FAC1502/201/1/2013

Tutorial letter 201/1/2013

Accounting concepts, principles and

procedures
FAC1502

Semester 1

Department of Financial Accounting

This tutorial letter contains the solution to

assignment 01/1/2013 and the May 2011 and
May 2012 exam papers with solutions
 CONTENTS

Page

1 INTRODUCTION ............................................................................................................................ 3
2 SOLUTION TO ASSIGNMENT 01/1/2013 ..................................................................................... 4
3 MAY 2011 EXAMINATION PAPER ............................................................................................... 6
4. SUGGESTED SOLUTIONS TO THE MAY 2011 EXAMINATION ............................................... 11
5 MAY 2012 EXAMINATION PAPER ............................................................................................. 18
6 SUGGESTED SOLUTIONS TO THE MAY 2012 EXAMINATION PAPER.................................. 24

2
 FAC1502/201

1 INTRODUCTION
Dear Student

Attached please find:

y the solution to assignment 01 for the first semester of 2013.
y the May 2011 and 2012 examination papers and suggested solutions.

It is in your own interest to work through the assignment in conjunction with the solutions and your
written answers.

Refer to paragraph 10 of tutorial letter FAC1502/101/3/2013 for additional information regarding the May
2013 examination. The examination paper will consist of “long type” questions only which should be
answered within two hours.

Please note that you should NOT expect the May 2013 examination paper to have the same topics
as previous examination papers. In your preparation for the exam you cannot work through
previous examination papers only as all the topics are not covered. All your study material
should be studied.

LECTURERS AND CONTACT DETAILS

Please use only the following e-mail address for electronic communication with the lecturers:
FAC1502@unisa.ac.za

Please use telephone number (012) 429 4245 for all telephonic communication with the lecturers. This
telephone number assigned to FAC1502 is linked to all the module‘s lecturers‘ telephone numbers.

Lecturers Office
Ms MS du Rand AJH 02-07
Ms A du Plessis AJH 02-11
Mr M Engelbrecht AJH 02-06
Mr DO Khumalo AJH 02-06
Mr P Maraisane AJH 02-08
Mr C Modise AJH 02-20

PLEASE NOTE

Lecturers are available for telephone enquiries from 08:00 to 16:00 on weekdays.

The study guide which you should have received is a reprint of the study guide for 2012, we are sending
out tutorial letter FAC1502/102/3/2013 with the necessary changes to the study guide.

3
2 SOLUTION TO ASSIGNMENT 01/1/2013

1. (2) Dr Debtors (Asset)

Cr Services rendered (Income)

2. (4) (b) False. Cash purchase of equipment has no effect on equity as the journal entry
for cash purchase of equipment will be the following:
Dr Equipment (Non-current asset)
Cr Bank (Current asset)
(c) False. The general journal is a book of prime entry.
(d) False. The general ledger continues from one year to the next. In the general
ledger there are asset, liability, equity, income and expense accounts. At the end
of each financial year income and expense accounts will close off to the statement
of profit or loss and other comprehensive income, whilst the asset, liability and
equity accounts will be balanced and the balances will be recorded in the
statement of financial position.

3. (2) (1) Dr Creditor (Current liability)

Cr Bank (Current liability)
Thus: No effect on equity.
(2) Dr Salaries (Expense)
Cr Bank (Current liability)
Thus: Increase in Expense has a negative effect on equity.
(3) Dr Asset (Non-current/Current asset)
Cr Bank (Current liability)
Thus: No effect on equity.
(4) Dr Property (Non-current asset)
Cr Bank (Current liability)
Thus: No effect on equity.

4. (5) (1) When the balance of an asset account is decreased an entry on the credit side of
the ledger is needed.
(2) To increase the balance of a liability account an entry on the credit side of the
ledger is needed.
(3) Nominal accounts refer to both income and expense accounts and these accounts
are treated differently. The statement is therefore false.
(4) To decrease the balance of an expense account an entry on the credit side of the
ledger is needed.

5. (4) (1) False – errors made by the bank are corrected in the bank reconciliation
statement.
(2) False – this item should appear as a reconciling item in the cash receipts
journal.
(3) False – these items should appear as reconciling items in the two cash journals
or in the adjusted bank account (in the general ledger).

6. (1) (d) False – duplicate receipts, duplicate cash register slips, proof of electronic
transfers and proof of direct deposits all are source documents that could be used
to record transactions in the cash receipts journal.

