawings ................................................................................................................................ 6 084 Accumulated depreciation: Equipment ................................................................................... 15 000 Commission income ............................................................................................................... 2 700 Credit losses .......................................................................................................................... 1 600 Property (at fair value) ............................................................................................................ 350 000 Equipment (at cost)………………………………………………………………............................ 34 000 Bank (favourable) .......................………...………………………………………………………… 24 208 Trade receivables control ....................................................................................................... 26 100 Interest on mortgage .............................................................................................................. 23 870 Municipal tax .......................................................................................................................... 4 333 Insurance ............................................................................................................................... 2 405 Mortgage .................................................................................. ………………………………… 248 000 Water and electricity…………... .............................................................................................. 2 750 Additional information 1. The following errors and problems were identified: 1.1 Moon Traders had 5 tenants, each paying different rental amounts. At the end of March 20.5, one of Moon Trader’s tenants owed two month’s rent to the enterprise. The monthly rental payable by the tenant is R1 750. 1.2 Stationery on hand at 31 March 20.5 amounted to R1 550. 1.3 Commission income of R750 was earned for April and May 20.5. 1.4 Dr D Persue disappeared. Management decided to write his debt amounting to R2 650 off as irrecoverable. 1.5 Provision should still be made for depreciation on equipment at 10% per annum on the diminishing balance method. 1.6 The water and electricity account for March 20.5 amounting to R310, has not yet been paid. 1.7 The insurance premium for April 20.5 was paid in advance. The premiums are paid in equal monthly amounts. 1.8 Interest at 10,5% per annum on the mortgage for March 20.5 should still be provided for. QUESTION 1 (continued) 32 REQUIRED: Marks (a) Calculate the total comprehensive income or loss of Moon Traders for the year ended 31 March 20.5. (b) Prepare the statement of financial position of Moon Traders as at 31 March 20.5. 12 16 [28] Please note: All calculations must be shown. Your answer must comply with the requirements of International Financial Reporting Standards (IFRS) appropriate to the business of the entity. QUESTION 2 (36 marks)(43 minutes) PECCO SCRAP DEALERS GENERAL LEDGER Dr Furniture at cost Cr 20.3 Sept 20.4 May R 20.4 Aug R 1 31 Bank Trade payables Bank (Installation) CPJ GJ CPJ 250 000 120 000 15 000 31 Balance c/d 385 000 385 000 385 000 20.4 Sept 20.5 June 1 30 Balance Bank b/d CPJ 385 000 66 000 20.5 June Aug 30 31 Furniture realisation (bought 1 September 20.3) Balance GJ c/d 123 000 328 000 451 000 451 000 20.5 Sept 1 Balance b/d 328 000 Dr Accumulated depreciation: Furniture Cr R 20.4 Sept 1 Balance b/d R 48 250 FAC1502/102 QUESTION 35 (13 marks)(16 minutes) 35 On comparing the bank statement with the cash journals of Pompei Traders, the following information and differences were identified at 31 July 20.5. Balances at 30 June 20.5 R Bank account (favourable) 7 950 Bank statement (favourable) 900 Balances at 31 July 20.5 R Bank account (favourable) ? Bank statement (favourable) 4 756 Additional information 1. The total of the bank column in the cash receipts journal 15 960 2. The total of the bank column in the cash payments journal 12 750 3. The bank statement displays bank charges to the amount of 650 4. A debtor ‘s cheque was marked “R/D” by the bank 2 354 5. Cheque no. 004 for Rompi appears as a debit entry on the bank statement of Pompei Traders 2 350 6. Cash deposited on 31 July 20.5 does not appear on the bank statement for July 20.5 3 600 7. The following cheques do not appear on the bank statement: Cheque number 324 300 Cheque number 329 1 300 Cheque number 333 950 REQUIRED: Marks Prepare the bank account and the bank reconciliation statement of Pompei Traders for the month ended 31 July 20.5. 13 [13] Please note: Do not prepare the cash journals QUESTION 36 (7 marks)(8 minutes) 36 The following is an extract from the general journal of Dudu Traders on 31 March 20.5: DUDU TRADERS GENERAL JOURNAL - 31 MARCH 20.5 NO. DETAILS Dr Cr Credit losses Trade receivables control Credit losses written off R R 1. 2 450 2 450 2. Trade receivables control Bank Settlement discount granted VAT output Reversal of the settlement discount allowed on the R/D cheque from debtor PJ More. 6 600 5 600 870 130 3. Bank VAT output Credit loss recovered, Debtor: J Jody Recovery of a debtor‘s account previously written off. 1 150 150 1 000 4. Allowance for credit losses Credit losses A decrease in the allowance for credit losses for the year 150 150 GENERAL LEDGER BALANCES The following are the balances as at 31 March 20.5 before the above journals were taken into consideration: R Trade receivables control ................................................................................................................. 