ACCOUNTING JUNE EXAMINATION 2015 GRADE 11 · Match the GAAP principles in COLUMN A with the correct transactions in COLUMN B write only the correct letter (A-E) next to the question

1

ACCOUNTING

JUNE EXAMINATION

2015

GRADE 11

MARKS: 300

TIME: 3 HOURS This Question paper consists of 13 pages and 11 pages Answer book

2 INSTRUCTIONS AND INFORMATION

1. You are provided with a question paper and an ANSWER BOOK.

2. This question paper consists of FIVE compulsory questions. Answer ALL the questions.

3. Use the formats provided in the answer book to answer the questions.

4. Where necessary WORKINGS must be shown in order to achieve part-marks.

5. You must try to keep to the time as proposed.

6. Non-programmable calculators may be used.

QUESTION 1: 75 marks; 45 minutes

Main topic of the question: This question integrates;

Bank reconciliation Financial accounting: Internal Control

Creditors reconciliation Financial accounting: Internal Control



Fixed Assets Managing resources: Ledger accounts, Internal control, Ethics



Partnership Financial accounting: Preparation of Income statement



Ratio Analysis Calculation of ratios Analysis & Interpretation of financial information

QUESTION 5: 52marks; 32 minutes Main topic of the question: This question integrates; Clubs Financial accounting: Statement of receipt and

payments, internal control

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QUESTION 1 (75 marks, 45 minutes) 1.1 CONCEPTS 10 Choose the correct answer from the given possible answers, for example, 1.1.6 A. Each question has only ONE correct answer. 1.1.1 A dishonoured cheque received from a debtor in settlement of his outstanding

account is recorded in the_____________journal. 2

A. Cash payment journal B. Cash receipts journal C. Debtors journal

1.1.2 When comparing the cash journals of the entity with the bank statement, an error made by the entity must be corrected_______________and an error made by the bank must be recorded______________

2

A. in the cash journal of the entity; nowhere B. in the cash journal of the entity; on the bank reconciliation statement C. on the bank reconciliation statement; in the cash journal of the entity

1.1.3 A post-dated cheque received will be 2 A. recorded in the cash receipts journal B. recorded in the bank reconciliation statement C. filed until the date on the cheque is due

1.1.4 What procedure will have to be followed if a cheque that was issued by an entity is stopped and replaced by another cheque?

2

(i). Cancel cheque in cash receipts journal (ii). Cancel cheque in cash payments journal (iii). Issued a new cheque in cash payments journal (iv). Enter newly issued cheque in bank reconciliation statement

A. ii, iii,iv B. i, iii C. ii, iii D. i, iii,iv

1.1.5 How will a post-dated cheque issued be recorded in the month of issuing? 2 A. Recorded in the cash receipts journal. B. Recorded on the bank reconciliation statement. C. Filed until the date on the cheque arrives. D. Recorded in the cash payments journal. E. Recorded in the cash payments journal and on the bank reconciliation statement as an outstanding cheque.

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1.2 BANK RECONCILIATION; ANALYSIS 48

REQUIRED: 1.2.1 Complete the Cash Journals of Logan Stores for April 2015. This business has a

banking account with Barklay Bank. 24

1.2.2 Post to the Bank account in the General Ledge, Balance the account. 6 1.2.3 Prepare the Bank Reconciliation Statement as at 30 April 2015. 7 1.2.4 Answer the question which follows. 11

Information:

x BANK RECONCILIATION STATEMENT ON 31 MARCH 2015 Bank statement balance (Favourable) R25 322 Outstanding deposit 9 661 Outstanding cheques: No. 3150 1 300 No. 3410 2 981 No. 3470 1 996 Bank account balance ? x Provisional totals in the Cash Journal on 30 April 2015: Cash Receipts Journal: Bank R60 122 Sundry accounts 60 122 Cash Payments Journal: Bank R63 334 Sundry accounts 63 334 A comparison of the April 2015 bank statement with the Bank reconciliation Statement of March 2015 and the Cash journal revealed the following: * Cheque no. 3150 has not been presented for payment as it had become stale. It was

originally issued to the Childline Centre as a donation.

* The outstanding deposit on 31 March 2015 appears on the April 2015 bank statement. * Cheque no. 3410 has disappeared and cannot be found. The cheque must be cancelled. It

had been issued to Portco Suppliers, a creditor. A new cheque will be sent to them during May 2015.

* Cheque no. 3470 which had been paid to Jackson Stores for goods bought appeared correctly on the bank statement as R1 699. This error must be corrected.

* Credit card levies R789; interest on overdraft R189 and service fees R458 appear only on the April 2015 bank statement.

* An electronic payment for R4 650 for rent paid by the tenant, Dwight Logistics, appears only on the Bank statement.

* A deposit of R7 662 appears only in the cash journal. * The bank statement showed an unpaid cheque for R1 960. This cheque was originally

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received from a debtor, Ms D. Fraught. * The following cheques did not appear on the April 2015 bank statement:

No. 3610 - R2 445 No. 3680 – R3 675 No. 3760 – R2 120 (dated 12 May 2015)

* The following electronic payments (EFT‟s) have not yet been recorded in the cash journal: x monthly advertisement placed in the “Witness” newspaper, R1 340. x monthly mobile phone subscriptions to Comvoda, R689, The mobile phone belongs

to the owner‟s son who is a medical student. x monthly insurance premium for the shop premises to Madoff Brokers R4 672.