4
 FAC1502/201

Solution to Assignment 01 (continued)

7. (5) (a) False – these amounts will have to be recorded in the cash receipts journal.
(b) False – these transactions will have to be recorded in the cash payments journal.
(c) False – errors made by the bank will have to be recorded in the bank recon-
ciliation statement.

8. (3) Dr Bank Cr
R R
Balance (opening) 117 Bank charges 63
Cheque recorded incorrectly Balance on 30 June 2010 99
(361 - 316) 45
162 162

9. (2) R175,00 x 20% = R35,00

10. (2) R480,00 (selling price) x 100/125 Cost price 100%

= R384,00 (cost price) Mark-up 25%
Selling price 125%

11. (2) R2 999,99 x 14/114 = R368,42

R
12. (2) R2 400,00/R4 500,00 x 100/1 Cost price 100% 4 500,00
= 53,33% mark-up on cost price Mark-up ? 2 400,00
Selling price ? 6 900,00

R
13. (2) Trade debtors 31 270,00
Credit losses (170,00)
Allowance for credit losses (1 555,00)
29 545,00

14. (1) (1) There are two debit entries but no credit entry for one transaction. The debit side of
the trail balance will be greater than the credit side.
(2) The personal account of the creditor in the creditors ledger will be wrong and not the
amount in the trial balance because the correct amount was posted to the creditors
control account. A reconciliation of the individual creditors accounts with the creditors
control account will reveal the difference.
(3) A bank overdraft has a credit balance
(4) The incorrect amount was entered in die sales journal and this incorrect amount will
be posted to all the applicable accounts in the general ledger. The debit side of the
trial balance will therefore be equal to the credit side.
R
15. (2) Bank account to be credited 29 800
Creditors control account to be debited (300)
Rent paid account to be debited twice (once to cancel
the incorrect entry and then to record the correct entry) (1 200)
28 300

5
3 MAY 2011 EXAMINATION PAPER

THIS QUESTION PAPER CONSISTS OF FIVE (5) PAGES.

PLEASE NOTE:

1. This paper consists of FOUR (4) questions.

2. Ensure that you are writing the correct paper.
3. Ensure that you are handed the correct examination answer book (BLUE) by the invigilator.
4. All questions must be answered.
5. Basic calculations, where applicable, must be shown.
6. The answer to each question must be commenced on a new (separate) page.
7. Please write legibly in blue or black ink.

PROPOSED TIME-TABLE: (Avoid deviating from this as far as possible)

TIME
QUESTION TOPIC MARKS
(minutes)
1 Bank reconciliation 13 16
2 Control accounts 15 18
Adjustments journals, trial balance and statement of profit
3 49 58
or loss and other comprehensive income
4 Depreciation and asset realisation 23 28
TOTAL 100 120

6
 FAC1502/201

QUESTION 1 (13 marks)(16 minutes)

The bookkeeper of OSSO Traders posted the cash receipts journal and the cash payments journal to the
general ledger for January 2011, before he received the bank statement for the same month. The totals
posted to the general ledger were:
- Total cash receipts: R74 700
- Total cash payments: R49 260

On comparing the bank statement with the cash receipts journal and the cash payments journal, the
following differences were noted:
1. On 1 January 2011 the bank account in the general ledger had a favourable balance of R540.
2. On 31 January 2011 the bank statement revealed a favourable balance of R10 170.
3. The following charges appeared on the bank statement:
R
Service fees 305
Cheque and deposit books 137

4. The following cheques in the cash payments journal have not yet been presented at the bank:
R
401 1 683
405 137
407 5 367
415 1 571
480 2 700
491 1 072

5. Cheques 401, 405 and 407 were all issued during July 2010. They are all stale and must now be
cancelled. These cheques were in favour of D Banks as payment for money owing to him.
6. An investigation of the cash receipts journal revealed that deposits totalling R28 920 have not yet
been entered on the bank statement.
7. The bank statement showed a deposit of R1 980 which was made by another client and
erroneously entered on OSSO Traders’ bank statement.
8. The cash receipts journal showed a deposit of R15 850 (received from J Bronko, a debtor) while
the correct figure of R15 170 appeared on the bank statement.
9. Cheque no 482 for R3 020 drawn by ROSSO Traders appeared on the bank statement but not in
the cash payments journal.
10. A receipt of R6 540 from B Crux was incorrectly entered in the cash receipts journal as R5 640.
11. Cheque no 483 for R1 842 in favour of A Randwell was issued but subsequently cancelled and
never mailed to the creditor. The bookkeeper however, recorded the payment in the cash
payments journal.