24 000 Allowance for credit losses........................................................................................................... 1 900 Bank (favourable)......................................................................................................................... 36 500 Credit losses................................................................................................................................. 0 Credit losses recovered................................................................................................................ 0 Settlement discount granted......................................................................................................... 2 546 VAT output.................................................................................................................................... REQUIRED: 3 489 Marks Prepare the general ledger accounts named in the above general journal of Dudu Traders, excluding the bank account and the settlement discount granted account at 31 March 20.5. 16 [16] Please note: The accounts should be balanced. FAC1502/102 QUESTION 37 (13 marks)(16 minutes) 37 MILL TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 30 JUNE 20.5 Debit Credit R R Capital ................ ……………………………………………………………………… - 202 000 Drawings .....................................................................…………………………… 27 000 - Trade receivables control ……………………………………………………………. 18 560 - Vehicles (at cost)............................................................................................... 202 100 - Accumulated depreciation: Vehicles .................…..……………………………….. - 19 100 Inventory: Trading (1 July 20.4) ......................................................................... 28 300 - Bank.................................................................................................................. 56 520 - Mortgage ........................................................................................................... - 105 000 Loan from Africa Bank ....................................................................................... - 15 000 Sales ................................................................................................................. - 272 195 Carriage on purchases ...................................................................................... 750 - Import duty on purchases ................ …...………………………………............….. 782 - Insurance on purchases….................………………………………………............ 329 - Commission income .......................................................................................... - 18 000 Depreciation ...................................................................................................... 19 100 - Insurance .......................................................................................................... 8 575 - Packaging materials .......................................................................................... 4 600 - Purchases ......................................................................................................... 190 800 - Purchases returns ............................................................................................. - 245 Rental income ................................................................................................... - 6 500 Sales returns ..................................................................................................... 1 860 - Settlement discount granted .............................................................................. 465 - Settlement discount received............................................................................. - 225 Telephone expenses .............. ………………………………………………………. 2 420 - Carriage on sales…................ ………………………………………………………. 1 250 - Repairs………………................. …………………………………………………….. 2 160 - Fuel………………................... ………………………………………………………. 3 479 - Wages ............................................................................................................... 64 115 - Water and electricity .......................................................................................... 5 100 - 638 265 638 265 Additional information The following information must still be taken into account for the year ended 30 June 20.5: 1. On 1 July 20.5, trading inventory had a balance of R22 750. 2. Rental income for the year should have been R6 000. 3. Packaging material on hand at 30 June 20.5 amounted to R1 200. 4. Commission income of R3 600 is still outstanding. 5. Water and electricity of R500 is still due. 6. The mortgage was obtained from XYZ Bank during the previous financial year and bears interest at a rate of 11,5% per annum, compounded annually. Interest for the current year must still be provided for. 7. The loan from Africa Bank is unsecured and bears interest at 19,5% per annum, compounded annually. Interest for the current year must still be provided for. QUESTION 40 (continued) 40 REQUIRED: Marks (a) Prepare the statement of financial position of F Tarta as at 30 April 20.5. The statement must comply with the requirements of International Financial Reporting Standards (IFRS) appropriate to the business of the entity. All calculations must be shown. (b) Prepare the statement of assets and liabilities as at 30 April 20.4 and calculate the equity balance as at 30 April 20.4. (c) Calculate the profit or loss for the year ended 30 April 20.5. 