FAC1502/202/1/2013

Tutorial letter 202/1/2013

Accounting Concepts, Principles and

Procedures
FAC1502

Semester 1

Department of Financial Accounting

This tutorial letter contains the solution to

assignment 02/1/2013 and the October 2011
and October 2012 exam papers with solutions
 CONTENTS

Page

1 INTRODUCTION ............................................................................................................................ 3
2 EXAMINATION INFORMATION .................................................................................................... 4
3 SOLUTION TO ASSIGNMENT 02/1/2013 ..................................................................................... 5
4 OCTOBER 2011 EXAMINATION PAPER ..................................................................................... 7
5 SUGGESTED SOLUTION TO THE OCTOBER 2011 EXAMINATION PAPER .......................... 12
6. OCTOBER 2012 EXAMINATION PAPER ................................................................................... 20
7 SUGGESTED SOLUTIONS TO THE OCTOBER 2012 EXAMINATION PAPER ........................ 26

2
 FAC1502/202

1 INTRODUCTION

Dear Student

Attached please find:

y the solution to assignment 02 for the first semester of 2013.
y the October 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
October 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 October 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.

3
2 EXAMINATION INFORMATION
A. Your examination paper will start with the following information and/or instructions:

Use of a non-programmable pocket calculator is permissible.

PLEASE NOTE:

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

2. Ensure that you are writing the correct examination paper (FAC1502).
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. Each question must be commenced on a new (separate) page.
7. Please write legibly in blue or black ink.

B. 1. Do the calculations in your examination answer book (not on the exam paper).

2. It is not necessary to answer the questions in number sequence.

3. The examination script consists of a book with 12 pages. Every page has three
columns on the right hand side. If you don’t want or cannot use the columns, ignore
them and draw your own columns or T-accounts. You may open the book and use the
left-hand (Dr-side) as well as the right-hand (Cr-side) page.

Make sure that you indicate what is being debited and what is being credited. No
marks will be allocated if you swop the debit and credit sides. Thus ensure that you
know what must be debited and what must be credited.

4. When it is required of you to prepare one of the cash journals, please use a double
page (e.g. page 2 and 3) to prepare the journal. Use the given columns, which will
avoid the time consuming to draw several lines.

5. Ensure that you apply the correct format for financial statements.

6. NB:
Do your calculations on the page opposite to your actual answers. Marks are
sometimes allocated for calculations.

7. Please commence each question on a new (separate) page. Basic calculations,

where applicable, must be shown.

4
 FAC1502/202

3 SOLUTION TO ASSIGNMENT 02/1/2013

1. (4)

2. (3) A deposit will be refunded when the rent contract is cancelled – it is therefore seen as
money that will be collected at a later stage and is therefore classified as a current
asset.

3. (1)

4. (4) (b) False – if the double entry principle is applied an increase in liabilities cannot also
result in an increase in equity (this requires two credit entries).
(c) False - contributions from equity participants is not seen as income, but rather as
an increase in equity.
(d) False – a decrease in equity will not constitute an increase in income.

5. (5)

6. (3)

7. (4) Assets Liabilities Equity

R R R
Delivery truck 67 500 Creditors 52 500
Inventory 22 500
Bank 11 250
Debtors 45 000
146 250 52 500 93 750

8. (4)

9. (2) (a) Transaction will be entered in the Purchases/Creditors journal.

(c) Transaction will be entered in the Purchases/Creditors journal.
(e) Transaction will be entered in the Purchases/Creditors journal.
(g) Transaction will be entered in the cash receipts journal.