REQUIRED:
a) Prepare the properly balanced/closed off bank account for January 2011 as it will appear in the
general ledger of OSSO Traders. (8)
b) Prepare the bank reconciliation statement of OSSO Traders as at 31 January 2011. (5)

7
QUESTION 2 (15 marks)(18 minutes)

The following details were obtained from the accounting records of S GLOW for January 2011:

R
Balances in the debtors ledger (1 January 2011) 22 556
Balances in the creditors ledger (1 January 2011) 37 452
Receipts issued to debtors 35 036
Cheques received from debtors, returned by the bank marked “R/D” 860
Credit losses 400
Cash received from G McDermot (his account was already closed and debt was written off) 160
Credit sales 65 636
Credit purchases 59 724
Cheques issued to creditors 25 724
Returns on purchases 400
Settlement discount granted to debtors 1 804
Returns on sales 110
Interest charged on overdue debtors accounts 60
Cash purchases 17 544
Interest collected by creditors 336

Additional information
1. Credit sales of R48 were incorrectly posted to B Ball’s account as R84.
2. An invoice of R40 for goods sold was not recorded in the sales journal.

REQUIRED:
Prepare the following properly balanced/closed off accounts in the general ledger of S GLOW for
January 2011:

a) Debtors control account (9½)

b) Creditors control account (5½)

8
 FAC1502/201

QUESTION 3 (49 marks)(58 minutes)

N&N ENTERPRISES
TRIAL BALANCE AS AT 31 DECEMBER 2010
Dr Cr
R R
Capital 130 000
Drawings 11 000
Mortgage (8%) 50 000
Land and buildings 81 000
Furniture and equipment 14 000
Bank 14 000
Inventory (1 January 2010) 100 000
Debtors control 82 000
Fixed deposit 37 200
Creditors control 90 000
Sales 500 000
Purchases 283 000
Interest income 800
Rent income 2 400
Freight charges on purchases 5 000
Advertising 9 800
Insurance 5 000
Credit losses 2 600
Administration expenses 30 000
Property taxes 9 600
Interest expenses 3 000
Water, electricity and telephone 10 000
Salaries 76 000
773 200 773 200

Additional information relating to adjustments that have to be made at year end is as follows:
1. On 1 August 2010 N&N Enterprises rented out a section of their premises to Oli Traders for
12 months. A cheque for R2 400 was received on that date for the entire year’s rent.
2. The interest earned on the fixed deposit amounted to R1 060, but was not yet received.
3. An amount of R3 500 for insurance expenses was prepaid for the 2011 financial year.
4. Advertising expenses include a payment of R2 400 made to the Count News Magazine for
advertisements to be placed from January 2011.
5. Salaries earned by the employees but not yet paid at 31 December 2010 amounts to R800.
6. Interest on the mortgage is payable quarterly in arrears on the first day of January, April, July and
October. The loan was negotiated on 1 March 2010. No repayment of the capital amount was
made during the year.
7. Furniture and equipment should be depreciated at 10% per annum, using the straight-line
method.
8. The closing inventory on 31 December 2010 was R72 000.

9
QUESTION 3 (CONTINUED)

REQUIRED:
a) Using the information given above, record the necessary year-end adjustments in the general
journal of N&N Enterprises as at 31 December 2010. (7)
b) Prepare a post adjustment trial balance for N&N Enterprises as at 31 December 2010. (27)
c) Prepare the statement of profit or loss and other comprehensive income of N&N Enterprises for
the year ended 31 December 2010. (15)

QUESTION 4 (23 marks)(28 minutes)

On 1 March 2007 WOW Traders started trading and on the same date equipment of R120 000, was
purchased for cash.

On 1 September 2008 new equipment of R30 000 was purchased for cash.

On 1 June 2009, WOW Traders sold used equipment to B Bouwer on credit for R15 750. This equipment
was purchased on 1 March 2007 at a total cost of R24 000.

On 1 July 2009, WOW Traders purchased new equipment on credit from OB Distributors for R54 000.
On this date WOW Traders issued cheque no. 9123 for R3 000 to Equipment Installers for installing the
equipment.

Provision for depreciation on equipment is made at 20% per annum using the diminishing balance
method.

The financial year end of WOW Traders is on the last day of February.