15 5½ 2½ [23] QUESTION 9 (25 marks)(31 minutes) EXTRACT FROM THE TRIAL BALANCE OF CAMP DEALERS AS AT 1 MARCH 20.4 R Bank (Debit balance) ............................................................................................................. 2 150 Machinery at cost ................................................................................................................. 220 000 Equipment at cost................................................................................................................. 70 000 Sales .................................................................................................................................... 250 000 VAT input ............................................................................................................................. 1 600 VAT output ........................................................................................................................... Accumulated depreciation: Machinery .................................................................................. Accumulated depreciation: Equipment.................................................................................. 1 800 22 000 7 000 The following totals of the analysis columns in the cash journals appeared in the accounting records of CAMP Dealers at 31 May 20.4: CASH RECEIPTS JOURNAL FOR MAY 2014 Date Bank Sales Cost of sales Trade receivables control Settlement discount granted VAT output VAT input Sundry amounts 31 R R R R R R R R 74 335 25 000 9 300 8 500 (248) 8 120 (37) 33 000# # The sundry amount relates to the sale of machinery. CASH PAYMENTS JOURNAL FOR MAY 2014 Date Bank Machinery Equipment VAT input VAT output Settlement discount received Sundry amounts 31 R R R R R R R 117 601 47 000 56 400 14 476 (75) (200) - FAC1502/102 QUESTION 41 (continued) 41 The following is an extract from the general journal of CAMP Dealers for the year ended 28 February 2015: Debit R Credit R 2015 Feb 1 Equipment VAT input Trade payables control/AZH Design Purchase of equipment on credit from AZH Design. 36 000 5 400 41 400 Additional information 1. The depreciation methods which are used by CAMP Dealers are as follows: - Machinery: 10% per annum on the straight-line method. - Equipment: 10% per annum on the diminishing-balance method. 2. The machinery sold was bought on 1 March 20.3 for R50 000. 3. The only acquisitions and sales of property, plant and equipment took place during May 20.4 and February 20.5. REQUIRED: Marks (a) Calculate the depreciation for machinery and for equipment for the year ended 28 February 20.5. 8 (b) Prepare the following general ledger accounts (properly balanced) of CAMP Dealer for the year ended 28 February 20.5: - Machinery at cost 4 - Equipment at cost 4 - Accumulated depreciation: Machinery 5 - Asset realisation 4 [25] QUESTION 10 (27 marks)(32 minutes) 42 The following information was obtained from the accounting records of XYZ Traders. XYZ TRADERS POST-ADJUSTMENT TRIAL BALANCE AS AT 30 JUNE 20.5 Debit Credit R R Capital .................................................................................................................. - 100 000 Drawings .............................................................................................................. 2 445 - Land and buildings at cost .................................................................................... 200 000 - Vehicles at cost .................................................................................................... 120 000 - Furniture and fittings at cost ................................................................................ 65 000 - Accumulated depreciation on vehicles (30 June 20.5) .......................................... - 54 700 Accumulated depreciation on furniture and fittings (30 June 20.5)........................ - 22 700 Trade receivables control ..................................................................................... 6 780 - Trading inventory (30 June 20.4) .......................................................................... 13 550 - Bank..................................................................................................................... 7 775 - Petty cash ............................................................................................................ 500 - Mortgage .............................................................................................................. - 150 000 Loan from Africa Bank .......................................................................................... - 50 000 Trade payables control ......................................................................................... - 3 200 Sales .................................................................................................................... - 256 400 Carriage on purchases ......................................................................................... 660 - Commission income ............................................................................................. - 15 000 Credit losses ........................................................................................................ 244 - Depreciation ......................................................................................................... 