R
10. (4) Capital 80 000
Sales (cash) 49 200
129 200

R
11. (4) Cheque for inventory, stationery, petrol and fuel and office equipment 57 624
Inventory 35 400
Rent expenses 12 000
Drawings 3 900
108 924

5
Solution to Assignment 02 (continued)

R
12. (4) Sales (cash) 49 200
Sales (credit) 27 000
Sales (credit) 64 170
140 370

R
13. (3) Sales (credit) 27 000
Sales (credit) 64 170
91 170

14. (3)

R R
15. (1) Sales 140 370
Less: Cost of sales (127 350)
Inventory (opening) -
Purchases (48 000 + 35 400 + 43 950) 127 350
Inventory (closing) -
Gross profit 13 020

6
 FAC1502/202

4 OCTOBER 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 Closing entries 27 32
2 Financial statements 25 30
3 General ledger accounts 31 38
4 Incomplete records 17 20
TOTAL 100 120

7
QUESTION 1 (27 marks)(32 minutes)

The following information was obtained from the books of XYZ Traders.

XYZ TRADERS
POST-ADJUSTMENT TRIAL BALANCE AS AT 30 JUNE 2011
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: Vehicles (30 June 2011) .......................................
54 700
Accumulated depreciation: Furniture and fittings (30 June 2011) ....................
22 700
Debtors control ..................................................................................................
6 780
Inventory: Trading (30 June 2010) ...................................................................
13 550
Bank .................................................................................................................
7 775
Petty cash ..........................................................................................................
500
Mortgage ..........................................................................................................
150 000
Loan from Africa Bank ......................................................................................
50 000
Creditors control ................................................................................................
3 200
Sales .................................................................................................................
256 400
Carriage on purchases .....................................................................................
660
Commission income .........................................................................................
15 000
Credit losses .....................................................................................................
244
Depreciation ......................................................................................................
15 400
Insurance ...........................................................................................................
2 400
Packing materials .............................................................................................
3 300
Purchases ..........................................................................................................
154 880
Purchases returns .............................................................................................
245
Rent 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 1 July 2011 trading inventory had a balance of R14 885.

REQUIRED:
a) Show the journal entries for bringing the closing inventory at 30 June 2011 into account. (3)
b) Show the journal entries for the closing of the applicable accounts (closing entries) at
30 June 2011. (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 2011. (10)

8
 FAC1502/202

QUESTION 2 (25 marks)(30 minutes)

The following list of balances was extracted from the general ledger of M&S, a general dealer at
28 February 2011:

R
Creditors control 28 900
Fixed deposit (36 month) 5 000
Debtors control 19 200
Bank (Dr) 6 000
Furniture and equipment (at carrying amount) 24 300
Land and buildings 108 000
Mortgage (repayable over 20 years) 78 000
Vehicles (at carrying amount) 51 000
Inventories 30 400
Capital (1 March 2010) 150 000
Profit/(Loss) for the year ended 28 February 2011 ?

REQUIRED:
a) Prepare the trial balance of M&S as at 28 February 2011. (11)
b) Prepare the statement of changes in equity of M&S for the year ended 28 February 2011. (4)
c) Prepare the statement of financial position of M&S as at 28 February 2011. (10)

9
QUESTION 3 (31 marks)(38 minutes)

ABC DEALERS
TRIAL BALANCE AS AT 1 FEBRUARY 2011
R
Bank (Debit balance) ........................................................................ ……………………… 2 150
Cost of sales ...................................................................................................................... 192 000
Trading inventory ............................................................................................................... 52 000
Sales .................................................................................................................................. 400 000
VAT input ........................................................................................................................... 1 600
VAT output ......................................................................................................................... 1 800

The following subsidiary journals, with only the totals of the analysis columns, appeared in the books of
ABC Dealers at 28 February 2011:

CASH RECEIPTS JOURNAL

Settlement
Cost of Debtors discount VAT VAT Sundry
Bank Sales sales control granted output input amounts
R R R R R R R R
*? 18 600 9 300 6 550 (150) 2 604 (20) -
*Total to be calculated

CASH PAYMENTS JOURNAL

VAT VAT Settlement discount Sundry
Bank Purchases Creditors input output received amounts
R R R R R R R
**? 7 200 6 400 1 008 (25) (100) 3 395
**Total to be calculated

SALES JOURNAL
Debtors Sales Cost of sales VAT output
R R R R
15 960 14 000 7 000 1 960

