Date

Received:..................
Programme
Module Name
Surname
First Name(s)
Student Number
Date Submitted
Postal Address

Email Address
Contact Numbers

Cell: +264 81
Home: +264 Work: +264

Alternate Contact:

Name:
Relationship:
Contact Number: +264 81

I hereby confirm that the assignment submitted herein is my own original work.

Signature of Student: .. Date: April 2015.

Contents
Question 1................................................................................................................................... 3
Question 2................................................................................................................................... 5
Question 3................................................................................................................................... 6
3.1 Debtors Account.................................................................................................................6
3.2 Reconciliation of debtors balances.....................................................................................6
Question 4................................................................................................................................... 7
4.1 Income statement of Orange trader for the year ended 29 February 2014.........................7
4.2 Statement of changes in equity for the year ended 29 February 2014...............................8

Question 1
1.1
The perpetual inventory system show all changes in inventory in the Inventory
account. Purchase accounts are not used in a perpetual inventory system whereas the
periodic inventory system keep the inventory balance at the same value that it was at
the beginning of the year, at year end the inventory balance is adjusted to a physical
count. To account for inventory purchases in a periodic inventory system, an account
called "Purchases" is used rather than debiting "Inventory".
1.2
2 key fundamental assumptions when preparing financial statements are as follows:
i)

Going Concern - When financial statements are prepared on a going concern

basis, it is assumed that the entity has neither the intention nor the need to liquidate or
curtail materially the scale of its operations, but will continue in operation for the
foreseeable future.
ii)

Accrual Basis - When financial statements are prepared on the accrual basis of

accounting, the effects of transactions and other events are recognized when they occur
(and not as cash or its equivalent is received or paid), and they are recorded in the
accounting records and reported in the financial statements of the periods to which they
relate.
1.3
Two errors that could occur in the drawing up of a creditors ledger:
i)

Errors of omission

ii)

Errors of principle

1.4

Three elements of financial statements are assets, liabilities and equity.

1.5
1.5.1
Asset are possessions that belong to the business. Assets are further divided into
non-current and current assets. An example is a building.
1.5.2
Liabilities are debts of a business or organization. Liabilities are further divided into
non-current and current liabilities. An example is long term debt
1.5.3
Net Asset Value this the difference between the value of assets owned by an
enterprise and the liabilities it has incurred.
1.5.4
Current liabilities current liabilities are debts over a short term period usually a year.
An example is a bank overdraft
1.5.5
Non-current assets - these are possessions of the business that are used for the
production of other goods or services. They are long term in nature. An example is land

Question 2
No

Source

Subsidiary

A/C Dr

A/C Cr

document
Bank deposit

Book
General

Bank

Capital

slip
Purchase

Journal
Cash

Purchases

Bank

Invoice

Payments

Sales Invoice

Journal
Cash

Debtor: R

Receipts

Randle

A=

O +

50000

50000

-50000

50000
Sales

16000

16000

18000

38000

18000
0

38000

Purchase

Journal
Purchases

Purchases

creditor: O Let

Invoice
Purchase

Journal
General

Motor

Creditor: H Hak

Invoice
Cheque

Journal
Cash

Vehicle
Advertising

Bank

-750

-750

counterfoil

Payments

expense

Cheque

Journal
Cash

Creditor: O

Bank

-18000

-18000

counterfoil

Payments

let

Purchase

Journal
General

Furniture

Creditor: Furn

5500

5500

Invoice
Cheque

Journal
Cash

Electricity

Furnishers
Bank

-1500

-1500

counterfoil

Payments

expense

Rent Receipt

Journal
Cash

Rent

Bank

-6500

-6500

Payments

expense

10

Journal

Question 3
3.1 Debtors Account
Debtors Account
201
4
Apr-

R
160

01 Balance b/d
Payments to debtors
Sales
Interest charged on
debtors account
Dishonoured cheque

Cash received from

00
100
117

debtors
Discount allowed

00

Returns inwards

100
550

Bad debts written of

Contra
Apr
-30 Balance c/d

284
May
-01 balance b/d

50
129

20
500
130
0
180
300
129
50
284
50

50

3.2 Reconciliation of debtors balances

Total list of debtors balances at 30 April
Sales - N. Boddy
Sales returns - R Stop
L. Long - R/D Cheque
Bad debts w/o
Balance at 30 April

R
132

R
13610
90
-100
550
-180
12950

Question 4
4.1 Income statement of Orange trader for the year ended 29 February 2014
R
Sales (250620-250)
Cost of sales
Opening inventory
Purchases (116040-1150)
Railage on purchases
Less closing inventory
GROSS PROFIT
Other Income
Rent Income
GROSS INCOME
Expenses
Salaries and wages
Railage on sales
Interest on loan
Depreciation on vehicles
Depreciation on equipment
Insurance (660-120)
Printing (1350+1350)
Stationery
Packaging material
Discount received
bad debts
Provision for bad debts
NET INCOME

R
250370
115800

13760
114890
2500
131150
15350
134570
9450
9450
144020
104550
77500
1600
8400
3400
560
540
2700
5400
3600
400
300
150
39470

4.2 Statement of changes in equity for the year ended 29 February 2014
R
Opening balance

60500

Add: net Profit

39470
99970

Less: Drawings

3400

Closing balance

96570

References