15 400 - Insurance ............................................................................................................. 2 400 - Packing material................................................................................................... 3 300 - Purchases ............................................................................................................ 154 880 - Purchases returns ................................................................................................ - 245 Rental income ...................................................................................................... - 3 600 Sales returns ........................................................................................................ 1 338 - Settlement discount granted ................................................................................. 553 - Settlement discount received................................................................................ - 155 Wages .................................................................................................................. 56 775 - Water and electricity ............................................................................................. 4 400 - 656 000 656 000 Additional information On 30 June 20.5, trading inventory had a balance of R14 885. REQUIRED: Marks (a) Show the journal entries for bringing the closing inventory at 30 June 20.5 into account. 3 (b) Show the journal entries to close off the applicable accounts (closing entries) of XYZ Traders at 30 June 20.5. 14 (c) Complete the trading account and the profit or loss account in the general ledger of XYZ Traders for the year ended 30 June 20.5. 10 [27] 13 FAC1502/102 QUESTION 13 (17 marks)(20 minutes) F Focus runs a small business, F Focus Services, from home and does not keep proper accounting records. He needs to calculate the entity’s profit/(loss) for income tax purposes and requested your assistance. You established the following: Balances at 30 April: 20.4 R 20.5 R Furniture at cost (Purchased on 30 April 20.4).................... ……………………… 25 000 25 000 Tools and equipment at cost (Purchased on 30 April 20.4)................................. 46 500 46 500 Trading inventory................................................................................................ 9 800 10 200 Bank(favourable) ................................................................................................ - 2 480 Bank(overdraft)................................................................................................... 6 500 - Long-term borrowings......................................................................................... 14 000 9 200 Trade payables control ....................................................................................... 5 200 6 120 Income received in advance ............................................................................... 3 800 5 000 Accrued expenses .............................................................................................. 1 600 1 300 Additional information 1. The following entries have not yet been taken into account in the list of balances above. 1.1 F Focus drew R100 000 during the year for own use. 1.2 Depreciation at 20% per annum on the straight-line method on furniture, as well as tools and equipment. REQUIRED: Marks Calculate the estimated profit or loss of F Focus Services for the year ended 30 April 20.5. 17 [17] QUESTION 14 (26 marks)(46 minutes) 46 The following bank reconciliation statement at 30 June 20.5 was prepared in the accounting records of Grey Services: Bank reconciliation statement as at 30 June 20.5 Debit Credit R R Credit balance as per bank statement………………………………………………… - 1 749 Credit outstanding deposit……………………………………………………………... - 1 010 Credit incorrect entry on bank statement ............................................................. , - 254 Debit outstanding cheques: No. 558………………………………………………………………………………... 410 - No. 813………………………………………………………………………………... 152 - No. 821………………………………………………………………………………... 249 - Debit balance as per bank account…………………………………………………… 2 202 - 3 013 3 013 The following is a summary of the deposits and cheque payments recorded in the cash receipts journal and the cash payments journal for July 20.5: Cash receipts journal Cash payments journal Doc. No. Date Details Bank (Amount deposi- ted) Doc. No. Date Details Bank (Amount paid) R R 7 Deposit 982 823 3 Telephone 410 16 Deposit 2 042 824 6 Purchases 4 600 20 L. Good 470 825 11 Insurance 294 27 Deposit 2 202 826 16 Wages 302 30 Deposit 1 152 827 20 F Andy 376 SO 25 Salaries 2 000 828 27 Water and electricity 84 CU K Dandy 142 829 30 G Bush 685 Abbreviations: SO = Stop order CU = Cheque previously deposited, unpaid (R/D). 47 FAC1502/102 QUESTION 14 (continued) The bank statement received on 31 July 20.5, was as follows: Bank statement: Grey Services – July 20.5 Date Details Debit Credit Balance R R R 1 Balance……………………………………………………..… - - 1 749 Cr Error corrected ................................................................. - 254 2 003 Cr 2 Deposit……………………………………………………….. - 1 010 3 013 Cr Cash deposit fee............................................................... 21 - 2 992 Cr 7 Cheque no. 821 ................................................................ 