PURCHASES JOURNAL
Creditors Purchases VAT input
R R R
10 488 9 200 1 288

SALES RETURNS JOURNAL

Debtors Sales returns Cost of sales VAT output
R R R R
285 250 125 35

PURCHASES RETURN JOURNAL

Creditors Purchases returns VAT input
R R R
969 850 119

10
 FAC1502/202

QUESTION 3 (CONTINUED)

REQUIRED:
Prepare the following general ledger accounts for ABC Dealers for February 2011:
a) Bank (4)
b) Cost of sales (5)
c) Trading inventory (7)
d) Sales (3)
e) VAT input (6)
f) VAT output (6)

QUESTION 4 (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 requests your
assistance. You establish the following:

2010 2011
Balances at 30 April:
R R
Furniture at cost (Bought on 30 April 2010) .................... ……………………… 25 000 25 000
Tools and equipment at cost (Bought on 30 April 2010) ................................. 46 500 46 500
Inventory: Trading ........................................................................................... 9 800 10 200
Bank (favourable) ........................................................................................... - 2 480
Bank (overdraft) .............................................................................................. 6 500 -
Long-term borrowings ..................................................................................... 14 000 9 200
Creditors ......................................................................................................... 5 200 6 120
Income received in advance ........................................................................... 3 800 5 000
Accrued expenses .......................................................................................... 1 600 1 300

Additional information
1. F Focus drew R100 000 during the year for own use.
2. Depreciation at 20% per annum on the cost price of furniture, as well as tools and equipment
must still be provided for.

REQUIRED:
Calculate the estimated profit or loss of F Focus Services for the year ended 30 April 2011. (17)

©
UNISA 2011

11
5 SUGGESTED SOLUTION TO THE OCTOBER 2011 EXAMINATION PAPER

QUESTION 1 (27 marks)(32 minutes)

a) Trading inventory brought into account

Debit Credit
R R
Trading account ^13 550
Inventory: Trading (opening) ^^13 550
Closing transfer of opening inventory
Inventory: Trading (closing) ^14 885
Trading account ^^14 885
Closing transfer of closing inventory
(6 x ½ = 3)
b) Closing entries
Debit Credit
R R

Sales ^553
Settlement discount granted ^553
Closing transfer of settlement discount
Settlement discount received ^155
Purchases ^155
Closing transfer of settlement discount
Trading account ^156 723
Carriage on purchases ^660
Purchases ^154 725
Sales returns ^1 338
Closing transfers
Sales ^255 847
Purchases returns ^245
Trading account ^256 092
Closing transfers
Trading account ^100 704
Profit or loss account ^^100 704
Transfer of gross profit
Profit or loss account ^82 519
Credit losses ^244
Depreciation ^15 400
Insurance ^2 400
Packing materials ^3 300
Wages ^56 775
Water and electricity ^4 400
Closing transfers
Commission income ^15 000
Rent income ^3 600
Profit or loss account ^18 600
Closing transfers

12
 FAC1502/202

QUESTION 1 (CONTINUED)

Debit Credit
R R

Profit or loss account ^36 785

Capital ^36 785
Closing transfer of profit
Capital ^2 445
Drawings ^2 445
Closing transfer of total comprehensive income for the year
(28 x ½ = 14)

c) ROBERTO TRADERS
GENERAL LEDGER

Dr Trading account Cr
R R
Jun 30 Inventory (1-7-2010) ^13 550 Jun 30 Inventory (30-6-2011) ^14 885
Carriage on purchases ^660 Sales (256 400 - 553) ^^255 847
Purchases (154 880 - 155) ^^154 725 Purchases returns ^245
Sales returns ^1 338
Profit or loss account (gross
profit) ^100 704
270 977 270 977

Dr Profit or loss account Cr

R R
Jun 30 Credit losses ^244 Jun 30 Trading account ^100 704
Depreciation ^15 400 Commission income ^15 000
Insurance ^2 400 Rent income ^3 600
Packing materials ^3 300
Wages ^56 775
Water and electricity ^4 400
Capital (total comprehensive
income for the year) ^36 785
119 304 119 304

(20 x ½ = 10)