REQUIRED:
Use the information given above to prepare the following accounts in the general ledger of
WOW Traders for the period 1 March 2009 to 29 February 2010:
a) Equipment (5)
b) Accumulated depreciation: Equipment (10½)
c) Asset realisation (7½)

©
UNISA 2011

10
 FAC1502/201

4. SUGGESTED SOLUTIONS TO THE MAY 2011 EXAMINATION

QUESTION 1 (13 marks)(16 minutes)

a) OSSO TRADERS
GENERAL LEDGER
Dr Bank Cr
R R
2011 201
1
Jan 1 Balance b/d 9540 Jan 31 Total payments 949 260
31 Total receipts 974 700 Bank charges (305 + 137) ^^442
D Banks (cancelled cheque J Bronko (incorrect figure as
401) ^1 683 deposit) ^680
D Banks (cancelled cheque Balance c/d ^34 787
405) ^137
D Banks (cancelled cheque
407) ^5 367
B Crux (incorrect deposit) ^900
A Randwell (cancelled
cheque) ^1 842
85 169 85 169
Feb 1 Balance b/d ^34 787
(8)

b) OSSO TRADERS
BANK RECONCILIATION STATEMENT AS AT 31 JANUARY 2011
Dr Cr
R R
Credit balance as per bank statement ^10 170
Outstanding cheques: No 415 ^1 571
No 480 ^2 700
No 491 ^1 072
Outstanding deposits ^28 920
Incorrect deposit 91 980
Incorrect cheques drawn 93 020
Debit balance as per bank account ^34 787
42 110 42 110

(5)

11
QUESTION 2 (15 marks)(18 minutes)

a)
S GLOW
GENERAL LEDGER
Dr Debtors control Cr
R R
2011 2011
Jan 1 Balance b/d ^22 556 Jan 31 Bank 935 036
31 Bank (R/D) 9860 Credit losses 9400
Sales 965 636 Settlement discount
Interest income 960 granted 91 804
Sales 940 Sales returns 9110
Balance c/d ^51 802
89 152 89 152
Feb 1 Balance b/d ^51 802
(9½)

b)
Dr Creditors control Cr
R R
2011 2011
Jan 31 Bank 925 724 Jan 1 Balance b/d ^37 452
Purchases returns 9400 31 Purchases 959 724
Balance c/d ^71 388 Interest expense 9336
97 512 97 512
Apr 1 Balance b/d ^71 388
(5½)

12
 FAC1502/201

QUESTION 3 (49 marks)(58 minutes)

a)
N&N ENTERPRISES
GENERAL JOURNAL FOR DECEMBER 2010
Dr Cr
Details R R
1. Rental income ^1 400
Income received in advance ^1 400
(Amount received in advance (7/12 x 2 400 = 1 400))
2. Accrued income ^1 060
Interest income ^1 060
3. Prepaid expenses ^3 500
Insurance ^3 500
4. Prepaid expenses ^2 400
Advertising ^2 400
(The advertisements will be placed from Jan 2011)
5. Salaries ^800
Accrued expenses ^800
6. Interest expense ^333
Accrued expenses ^333
(Interest payable for the year: (50 000 x 8% x 10/12) = 3 333 –
3 000 (paid) = 333 (outstanding))
7. Depreciation ^1 400
Accumulated depreciation: Furniture and equipment
(14 000 x 10% = R1 400) ^1 400
(7)

13
b)
N&N ENTERPRISES
POST ADJUSTMENT TRIAL BALANCE AS AT 31 DECEMBER 2010
Dr Cr
R R
Capital ^130 000
Drawings ^11 000
Mortgage (8%) ^^50 000
Land and buildings ^81 000
Furniture and equipment ^14 000
Accumulated depreciation: Furniture and equipment ^1 400
Bank ^14 000
Fixed deposit ^37 200
Inventory ^100 000
Debtors control ^82 000
Creditors control ^90 000
Income received in advance ^1 400
Accrued income ^1 060
Prepaid expenses (^2 400 + 93 500) ^5 900
Accrued expenses (^333 + 9800) ^1 133
Sales ^500 000
Purchases ^283 000
Interest income (^800 + 91 060) ^1 860
Rental income (^2 400 – 91 400) ^1 000
Freight charges on purchases ^5 000
Advertising (^9 800 – 92 400) ^7 400
Insurance (^5 000 – 93 500) ^1 500
Credit losses ^2 600
Depreciation ^1 400
Administration expenses ^30 000
Property taxes ^9 600
Interest expenses (^3 000 + 9333) ^3 333
Water, electricity and telephone ^10 000
Salaries (^76 000 + 9800) ^76 800
776 793 776 793
(27)