249 - 2 743 Cr Deposit……………………………………………………….. - 982 3 725 Cr Cash deposit fee............................................................... 21 - 3 704 Cr 12 Deposit (rent).................................................................... - 290 3 994 Cr Cash deposit fee............................................................... 6 - 3 988 Cr 16 Cheque no. 823 ................................................................ 410 - 3 578 Cr 20 Cheque no. 824 ................................................................ 4 400 - 822 Dr Deposit……………………………………………………….. - 2 042 1 220 Cr Cash deposit fee............................................................... 40 - 1 180 Cr Deposit……………………………………………………….. - 470 1 650 Cr Cash deposit fee............................................................... 6 - 1 644 Cr MF…………………………………………………………….. 90 - 1 554 Cr 25 Cheque no. 825 ................................................................ 294 - 1 260 Cr 27 Cheque no. 826 ................................................................ 302 - 958 Cr Stop order……………………………………………………. 2 000 - 1 042 Dr Deposit……………………………………………………….. - 2 202 1 160 Cr Cash deposit fee............................................................... 75 - 1 085 Cr Unpaid cheque (K Dandy) ................................................ 142 - 943 Cr Cheque fees ..................................................................... 25 - 918 Cr IN ..................................................................................... 12 - 906 Cr Additional information 1. Abbreviations: MF = Management fee IN = Interest on overdraft 2. Cheque no. 558 was drawn on 25 November 20.4 in favour of K Kara for repairs to the building. The cheque is stale and must be cancelled. 3. The correct amount of cheque no. 824 is R4 400 and not R4 600. 4. Cheque no. 828 was mislaid by the municipality and the bank was notified to stop payment. No entries were made to record this. REQUIRED: Marks (a) Finalise the cash receipts journal and the cash payments journal for July 20.5. (Start your answer with the totals). (b) Open and complete the bank account for July 20.5 in the general ledger of Grey Services. (c) Prepare the bank reconciliation statement as at 31 July 20.5. 14 4 8 [26] QUESTION 16 (27 marks)(32 minutes) 50 The following information was obtained from the accounting records of Orange Traders: ORANGE TRADERS TRIAL BALANCE AS AT 28 FEBRUARY 20.5 Debit Credit R R Capital ................................................................................................................ - 100 000 Drawings ............................................................................................................ 2 445 - Land and Buildings (at cost) ............................................................................... 200 000 - Vehicles (at cost) ................................................................................................ 120 000 - Furniture and fittings (at cost) ............................................................................. 65 000 - Accumulated depreciation on vehicles (1 March 20.4)........................................ - 54 700 Accumulated depreciation on furniture and fittings (1 March 20.4)...................... - 22 700 Trade receivables control ................................................................................... 6 780 - Inventory: Trading (1 March 20.4)....................................................................... 13 550 - Bank ................................................................................................................... 7 775 - Cash float ........................................................................................................... 500 - Mortgage ............................................................................................................ - 150 000 Loan from Africa Bank ........................................................................................ - 50 000 Trade payables control ....................................................................................... - 3 200 Sales .................................................................................................................. - 243 645 Carriage on purchases ....................................................................................... 660 - Commission income ........................................................................................... - 15 000 Credit losses....................................................................................................... 244 - Insurance ........................................................................................................... 2 400 - Packing materials ............................................................................................... 3 300 - Purchases .......................................................................................................... 154 880 - Purchases returns .............................................................................................. - 245 Rental income .................................................................................................... - 3 300 Sales returns ...................................................................................................... 1 338 - Settlement discount granted ............................................................................... 553 - Settlement discount received.............................................................................. - 155 Stationery ........................................................................................................... 