13
QUESTION 2 (25 marks)(30 minutes)

a)
M&S
TRIAL BALANCE AS AT 28 FEBRUARY 2011
Dr Cr
R R
Creditors control 928 900
Fixed deposit 95 000
Debtors control 919 200
Bank 96 000
Furniture and equipment 924 300
Land and buildings 9108 000
Mortgage 978 000
Vehicles 951 000
Inventory 930 400
Capital: Mica (1 Maart 2010) 9150 000
243 900 256 900
Loss for the year 913 000
256 900 256 900

(11)

It is important to draw up a trial balance first so that difference between the debit and credit balances can
be detected. M&S had a loss of R13 000 for the year.

b)
M&S 9
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 2011
Capital
R
Balance as at 1 March 2010 9150 000
Loss for the year 9 (13 000)
Balance as at 28 February 2011 9137 000
(4)

14
 FAC1502/202

QUESTION 2 (CONTINUED)
c)
M&S
STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2011 9
ASSETS R R

Non-current assets 188 300

Property, plant and equipment^ (24 300^ + 108 000^ + 51 000^) 183 300
Financial assets^ ^5 000

Current assets 55 600

Inventories^ ^30 400
Trade and other receivables^ ^19 200
Cash and cash equivalents^ ^6 000

TOTAL ASSETS 243 900

EQUITY AND LIABILITIES
Equity 137 000
Capital^ ^137 000

Non-current liabilities 78 000

Long-term borrowings^ ^78 000

Current liabilities 28 900

Trade and other payables^ ^28 900

TOTAL EQUITY AND LIABILITIES 243 900

(10)

15
QUESTION 3 (31 marks)(38 minutes)

ABC DEALERS
GENERAL LEDGER

Dr Bank Cr
R R
2011 2011
Feb 1 Balance^ b/d ^2 150 Feb 28 Total payments^ CPJ ^17 878
28 Total receipts^ CRJ ^27 584 Balance^ c/d ^11 856

29 734 29 734

Mrch 1 Balance b/d 11 856

(4)

Dr Cost of sales Cr
R R
2011 2011
Feb 1 Total^ b/d ^192 000 Feb 28 Trading inventory^ SRJ ^125
28 Trading inventory^ CRJ ^9 300 Total^ c/d ^208 175
Trading inventory^ SJ ^7 000
208 300 208 300

Mrch 1 Total b/d 208 175

(5)

Dr Trading inventory Cr
R R
2011 2011
Feb 1 Balance^ b/d ^52 000 Feb 28 Cost of sales^ CRJ ^9 300
28 Bank^ CPJ ^7 200 Cost of sales^ SJ ^7 000
Creditors control^ PJ ^9 200 Creditors control^
Cost of sales^ SRJ ^125 Balance PRJ ^850
c/d 51 375
68 525 68 525

Mrch 1 Balance b/d 51 375

(7)

Dr Sales Cr
R R
2011 2011
Feb 28 Total c/d 432 600 Feb 1 Total^ b/d ^400 000
28 Bank^ CRJ ^18 600
Debtors control^ SJ ^14 000
432 600 432 600

Mrch 1 Total b/d 432 600

(3)

16
 FAC1502/202

QUESTION 3 (CONTINUED)

Dr VAT input Cr
R R
2011 2011
Feb 1 Balance^ b/d ^1 600 Feb 28 Creditors control^ PRJ ^119
28 Debtors control^ CRJ ^20 Balance^ c/d ^3 797
Bank^ CPJ ^1 008
Creditors control^ PJ ^1 288
3 916 3 916

Mrch 1 Balance b/d 3 797

(6)

Dr VAT output Cr
R R
2011 2011
Feb 28 Debtors control^ SRJ ^35 Feb 1 Balance^ b/d ^1 800
Balance^ c/d ^6 354 28 Bank^ CRJ ^2 604
Creditors control^
Debtors control^ CPJ ^25
SJ ^1 960
6 389 6 389

Mrch 1 Balance b/d 6 354

(6)