14
 FAC1502/201

c)
N&N ENTERPRISES
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 DECEMBER 2010
R R
Revenue ^ ^ 500
000
Cost of sales^ (1) (316 000)
Gross profit^ ^184 000
Other income ^ ^2 860
Rental income ^1 000
Interest income ^1 860
186
860
Distribution, administrative and other expenses ^ ^ (139 300)
Advertising ^7 400
Salaries ^76 800
Administrative expenses ^30 000
Property taxes ^9 600
Water, electricity & telephone ^10 000
Credit losses ^2 600
Insurance expense ^1 500
Depreciation ^1 400
Finance costs (3 333)
Interest expenses ^3 333
Profit for the year 44 227
Other comprehensive income for the year -
Total comprehensive income for the year^ ^44 227
(15)

(1) Calculation of cost of sales

R
Opening inventory 9100 000
Purchases 9283 000
Freight charges on purchases 95 000
Closing inventory 9 (72 000)
Cost of sales 316 000

15
QUESTION 4 (23 marks)(28 minutes)

a)
WOW TRADERS
GENERAL LEDGER
Dr Equipment Cr
R R
2009 2009
Mar 1 Balance b/d 9150 000 Jun 1 Equipment realisation 924 000
Jul 1 Creditors control 2010
(OB Distributors) 954 000 Feb 29 Balance c/d ^183 000
Bank 93 000
207 000 207 000
2010
Mar 1 Balance b/d ^183 000

(5)
b)
Dr Accumulated depreciation: Equipment Cr
R R
2009 2009
Jun 1 Equipment realisation (4½) 9 408 Mar 1 Balance b/d (3½) 46 200
2010 Jun 1 Depreciation 9768
Feb 29 Balance c/d ^62 848 2010
Feb 29 Depreciation (4) 25 288
72 256 72 256
Mar 1 Balance b/d ^62 848

(14)
c)
Dr Equipment realisation Cr
R R
2009 2009
Jun 1 Equipment 924 000 Jun 1 Accumulated
Profit on sale of depreciation:
assets 91 158 Equipment 9 9 408
Debtors control
(B Bouwer) 915 750
25 158 25 158

(4)

16
 FAC1502/201

Calculations

1. Balance of accumulated depreciation on 1 March 2009

R
1 March 2007 – 28 February 2008: ^R120 000 x ^20% = 24 000
1 March 2008 – 28 February 2009: (^R120 000 – ^R24 000) x 20% = 19 200
1 September 2008 – 28 February 2009: ^R30 000 x 20% x 96/12 = 3 000
46 200
(3½)

2. Vehicle sold

R
1 March 2007 – 28 February 2008: ^R24 000 x ^20% = 4 800
1 March 2008 – 28 February 2009: (^R24 000 – ^R4 800) x 20% = 3 840
^8 640
1 March 2009 – 1 June 2009: (R^24 000 – ^R8 640) x 20% x 93/12 =
768
9 408
(4½)

3. Depreciation at year-end
R
“Old” equipment: [(^R150 000 - ^R24 000) -
(^R46 200 - ^R8 640)] x ^20% = 17 688
“New” equipment: R^57 000 x 20% x 98/12 = 7 600
25 288
(4)

©
UNISA 2012

17
5 MAY 2012 EXAMINATION PAPER

THIS QUESTION PAPER CONSISTS OF SIX (6) PAGES.

PLEASE NOTE:
1. This paper consists of FIVE (5) questions.
2. Ensure that you are writing the correct paper.
3. Ensure that you are handed the correct examination answer book (BLUE) by the invigilator.
4. All questions must be answered.
5. Basic calculations, where applicable, must be shown.
6. The answer to each question must be commenced on a new (separate) page.
7. Please write legibly in blue or black ink.

PROPOSED TIME-TABLE: (Avoid deviating from this as far as possible)

TIME
QUESTION TOPIC MARKS
(minutes)
1 Financial statements 28 34
2 Property, plant and equipment 36 43
3 Incomplete records 7 8
4 Bank reconciliation 13 16
5 General ledger accounts 16 19
TOTAL 100 120

18
 FAC1502/201

QUESTION 1 (28 marks)(34 minutes)

At 31 March 2011 Moon Traders had the following general ledger balances before any adjustments were
made:

MOON TRADERS
PRE- ADJUSTMENT BALANCES AT 31 MARCH 2011
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
Debtors control ......................................................................................................................... 26 100
Interest on mortgage ................................................................................................................ 23 870
Municipality levy ....................................................................................................................... 4 333
Insurance .................................................................................................................................. 2 405
Loan on property @ 10.50% interest (mortgage) ..................... ………………………………… 248 000
Water and electricity…………... ................................................................................................ 2 750

Additional information (errors and problems identified)