2 345 - Wages ................................................................................................................ 56 775 - Water and electricity ........................................................................................... 4 400 - 642 945 642 945 Additional information 1. Inventory on hand at 28 February 20.5 ● Trading inventory – R12 800 ● Stationery – R345. 2. The insurance amount of R2 400 includes a premium of R200 for March 2015. 3. The loan was obtained from Africa Bank on 1 September 20.4. The loan bears interest at 12% per annum, compounded annually. The interest still has to be paid. 4. Rental income for February 20.5 is still outstanding. 5. Depreciation must be provided as follows: ● Vehicles – 20% per annum on the diminishing balance method. ● Furniture and fittings – 10% per annum on the straight-line method. FAC1502/102 QUESTION 16 (continued) REQUIRED: 51 Marks (a) Record the adjustments in the general journal of Orange Traders. (Ignore narrations) (b) Prepare the statement of profit or loss and other comprehensive income of Orange Traders for the year ended 28 February 20.5. The statement must comply with the requirements of International Financial Reporting Standards (IFRS), appropriate to the business of the entity. 6 21 [27] QUESTION 17 (20 marks)(26 minutes) Pride Sales had the following information in respect of its property, plant and equipment for the year ended 30 September 20.5: Machines Purple Aqua Date of purchase 1 April 20.2 1 July 20.3 Purchase price R250 000 R570 000 Estimated useful life 10 3 Additional information 1. The entity uses the straight-line method over the useful life of the machinery for calculating depreciation. 2. On 31 December 20.4, management decided to increase production capacity and purchased the Green machine on credit from Spring Colour Machinery for R525 000. The Aqua machine was traded in for the purchase of the Green machine, and the outstanding balance which is payable to Spring Colour Machinery with regards to the purchase is R175 000. 3. The estimated useful life of the Green machine is 7 years. REQUIRED: Marks Prepare the following general ledger accounts in the accounting records of Pride Sales for the year ended 30 September 20.5: - Accumulated depreciation - Depreciation - Machinery realisation 11 3½ 5½ [20] Please note: All calculations must be shown. 52 3. SOLUTIONS TO THE ADDITIONAL QUESTIONS QUESTION 1 (28 marks)(34 minutes) CALCULATION OF TOTAL COMPREHENSIVE INCOME OR LOSS: R R Rental income R(64 000 + 3 500) 67 500 Commission income R(2 700 - 750) 1 950 69 450 Less: Expenses (43 603) Interest on mortgage R(23 870 + 2 170) 26 040 Water and electricity R(2 750 + 310) 3 060 Municipal taxes 4 333 Insurance R(2 405 - 185) 2 220 Stationery R(3 350 - 1 550) 1 800 Credit losses R(1 600 + 2 650) 4 250 Depreciation 1 900 Profit for the year 25 847 Other comprehensive income for the year - Total comprehensive income for the year 25 847 (12) MOON TRADERS STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 20.5 ASSETS R R Non-current assets 367 100 Property, plant and equipment R(350 000 + 34 000 - 15 000 - 1 900) 367 100 Current assets 52 893 Inventories 1 550 Trade and other receivables R(26 100 - 2 650 + 3 500 + 185) 27 135 Cash and cash equivalent 24 208 168 763 TOTAL ASSETS 419 993 EQUITY AND LIABILITIES Equity 168 763 Capital R(149 000 - 6 084 + 25 847) Non-current liabilities 248 000 248 000 Long-term borrowings Current liabilities 3 230 3 230 Trade and other payables R(750 + 310 + 2 170) TOTAL EQUITY AND LIABILITIES 419 993 (16) FAC1502/102 QUESTION 3 (7 marks)(8 minutes) 55 Calculation of profit or loss for the year ended 31 January 20.6 R Land and buildings 120 000 Furniture and equipment R(65 000 - 18 000) 47 000 Inventories 30 000 Bank(favourable) 13 500 Trade receivables 35 000 Prepaid expenses 28 000 Accrued income 7 500 Trade payables (15 000) Long-term loan (75 000) Equity - 31 January 2016 191 000 Less: Equity - 1 February 2015 (78 000) 113 000 Add: Drawings 34 800 Profit for the year 147 800 (7) QUESTION 4 (13 marks)(16 minutes) POMPEI TRADERS GENERAL LEDGER Dr Bank Cr 20.5 July R 20.5 July 31 Total payments Bank charges R/D Cheque Balance CPJ c/d R 1 31 Balance Total receipts b/d CRJ 7 950 15 960 12 750 650 2 354 8 156 23 910 23 910 20.5 Aug 1 Balance b/d 8 156 (6) POMPEI TRADERS BANK RECONCILIATION STATEMENT AS AT 31 JULY 20.5 Credit balance as per bank statement Credit outstanding deposit Debit outstanding cheques: No 324 No 329 No 333 Error: Cheque no. 004 for Rompi Debit balance as per bank account Dr Cr R R 300 1 300 950 8 156 4 756 3 600 2 350 10 706 10 706 (7) QUESTION 5 (16 marks)(19 minute) 56 DUDU TRADERS GENERAL LEDGER Dr Trade receivables control Cr 20.5 Mar R 20.5 Mar 31 Credit losses Balance GJ c/d R 31 Balance Bank Settlement discount granted VAT output b/d GJ GJ GJ 24 000 5 600 870 130 2 450 28 150 30 600 30 600 20.5 April 1 Balance b/d 28 150 (6) Dr Allowance for credit losses Cr 20.5 Mar 31 Credit losses Balance GJ c/d R 20.5 Mar R 150 1 750 31 Balance b/d 1 900 1 900 1 900 20.5 April 1 Balance b/d 1 750 (3) Dr Credit losses Cr 20.5 Mar R 20.5 Mar 31 Allowance for credit losses Balance GJ c/d R 31 Trade receivables control GJ 2 450 150 2 300 2 450 2 450 20.5 Apr 1 Balance b/d 2 300 (21/2) Dr Credit losses recovered Cr 20.5 Mar 31 Bank GJ R 1 000 (1) Dr VAT output Cr 20.5 Mar 31 Balance c/d R 20.5 Mar R 3 769 