17
QUESTION 4 (17 marks)(20 minutes)

a) Calculation of profit/loss

F FORTUNE
STATEMENT OF ASSETS AND LIABILITIES AS AT 30 APRIL 2010
ASSETS R
Furniture ^25 000
Tools and equipment ^46 500
Inventory ^9 800
TOTAL ASSETS 81 300
LIABILITIES
Long-term borrowing ^14 000
Creditors ^5 200
Income received in advance ^3 800
Accrued expenses ^1 600
Bank overdraft ^6 500
TOTAL LIABILITIES 31 100

Calculation of equity at the beginning of the period

Equity = Assets – Liabilities

= R81 300^ – R31 100^
= R50 200^ (5½)

F FORTUNE
STATEMENT OF ASSETS AND LIABILITIES AS AT 30 APRIL 2011
R R
ASSETS Alternative

Furniture ^25 000 9^20 000

Tools and equipment ^46 500 9^37 200
Inventory ^10 200 ^10 200
Bank ^2 480 ^2 480
TOTAL ASSETS 84 180 69 880
LIABILITIES
Long-term borrowing ^9 200 ^9 200
Creditors ^6 120 ^6 120
Income received in advance ^5 000 ^5 000
Accrued expenses ^1 300 ^1 300
TOTAL LIABILITIES 21 620 21 620

Calculation of equity at the end of the period

Equity = Assets – Liabilities

= R84 180^ – R21 620^ or R69 880^ – R21 620^
= R62 560^ or R48 260^ (5½) (7½)

18
 FAC1502/202

QUESTION 4 (CONTINUED)

Estimated profit/loss: Alternative

R R
Capital at the end of the financial period 962 560 948 260
Capital at the beginning of the period 9(50 200) 9(50 200)

Drawings 12 360 (1 940)

Adjustments: Depreciation 9100 000 9100 000
(14 300)
Furniture 95 000
Tools and fittings 99 300

Estimated profit for the year 998 060 998 060

(6) (4)

©
UNISA 2012

19
6 OCTOBER 2012 EXAMINATION PAPER

This question paper consists of SIX (6) 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: (try not to deviate from this):

Time in
Question Topic Marks
minutes
1 Cash transactions and bank reconciliation 26 30
Statement of financial position and general ledger accounts
2 27 32
(final)
The adjusting journal and statement of profit or loss and
3 27 32
other comprehensive income
4 Property, plant and equipment 20 26

TOTAL 100 120

20
 FAC1502/202

QUESTION 1 (26 marks)(30 minutes)

The following bank reconciliation statement was prepared at 30 June 2012 in the books of Grey
Services:

BANK RECONCILIATION STATEMENT AS AT 30 JUNE 2012

Debit Credit

R R
- 1 749
Credit balance as per bank statement ...................................................... - 1 010
Credit outstanding deposit ........................................................................ - 254
Credit incorrect entry on bank statement ................................................. - -
Debit outstanding cheques: 410 -
No. 558 152 -
No. 813 249 -
No. 821 2 202 -
Debit balance as per bank account ..........................................................
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 2012:
CASH RECEIPTS JOURNAL CASH PAYMENTS JOURNAL

Bank Bank
Doc. Date Details (Amount Doc. Date Details (Amount
no. deposited) no. 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).

21
QUESTION 1 (CONTINUED)

The bank statement received on 31 July 2012 was as follows:

Bank statement: Grey Services – July 2012

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 2011 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:
a) Finalise the cash receipts journal and the cash payments journal for July 2012. (Begin your
answer with the totals) (14)
b) Open and complete the bank account for July 2012 in the general ledger of Grey Services. (4)
c) Prepare the bank reconciliation statement as at 31 July 2012. (8)

22
 FAC1502/202

QUESTION 2 (27 marks)(32 minutes)

The following information was obtained from the books of Khulong Traders.