1. Moon had 5 tenants, each paying different rental amounts. At the end of March 2011, one of
Moon Trader’s tenants owed two month’s rent to the enterprise. The monthly rental payable by
the tenant is R1 750.
2. Stationery on hand at 31 March 2011 amounted to R1 550.
3. R750 commission income was earned for April and May 2011.
4. Dr D Persue disappeared. Management decided to write his debt amounting to R2 650 off as
irrecoverable.
5. Provision should still be made for depreciation on equipment at 10% per annum on the
diminishing balance method.
6. The water and electricity account for March 2011 amounting to R310, has not yet been paid.
7. The insurance premium for April 2011 was paid in advance. The premiums are paid in equal
monthly amounts.
8. Interest on the loan for the month of March 2011 is still to be provided for.

REQUIRED:
a) Calculate the total comprehensive income or loss for the year ended 31 March 2011. (12)
b) Prepare the statement of financial position as at 31 March 2011. (16)

All calculations must be shown.

19
QUESTION 2 (36 marks)(43 minutes)

PECCO SCRAP DEALERS

GENERAL LEDGER
Dr Furniture at cost Cr
R R
2009 2010
Sept 01 Bank CPJ 250 000 Aug 31 Balance c/d 385 000
2010
May 31 Creditors GJ 120 000
Bank (Installation) CPJ 15 000
385 000 385 000
2010 2011
Sept 01 Balance b/d 385 000 June 30 Furniture realisation GJ 123 000
2011 (bought 01 Sept
June 30 Bank CPJ 66 000 2009)
Aug 31 Balance c/d 328 000
451 000 451 000
2011
Sept 01 Balance b/d 328 000

Dr Accumulated depreciation: Furniture Cr

R R
2010
Sept 01 Balance b/d 48 250

Dr Vehicles at cost Cr
R R
2009 2009
Sept 01 Bank CPJ 400 000 Nov 30 Vehicle realisation GJ 78 000
2010 2010
July 31 Bank CPJ 30 000 Aug 31 Balance c/d 352 000
430 000 430 000
2010 2011
Sept 01 Balance b/d 352 000 Aug 31 Vehicle realisation GJ 255 000
2011 (bought 01 Sept
Mar 01 Bank CPJ 65 000 2009 and 31 July
2011 2010)*
July 31 Creditors GJ 93 000 Balance c/d 255 000
510 000 510 000
2011
Sept 01 Balance b/d 255 000
*Bought: 1 Sept 2009 = R225 000 + 31 Jul 2010 = R30 000

Dr Accumulated depreciation: Vehicles Cr

R R
2010
Sept 0 Balance b/d 68 800
1

20
 FAC1502/201

QUESTION 2 (CONTINUED)

Additional information:
Depreciation on both Furniture and Vehicles is provided for on the straight-line method at 20% p.a..

REQUIRED:
a) Show all the depreciation calculations for the year ended 31 August 2011. (12)
b) Prepare the property, plant and equipment note to the financial statement of Pecco Scrap
Dealers for the year ended 31 August 2011. (24)
Notes on accounting policy are not required

QUESTION 3 (7 marks)(8 minutes)

The following information relates to Tottenham Traders:

Assets and liabilities as at 31 January 2012

R
Land and buildings (at cost) 120 000
Capital - 1 February 2011 78 000
Furniture and equipment (at cost) 65 000
Accumulated depreciation:
- Furniture and equipment 18 000
Creditors 15 000
Inventories 30 000
Accrued income 7 500
Bank (favourable) 13 500
Debtors 35 000
Prepaid expenses 28 000
Long-term loan 75 000

Additional information:
The owner made no additional capital contribution during the year but took inventory to the value of
R34 800 as a gift for his daughter’s wedding.

REQUIRED:
Calculate the profit or loss for the year ended 31 January 2012. (7)
All calculations should be shown

21
QUESTION 4 (13 marks)(16 minutes)

On comparing the bank statement with the cash journals of Pompei Traders, the following information
and differences were found at 31 July 2011.