31 Balance Trade receivables control Bank b/d GJ GJ 3 489 130 150 3 769 3 769 20.5 Apr 1 Balance b/d 3 769 (31/2) FAC1502/102 QUESTION 6 (33 marks)(39 minutes) 57 a) MILL TRADERS STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 20.5 R Revenue R(272 195 - 1 860 - 465) 269 870 Cost of sales (197 741) Inventory - 1 July 20.4 28 300 Plus: Purchases R(190 800 - 245 - 225) 190 330 Plus: Carriage on purchases 750 Plus: Import duty on purchases 782 Plus: Insurance on purchases 329 Less: Inventory - 30 June 20.5 (22 750) Gross profit 72 129 Other income 27 600 Rental income R(6 500 - 500) 6 000 Commission income R(18 000 + 3 600) 21 600 99 729 Distribution, administration and other expenses (113 514) Repairs 2 160 Insurance R(8 575 - 1 225) 7 350 Wages 64 115 Water and electricity (5 100 + 500) 5 600 Petrol 3 479 Packing materials R(4 600 - 1 200) 3 400 Depreciation 19 100 Telephone expenses 2 420 Carriage on sales 1 250 Credit losses 4 640 Finance costs (15 000) Interest on mortgage (R105 000 x 11,5%) 12 075 Interest on short term loan (R15 000 x 19,5%) 2 925 Loss for the year (28 785) Other comprehensive income for the year - Total comprehensive loss for the year (28 785) (30) QUESTION 8 (continued) 60 b) F TARTA STATEMENT OF ASSETS AND LIABILITIES AS AT 30 APRIL 20.4 ASSETS R Furniture Tools and equipment Inventory Bank 25 500 51 500 15 200 12 480 TOTAL ASSETS 104 680 LIABILITIES 19 000 5 700 5 000 1 300 Long-term borrowing Trade payables Income received in advance Accrued expenses TOTAL LIABILITIES 31 000 Calculation of equity at the beginning of the period Equity = Assets – Liabilities = R104 680 – R31 000 = R73 680 (5½) c) Estimated profit/(loss) for the year R Capital at the end of the financial period 84 075 Capital at the beginning of the financial period (73 680) Movement in capital during the year 10 395 Additions (30 000) Drawings 20 000 395 (2½) FAC1502/102 QUESTION 10 (61 marks)(32 minutes) 61 a) DEPRECIATION CALCULATIONS Depreciation on Machinery: Straight-line method Old: R220 000 - R50 000 = R170 000 x 10/100 R17 000 New: Purchased 31 May 20.4, R47 000 x 10/100 x 9/12 R 3 525 R20 525 Old: Sold 31 May 2014 20.5: Cost R50 000 x 10/100 x 3/12 R 1 250 20.4: Cost R50 000 x 10/100 R 5 000 R 6 250 Depreciation on Equipment: Diminishing balance method Old: R70 000 - R7 000 = R63 000 x 10/100 R 6 300 New: R56 400 x 10/100 x 9/12 R 4 230 New: R36 000 x 10/100 x 1/12 R 300 (8) b) CAMP DEALERS GENERAL LEDGER Dr Machinery at cost Cr 20.4 Mar May R 20.4 May 20.5 Feb 31 28 Asset realisation Balance CRJ c/d R 1 31 Balance Bank b/d CPJ 220 000 47 000 50 000 217 000 267 000 267 000 20.5 Mar 1 Balance b/d 217 000 (4) Dr Equipment at cost Cr 20.4 Mar May 20.5 Feb R 20.5 Feb 28 Balance c/d R 1 31 1 Balance Bank Trade payables control b/d CPJ GJ 70 000 56 400 36 000 162 400 162 400 162 400 20.5 Mar 1 Balance b/d 162 400 (4) QUESTION 9 (continued) 62 Dr Accumulated depreciation: Machinery Cr 20.4 May 20.5 Feb 31 28 Asset realisation Balance GJ c/d R 20.4 Mar May 20.5 Feb R 6 250 37 525 1 31 28 Balance Depreciation Depreciation b/d GJ GJ 22 000 1 250 20 525 43 775 43 775 20.5 Mar 1 Balance b/d 37 525 (5) Dr Asset realisation Cr 20.4 May 31 Machinery at cost GJ R 20.4 May 31 Accumulated depreciation: Machinery Bank Loss on sale GJ CRJ R 50 000 6 250 33 000 10 750 50 000 50 000 (4) FAC1502/102 65 QUESTION 11 (25 marks)(30 minutes) a) M&S TRIAL BALANCE AS AT 28 FEBRUARY 20.5 Dr R Cr R Trade payables control .......................................................................................... 28 900 Fixed deposit ......................................................................................................... 5 000 Trade receivables control ...................................................................................... 19 200 Bank...................................................................................................................... 6 000 Furniture and equipment ....................................................................................... 24 300 Land and buildings ................................................................................................ 108 000 Mortgage ............................................................................................................... 78 000 Vehicles................................................................................................................. 51 000 Inventory ............................................................................................................... 30 400 Capital: Mica (1 March 20.4).................................................................................. 150 000 243 900 256 900 Total comprehensive loss for the year ................................................................... 13 000 256 900 256 900 (11) It is important to draw up a trial balance first so that debit and credit balances can be differentiated. M&S had a loss of R13 000 for the year. b) M&S STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 20.5 Capital R Balance as at 1 March 20.4………………………………………………………………………… 150 000 Total comprehensive loss for the year…………………………………………………………...... (13 000) Balance as at 28 February 20.5………………………………………………………………….... 