POST-ADJUSTMENT TRIAL BALANCE OF KHULONG TRADERS AS AT 30 JUNE 2012

Debit Credit
R R
Capital ................................................................................................ - 100 000
Drawings ............................................................................................. 2 695 -
Land and buildings at cost .................................................................. 200 000 -
Vehicles at cost .................................................................................. 122 000 -
Furniture and fittings at cost .............................................................. 65 000 -
Accumulated depreciation on vehicles (30 June 2012) ...................... - 54 700
Accumulated depreciation on furniture and fittings (30 June 2012) .. - 22 700
Debtors control ................................................................................... 9 280 -
Inventory: Trading (01 July 2011) ....................................................... 13 800 -
Bank ................................................................................................... 8 025 -
Petty cash ........................................................................................... 750 -
Mortgage ............................................................................................ - 150 000
Loan from Africa Bank (final instalment on 28 February 2013) .......... - 50 000
Creditors control ................................................................................. - 4 500
VAT control ......................................................................................... - 1 500
Sales ................................................................................................... - 257 070
Carriage on purchases ....................................................................... 760 -
Commission income ........................................................................... - 15 000
Credit losses ....................................................................................... 349 -
Depreciation ....................................................................................... 15 400 -
Insurance ............................................................................................ 2 750 -
Packing materials ............................................................................... 4 300 -
Purchases ........................................................................................... 155 130 -
Purchases returns .............................................................................. - 1 130
Rent income ....................................................................................... - 3 800
Sales returns....................................................................................... 1 338 -
Credit losses recovered...................................................................... - 2 500
Loss on sale of an asset..................................................................... 5 700 -
Settlement discount granted ............................................................... 303 -
Settlement discount received ............................................................. - 405
Wages ................................................................................................ 51 325 -
Water and electricity ........................................................................... 4 400 -
663 305 663 305

Additional information

On 30 June 2012 trading inventory had a balance of R15 335.

REQUIRED:
a) Prepare the following general ledger accounts of Khulong Traders for the year ended
30 June 2012:
Inventory, (3)
Profit or loss, (9)
Capital. (3)
b) Prepare the statement of financial position as at 30 June 2012. (12)
Show all necessary calculations

23
QUESTION 3 (27 marks)(32 minutes)

The following information was obtained from the books of Orange Traders:
ORANGE TRADERS
TRIAL BALANCE AS AT 29 FEBRUARY 2012
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: Vehicles (1 March 2011).................................. - 54 700
Accumulated depreciation: Furniture and fittings (1 March 2011) .............. - 22 700
Debtors control ........................................................................................... 6 780 -
Inventory: Trading (1 March 2011).............................................................. 13 550 -
Bank ................................................................................................. 7 775 -
Cash float ................................................................................................. 500 -
Mortgage ................................................................................................. - 150 000
Loan from Africa Bank (@ 12% p.a.) .......................................................... - 50 000
Creditors 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
Rent 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 29 February 2012

• Trading inventory – R12 800
• Stationery – R345.
2. The insurance amount of R2 400 includes a premium of R200 for March 2012.
3. The loan was obtained from Africa Bank on 1 September 2011. The interest on the loan has still
to be paid.
4. Rent income for February 2012 is still outstanding.
5. Provision must be made for depreciation as follows:
• Vehicles – 20% per annum on the diminishing balance method.
• Furniture and fittings – 10% per annum on the cost price.

24
 FAC1502/202

QUESTION 3 (CONTINUED)

REQUIRED:
a) Record the adjustments in the general journal of Orange Traders. (Ignore narrations) (6)
b) Prepare the statement of profit or loss and other comprehensive income of Orange Traders for the
year ended 29 February 2012. (21)

QUESTION 4 (20 marks)(26 minutes)

Pride Sales had the following information in respect of its property, plant and equipment for the year
ending 30 September 2012.

Machines Purple Aqua

Date of purchase 1 April 2009 1 July 2010

Purchase price R250 000 R570 000

Estimated lifespan 10 3

1. The entity uses the straight line method of calculating depreciation.

2. On 31 December 2011 management decided to increase capacity and bought the Green
machine on credit from Spring Color Machinery worth R525 000.The Aqua machine was traded
in for the purchase of the Green machinery, and the balance payable to Spring Color Machinery
with regard to the purchase is R175 000.