Balances at 30 June 2011 R

Bank account (favourable) 7 950
Bank statement (favourable) 900

Balances at 31 July 2011

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 payment journal 12 750
3. The bank statement reglexes 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 2011 does not appear on the bank statement for July 2011 3 600
7. The following cheques does not appear on the bank statement:
Cheque number 324 300
Cheque number 329 1 300
Cheque number 333 950

REQUIRED:
Prepare the bank account and the bank reconciliation statement of Pompei Traders for the month ending
31 July 2011. (13)
Do not prepare the cash journals

22
 FAC1502/201

QUESTION 5 (16 marks) (19 minutes)

Extract from the General Journal of DUDU TRADERS - 31 March 2012:

DUDU TRADERS
GENERAL JOURNAL - 31 MARCH 2012
NO. DETAILS DR CR
1. Credit losses 2 450
Debtors control 2 450
Credit losses written off
2. Debtors control 6 600
Bank 5 600
Settlement discount granted 877
VAT output 123
Reversal of the settlement discount allowed on the R/D cheque
from debtor PJ More.
3. Bank 1 150
VAT output 141
Credit loss recovered, Debtor: J Jody 1 009
Recovery of a debtor‘s account previously written off.
4. Allowance for credit losses 150
Credit losses 150
A decrease in the allowance for credit losses for the year

GENERAL LEDGER BALANCES

The following were the balances as at 31 March 2012 before the above journals were taken into
consideration)
R
Debtors 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...................................................................................................................... 3 489

REQUIRED:
Prepare the general ledger accounts named in the above general journal of Dudu Traders, excluding
bank and settlement discount granted at 31 March 2011. (16)
The accounts should be balanced.

©
UNISA 2012

23
6 SUGGESTED SOLUTIONS TO THE MAY 2012 EXAMINATION PAPER

QUESTION 1 (28 marks)(34 minutes)

CALCULATION OF TOTAL COMPREHENSIVE INCOME OR LOSS:

R R
Rent income (64 000^ +^ 3 500^) 67 500
Commission income (2 700^ -^ 750^) 1 950
69 450
Less: Expenses (43 603)
Interest on mortgage (23 870^ +^ 2 170^) 26 040
Water and electricity (2 750^ +^ 310^) 3 060
Municipal levy 4 333^
Insurance (2 405^ -^ 185^) 2 220
Stationery (3 350^ -^ 1 550^) 1 800
Credit losses (1 600^ +^ 2 650^) 4 250
Depreciation 1 9009
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 2011
R
ASSETS
Non-current assets 367 100
Property, plant and equipment ^ (350 000^ + 34 000^ - 15 000^ - 1 900^) 367 100

Current assets 52 893

Inventories ^ 91 550
Trade and other +receivables ^ (26 100^- 2 6509+ 3 5009+ 27 135
1859)
Cash and cash equivalent ^ ^24 208

TOTAL ASSETS 419 993

EQUITY AND LIABILITIES

Equity 168 763
Capital ^ (149 000^ - 6 084^ + 25 847;) 168 763
248 000
Non-current liabilities
Long-term borrowings^ ^248 000
3 230
Current liabilities
Trade and other payables ^ (7509 + 3109 + 2 1709) 3 230

TOTAL EQUITY AND LIABILITIES 419 993

(16)

24
 FAC1502/201

QUESTION 2 (36 marks)(43 minutes)

Depreciation calculations
Furniture
1. Existing furniture: from 1 Sept.2010 to 31 Aug. 2011
R385 000 - R123 000 = R262 000 x 20/100 = R52 4009

2. New furniture: from 30 June 2011 to 31 August 2011

R66 0009 x 20/100 x 2/129 = R2 200

3. Sold furniture: from 1 Sept. 2010 to 30 June 2011

Depreciation for 2011: R123 0009 x 20/100 x 10/129 = R20 500
Depreciation for 2010: R123 000 x 20/100 = R24 600

4. Alternative calculation for furniture depreciation:

R385 000 x 20/100 x 10/12 = R64 167999
R328 000 x 20/100 x 2/12 = R10 93399

Vehicles
1. Existing vehicles: from 1 Sept. 2010 to 31 Aug. 2011
R352 000 - R255 000 = R97 000 x 20/100 = R19 4009

2. New vehicles: from 01 Sept 2010 to 31 Aug. 2011

Vehicle 1: from 1 March to 31 Aug. R65 0009 x 20/100 x 6/129 = R6 500
Vehicle 2: from 31 July to 31 Aug. R93 0009 x 20/100 x 1/129 = R1 550

3. Sold vehicles: from 1 Sept. 2010 to 31 Aug. 2011

Vehicle 1:
Depreciation for 2011: Cost (R255 000 - R30 000) x 20/100 = R45 0009
Depreciation for 2010: Cost R225 000 x 20/100 = R45 000

Vehicle 2:
Depreciation for 2011: Cost R30 000 x 20/100 = R6 0009
Depreciation for 2010: Cost R30 000 x 20/100 x 1/12 = R500