137 000 (4) QUESTION 11 (continued) c) 66 M&S STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 20.5 ASSETS R R Non-current assets 188 300 Property, plant and equipment R(24 300 + 108 000 + 51 000) 183 300 Fixed Deposit 5 000 Current assets 55 600 Inventory 30 400 Trade and other receivables 19 200 Cash and cash equivalents 6 000 137 000 TOTAL ASSETS 243 900 EQUITY AND LIABILITIES Equity 137 000 Capital Non-current liabilities 78 000 78 000 Long-term borrowings Current liabilities 28 900 28 900 Trade and other payables TOTAL EQUITY AND LIABILITIES 243 900 (10) QUESTION 12 (31 marks)(37 minutes) ABC DEALERS GENERAL LEDGER Dr Bank Cr 20.5 Feb 1 28 R 20.5 Feb 28 Total payments Balance CPJ c/d R Balance Total receipts b/d CRJ 2 150 27 584 17 878 11 856 29 734 29 734 Mar 1 Balance b/d 11 856 (4) FAC1502/102 QUESTION 12 (continued) 67 Dr Cost of sales Cr 20.5 Feb 1 28 R 20.5 Feb 28 Trading inventory Balance SRJ c/d R Balance Trading inventory Trading inventory b/d CRJ SJ 192 000 9 300 7 000 125 208 175 208 300 208 300 Mar 1 Balance b/d 208 175 (5) Dr Trading inventory Cr 20.5 Feb 1 28 R 20.5 Feb 28 Cost of sales Cost of sales Trade payables control Balance CRJ SJ PRJ c/d R Balance Bank Trade payables control Cost of sales b/d CPJ PJ SRJ 52 000 7 200 9 200 125 9 300 7 000 850 51 375 68 525 68 525 Mar 1 Balance b/d 51 375 (7) Dr Sales Cr 20.5 Feb 28 Balance c/d R 20.5 Feb 1 28 R 432 600 Balance Bank Trade receivables control b/d CRJ SJ 400 000 18 600 14 000 432 600 432 600 Mar 1 Balance b/d 432 600 (3) Dr VAT input Cr 20.5 Feb 1 28 R 20.5 Feb 28 Trade payables control Balance PRJ c/d R Balance Trade receivables control Bank Trade payables control b/d CRJ CPJ PJ 1 600 22 1 008 1 380 128 3 882 4 010 4 010 Mar 1 Balance b/d 3 882 (6) QUESTION 14 (26 marks)(30 minutes) 70 (a) GREY SERVICES CASH RECEIPTS JOURNAL FOR JULY 20.5 31 Receipts (Bank) R Total 6 848 Cheque 558 cancelled (repairs) Rental income (B/S) Correction - cheque 824 (purchases) Cancellation - cheque 828 (water and electricity) 410 290 200 84 7 832 GREY SERVICES CASH PAYMENTS JOURNAL FOR JULY 20.5 (8) 31 Payments (Bank) R Total 8 893 Interest on bank account (B/S) Bank Charges R(21 + 21 + 6 + 40 + 6 + 90 + 75 + 25) 12 284 9 189 (6) (b) Dr Bank account Cr 20.5 R 20.5 31 Total payments Balance c/d R Jul 1 31 Balance Total receipts b/d 2 202 7 832 Jul 9 189 845 10 034 10 034 Aug 1 Balance b/d 845 (4) (c) GREY SERVICES BANK RECONCILIATION STATEMENT AS AT 31 JULY 20.5 Balance as per bank statement Credit outstanding deposit Debit cheques not yet presented for payment: No. 813 No. 827 No. 829 Balance as per bank account Debit Credit R R 906 152 1 152 376 685 845 2 058 2 058 (8) FAC1502/102 QUESTION 15 (27 marks)(32 minutes) (a) 71 KHULONG TRADERS GENERAL LEDGER Dr Trading inventory Cr 20.4 R 20.5 30 Trading account Balance GJ c/d R Jul 20.5 Jun 1 30 Balance Trading account b/d GJ 13 800 15 335 Jun 13 800 15 335 29 135 29 135 Jul 1 Balance b/d 15 335 (3) Dr Profit or loss account Cr 20.5 R 20.5 R Jun 30 Credit losses 349 Jun 30 Trading account 102 609 Depreciation 15 400 Commission income 15 000 Insurance 2 750 Rental income 3 800 Packing materials 4 300 Credit losses Wages 51 325 recovered 2 500 Water and electricity 4 400 Loss on sale of asset 5 700 Capital (Total compre- hensive income for the year) 39 685 123 909 123 909 (9) Dr Capital Cr R R 20.5 Jun 30 Drawings Balance c/d 2 695 136 990 20.4 Jul 20.5 Jun 1 30 Balance Profit or loss account b/d 100 000 39 685 139 68 139 685 Jul 1 Balance b/d 136 990 (3) QUESTION 15 (continued) 72 (b) KHULONG TRADERS STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 20.5 R ASSETS Non-current assets 309 600 Property, plant and equipment R(200 000 + 122 000 - 54 700 + 65 000 – 22 700) 309 600 Current assets 33 390 Inventories 15 335 Trade and other receivables 9 280 Cash and cash equivalents R(8 025 + 750) 8 775 Total assets 342 990 EQUITY AND LIABILITIES Total equity 136 990 Capital 136 990 Non-current liabilities 150 000 Long term borrowings 150 000 Current liabilities 56 000 Trade and other payables R(4 500 + 1 500) 6 000 Current portion of long term borrowings 50 000 Total equity and liabilities 342 990 (12) FAC1502/102 QUESTION 17 (20 marks)(26 minutes) (a) 75 Dr Accumulated depreciation Cr 20.5 Sep 30 Realisation account R(47 500 + 190 000 + 47 500) Balance GJ c/d R 20.4 Oct 1 Balance R(12 500 + 25 000 + 47 500 + 25 000 + 190 000) R 285 000 143 750 b/d 300 000 Dec 20.5 Sept 31 30 Depreciation Depreciation GJ GJ 47 500 81 250 428 750 428 750 Oct 1 Balance b/d 143 750 (11) Dr Depreciation Cr 20.4 Dec 20.5 R R 31 Accumulated depreciation GJ 47 500 Sep 30 Accumulated depreciation (25 000 + 56 250) GJ 81 250 128 750 (3½) Dr Realisation account Cr 20.4 Dec 31 Machinery Profit on sale of asset GJ GJ R 20.4 Dec 31 Trade payables control R(525 000 - 175 000) Accumulated depreciation GJ GJ R 570 000 65 000 350 000 285 000 635 000 635 000 (5½) 76 QUESTION 17 (continued) CALCULATIONS: 1. PREVIOUS YEARS’ DEPRECIATION: R Six months ended 30 September 20.2 Machine purple: R250 000/10 x 6/12 = 12 500 Financial year ended 30 September 20.3 Machine Purple: R250 000/10 = 25 000 Machine Aqua: R570 000/3 x 3/12 = 47 500 Financial year ended 30 September 20.4 Machine Purple: R250 000/10 = 25 000 Machine Aqua: R570 000/3 = 190 000 Total opening balance as at 1 October 20.4 300 000 2. CURRENT YEAR’S DEPRECIATION: R Financial year ended 30 September 20.5 31 December 20.4 Machine Aqua: R570 000/3 x 3/12 = 47 500 30 September 20.5 Machine Purple: R250 000/10 = 25 000 30 September 20.5 Machine Green: R525 000/7 x 9/12 = 56 250 81 250 Realisation: Accumulated depreciation Machine Aqua: R570 000/3 x 3/12 = 47 500 Machine Aqua: R570 000/3 = 190 000 Machine Aqua: R570 000/3 x 3/12 = 47 500 285 000 © UNISA 2018