3. The estimated lifespan of the Green machine is 7 years.

REQUIRED:
Prepare the following general ledger accounts for the year ended 30 September 2012:
a) Accumulated depreciation, (11)
b) Depreciation, (3 ½)
c) Machinery realisation. (5 ½)
Show all calculations where necessary, marks are also allocated for calculations.

©
UNISA 2012

25
7 SUGGESTED SOLUTIONS TO THE OCTOBER 2012 EXAMINATION PAPER

QUESTION 1 (26 marks)(30 minutes)

SILVER SERVICES
CASH RECEIPTS JOURNAL FOR JULY 2012
Receipts
(Bank)
R
Pencil total/ sub-total 6 848
Cheque 558 cancelled (repairs) 99 410
Rent income (B/S) 99 290
Correction cheque 824 (purchases) 99 200
Cancellation cheque 828 (Water and electricity) 99 84
7 832

(8)

SILVER SERVICES
CASH PAYMENTS JOURNAL FOR JULY 2012
Payments
(Bank)
R
Pencil total/ sub-total 8 893
Interest on bank acc (B/S) 99 12
Bank charges (21^ + 21^ + 6^ + 40^ + 6^ + 90^ + 75^ + 25^) 284
9 189

(6)

Dr Bank Cr
R R
2012 2012
July 1 Balance b/d 9 2 202 July 31 Total payments 9 9 189
31 Total receipts 9 7 832 Balance c/d ^845
10 034 10 034

Aug 1 Balance b/d ^845

(4)

26
 FAC1502/202

QUESTION 1 (CONTINUED)

SILVER SERVICES
BANK RECONCILIATION STATEMENT AS AT 31 July 2012
Debit Credit
R R
Balance as per bank statement 99 906
Credit outstanding deposit 9 1 152
Debit cheques not yet presented for payment:
No. 813 99 152
No. 827 9 376
No. 829 9 685
Balance as per bank account 9 845
2 058 2 058

(8)

QUESTION 2 (27 marks)(32 minutes)

a)
KHULONG TRADERS
GENERAL LEDGER

Dr Trading inventory Cr
R R
2011 2012
Jul 01 Balance b/d ^ 13 800 Jun 30 Trading account ^ GJ ^ 13 800
2012 Balance c/d ^ 15 335
Jun 30 Trading account ^ GJ ^ 15
335
29 135 29 135

Jul 01 Balance b/d 15 335

(3)
Dr Profit or loss account Cr
R R
2012 2012
Jun 30 Credit losses ^ 349 Jun 30 Trading account9 9102 609
Depreciation ^ 15 400 Commission income ^ 15 000
Insurance ^ 2 750 Rent income ^ 3 800
Packing materials ^ 4 300 Credit losses
Wages ^ 51 325 recovered ^ 2 500
Water and electricity ^ 4 400
Loss on sale of an
asset ^ 5 700
Capital (Total compre-
hensive income for the
year) 9 9 39 685
123 909 123 909

(9)
27
QUESTION 2 (CONTINUED)

Dr Capital Cr
R R
2012 2011
Jun 30 Drawings ^ 2 695 Jul 01 Balance b/d ^ 100 000
Balance c/d ^ 136 990 2012
Jun 30 Profit or loss ^ ^ 39 685
139 685 139 685

Jul 01 Balance b/d ^ 136 990

(3)

b)
KHULONG TRADERS
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012
ASSETS R
Non-current assets
Property, plant and equipment^ (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^ (8 025^ + 750^) 8 775

TOTAL ASSETS^ 342 990

EQUITY AND LIABILITIES

Equity
Capital^ ^ 136 990
Non-current liabilities
Long term borrowings^ ^ 150 000
Current liabilities 56 000
Trade and other payables^ (4 500^ + 1 500^) 6 000
Current portion of long term borrowings^ ^ 50 000

TOTAL EQUITY AND LIABILITIES^ 342 990

(12)