4. Alternative calculation for vehicle depreciation:

R352 000 x 20/100 = R70 400999 (R19 400 + R45 000 + R6 000)
OR for the sold ones: R255 000 x 20/100 = R51 00099 (R45 000 + R6 000)

5. Alternative calculation for vehicle depreciation:

R352 000 x 20/100 x 6/12 = R35 200999
R417 000 x 20/100 x 5/12 = R34 75099
R510 000 x 20/100 x 1/12 = R8 50099 (12)

25
PECCO SCRAP DEALERS
NOTES FOR THE YEAR ENDED 31 AUGUST 2011

1. Property, plant and equipment

FURNITURE VEHICLES TOTAL

R R R

Carrying amount: 1 Sept. 2010 336 750 ; 283 200 ; 619 950 `

Cost 385 000 9 352 000 9 737 000

Accumulated depreciation (48 250) 9 (68 800) 9 (117 050)

Additions 66 000 9 a158 000 9 224 000

Disposal (77 900); (158 500) ; (236 400)

Cost 123 000 9 255 000 9 378 000

Accumulated depreciation b(45 100)9 c(96 500)99 (141 600)

Depreciation for the year (75 100); (78 450); (153 550)

Carrying amount: 31 Aug. 2011 249 750 ; 204 250 ; 454 000 `

Cost 328 000 ; 255 000 ; 583 000

Accumulated depreciation (78 250); (50 750); (129 000)

Calculations
a (R65 000^ + R93 000^) = R158 000
b (R20 500^ + R24 600^) = R45 100
c (R45 000^ + R45 000^ + R500^ + R6 000^) = R96 500
(24)

26
 FAC1502/201

QUESTION 3 (7 mark)(8 minutes)

Calculation of profit or loss for the year ended 31 January 2012

R
Land and building 120 000^
Furniture and equipment (65 000^ - 18 000^) 47 000
Inventories 30 000^
Bank(favourable) 13 500^
Debtors 35 000^
Prepaid expenses 28 000^
Accrued income 7 500^
Creditors (15 000)^
Long-term loan (75 000)^

Equity - 31 January 2012 191 000`

Less: Equity - 1 February 2011 (78 000)^

113 000

Add: Drawings 34 800^

Profit for the year 147 800`

(7)

27
QUESTION 4 (13 marks)(16 minutes)

POMPEI TRADERS
GENERAL LEDGER

Dr Bank Cr
R R
2011 2011
July 1 Balance b/d 7 9509 July 31 Total payments CPJ 12 7509
31 Total receipts CRJ 15 9609 Bank charges 6509
R/D Cheque 2 3549
Balance c/d 8 156;
23 910 23 910
2011
Aug 1 Balance b/d 8 156
(6)

POMPEI TRADERS
BANK RECONCILIATION STATEMENT AS AT 31 JULY 2011
Dr Cr
R R
Credit balance as per bank statement 4 7569
Credit outstanding deposit 3 6009
Debit outstanding cheques:
No 324 3009
No 329 1 3009
No 333 9509
Error: Cheque no. 004 for Rompi 2 3509
Debit balance as per bank account 8 156;
10 706 10 706
(7)

28
 FAC1502/201

QUESTION 5 (16 marks)(19 minute)

DUDU TRADERS
GENERAL LEDGER

Dr Debtors control Cr
R R
2012 2012
Mar 31 Balance^ b/d 24 000^ Mar 31 Credit losses^ GJ 2 450^
Bank^ GJ 5 600^ Balance` c/d 28 150`
Settlement discount
granted^ GJ 877^
VAT output^ GJ 123^

30 600 30 600
2012
April 1 Balance b/d 28 150
(6)
Dr Allowance for credit losses Cr
R R
2012 2012
Mar 31 Credit losses^ GJ 150^ Mar 31 Balance^ b/d 1 900^
Balance` c/d 1 750`
1 900 1 900
2012
April 1 Balance b/d 1 750
(3)
Dr Credit losses Cr
R R
2012 2012
Mar 31 Debtors control^ GJ 2 450^ Mar 31 Allowance for credit
losses^ GJ 150^
Balance c/d 2 300`
2 450 2 450
2012
Apr 1 Balance b/d 2 300
(21/2)
Dr Credit losses recovered Cr
R
2012
Mar 31 Bank^ GJ 1 009^
(1)
Dr VAT output Cr
R R
2012 2012
Mar 31 Balance c/d 3 753` Mar 31 Balance^ b/d 3 489^
Debtors control^ GJ 123^
Bank^ GJ 141^
3 753 3 753
2012
Apr 1 Balance b/d 3 753
(31/2)
©
UNISA 2013

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