28
 FAC1502/202

QUESTION 3 (27 marks)(32 minutes)

a)
ORANGE TRADERS
ADJUSTMENTS: GENERAL JOURNAL
Debit Credit
R R
1. Consumable on hand 345 ^
^
Stationery 345
Unused stationery at year end
2. Prepaid expenses 200 ^
^
Insurance 200
Premium paid in advance
c Interest on loan 3 000 ^
^
Accrued expenses 3 000
Interest on loan to be paid (12% x 6 months x R50 000)
d Accrued income 300 ^
^
Rent income 300
Rent for June not received
e Depreciation 19 560 ^^
^
Accumulated depreciation: Vehicles 13 060
^
Accumulated depreciation: Furniture and fittings 6 500
Vehicles (20% on diminishing balance)
Furniture and fittings (10% on cost price)
(6)

29
QUESTION 3 (CONTINUED)

b)
ORANGE TRADERS
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR
ENDED 29 FEBRUARY 2012
R

Revenue (243 6459 – 1 338^ - 553^) 241 754

Less: Cost of sales (155 890)
Inventory: Trading (1 March 2011) 13 550 3
Purchases (154 8809 - 155^ - R245^) 154 480
Carriage on purchases 660 3
3
Inventory: Trading (29 February 2012) (12 800)
Gross profit 85 864
Other income 18 600
Rent income (3 3009 + 3009) 3 600
Commission income 15 000 3

104 464
Distribution, administrative and other expenses 88 479
Stationery (2 3453 – 3453) 2 000
Insurance (2 4003 – 2003) 2 200
Credit losses 244 3
Depreciation (13 0603 + 6 5003) 19 560
Packing materials 3 300 3
Wages 56 775 3
Water and electricity 4 400 3

Finance costs 3 000

Interest on loan (50 000 x 12%^ x 6/12^) 3 000

Total comprehensive income for the year 12 985

(21)

30
 FAC1502/202

QUESTION 4 (20 marks)(26 minutes)

Dr Accumulated depreciation Cr
R R
2012 2011
Sep 30 Realisation ^ 285 000 Oct 01 Balance ^ b/d 300 000
(47 5003 + 190 000^ + (12 5003 + 25 000^ +
47 5003) 47 5003+ 25 000^ +
190 000^)
Balance ^ c/d ^ 143 750 Dec 31 Depreciation ^ ^ 47 500
2012
Sept 30 Depreciation ^ ^ 81 250
428 750 428 750
Oct 01 Balance ^ b/d 143 750^
(11)

Dr Depreciation Cr
R
2011
Dec 31 Accumulated depreciation ^
2012 347 500
Sep 30 Accumulated depreciation ^
(25 000^+ 56 2503) 81 250
128 750

(3½)

Dr Machinery realisation Cr
R R
2011 2011
Dec 31 Dec 31 Creditors control ^
Machinery ^ 3570 000 (525 000-175 000) 3350 000
Profit on sale of asset ^ 3 65 000 Accumulated ^285 000
depreciation ^
635 000 635 000

(5½)

31
QUESTION 4 (CONTINUED)

CALCULATIONS:

1. PREVIOUS YEARS DEPRECIATION:

Financial period ending 30 September 2009

Machine Purple: 250 000/10 x 6/12 = . 12 5003

Financial period ending 30 September 2010

Machine Purple: 250 000/10 = 25 000^
Machine Aqua: 570 000/3 x 3/12 = 47 5003

Financial period ending 30 September 2011

Machine Purple: 250 000/10 = 25 000^
Machine Aqua: 570 000/3 = 190 000^

Total opening balance as at 1 October 2011 R 300 000

2. CURRENT YEAR DEPRECIATION:

Financial period ending 30 September 2012

31 December 2011 Machine Aqua: 570 000/3 x 3/12 = 47 5003

30 September 2012 Machine Purple: 250 000/10 = 25 000^

30 September 2012 Machine Green: 525 000/7 x 9/12 = 56 2503
81 250

Realisation: Accumulated depreciation

Machine Aqua: 570 000/3 x 3/12 = 47 5003
Machine Aqua: 570 000/3 = 190 000^
Machine Aqua: 570 000/3 x 3/12 = 47 5003
285 000

©
UNISA 2013

32