* The bookkeeper was unsure about a cheque received from a customer Mr Jay Jolly, for R2 500. He did not record it as it had been dated 10 May 2015.

* The bank statement had a balance of R??? on 30 April 2015.

1.2.4 QUESTIONS: 1.2.4.1 Your neighbour runs a small shop from her home. She has a cheque account at

FNB bank. She does not know about bank reconciliation as she did not do Accounting in school. Explain three major benefits of doing bank reconciliation.

6

1.2.4.2 What does the abbreviation „EFT‟ stands for? 1 1.2.4.3 Identify two advantages of electronic banking (Internet banking). 2 1.2.4.4 Suggest one reason as to why many people do not do Internet banking 2

1.3 CREDITORS RECONCILIATION 17

BB Store has received a statement from a creditor, AMA Traders at the end of July 2014. The balance on the statement does not agree with that in the Creditors‟ Ledger of BB Stores REQUIRED: 1.3.1

Calculate the correct balance of AMA Traders in the books of BB Traders on 31 July 2014 6

1.3.2

Prepare a Creditor‟s Reconciliation Statement on 31 July 2014 to calculate the correct amount owing by BB Stores to AMA Traders

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INFORMATION: AMA TRADERS DEBTOR’S STATEMENT BB Stores PO Box 1019 Wandsbeck 3610

6 Statement : date: 25 July 2015 Debit Credit Balance 01- July Brought forward R6 750 03-July Invoice no.4260 5 800 12 550 07-July Receipts no. 737 3 200 9 350 12- July Invoice no. 4618 4 880 14 230 15- July Credit Note no. 261 700 13 530 23-July Invoice no. 4632 1 247 14 777 CREDITORS LEDGER OF BB Stores AMA TRADERS C1.12 Date Details Fol Dr Cr Balance 01-July Balance b/d R6 750 03-July Invoice no.4260 8 500 15 250 05-July Cheque no. 2013 3 200 12 050 05-July Discount Received 320 11 730 12-July Invoice no 4618 4 880 16 610 15- July Debit note no. 214 750 15 860 23-July Invoice no.4632 1 247 17 107 27-July Cheque no. 2368 10 000 7 107 27-July Discount Received 1 000 6 107 Additional information: BB stores have made the error in processing invoice no. 4260. AMA Traders should have granted 10% discount on 5 July. Investigation showed that the amount on 15 July with regard to goods return by BB stores

is correct in the books of AMA Traders QUESTION 2 (57 marks: 34 minute) FIXED ASSETS NOTE; ASSET DISPOSAL ACCOUNT REQUIRED: 2.1 Complete the Ledger Accounts in your Answer Book. Balance / close off the accounts on

28 February 2015 27

2.2 Complete the Fixed Asset note to the Balance Sheet on 28 February 2015. 24 2.3 Answer the questions in number 2.3. 6

The following balance appeared in the books of Sunshine Traders on 1 March 2014, the beginning of the financial year. Land and Building R450 000

7 Vehicles 150 000 Accumulated depreciation on vehicle 62 000 Equipment 98 000 Accumulated depreciation on equipment 36 000 Information:

x Vehicles are depreciated at 20% p.a. on the fixed installment method. x Equipment is depreciated at 25% p.a. on the diminishing balance method.

Transactions: 1. On 1 April 2014 extensions worth R34 000 were completed to the land and buildings. This

amount was added on to the mortgage bond. 2. While the contract was on the premises the owner requested that they also paint the outside of

the building at a cost of R5 290. The contractor was paid by cheque. 3. On 1 June 2014 new equipment was bought on credit for R25 000 less 10% trade discount. 4. On 1 October 2014 one of the vehicles with an original cost price of R63 000 and a

book/carrying value of R28 000 was traded- in at a profit of R1 600 against a new vehicle bought on credit for R180 000.

2.3 Questions 2.3.1 Explain what Prudence concept means and how it applies to vehicles and equipment. 4 2.3.2 Why doLand and Buildings not depreciate? 2

QUESTION 3 (84 marks: 50 minutes)

3.1 GAAP PRINCIPLES 10 Match the GAAP principles in COLUMN A with the correct transactions in COLUMN B write

only the correct letter (A-E) next to the question number in your answer book. COLUMN A COLUMN B 3.1.1 Materiality A The tenant has paid R35750 which includes rent

for one month of the following year. Only R33000 recorded in the income statement.

3.1.2 Prudence B Although the cost prices of the stock items are fluctuating the stock is recorded at cost assuming that it will be sold some time in the future.

3.1.3 Matching C The directors‟ fees must be reflected separately form salaries and wages

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3.1.4 Going –concern concept D Even though the market value of land and buildings is R2m recorded at the original purchase price of R1350 000

3.1.5 Historical-cost concept E Money lost due to theft of stock is written off, even though there is a possibility that it may be recovered in future

3.2 FINANCIAL STATEMENT AND NOTES 74

REQUIRED:

Use the information from the books of Fun-land Toys to prepare the following:

3.2.1

Income Statement for the year ended 28 February 2015.

46

3.2.2 Notes to the Financial Statement for the year ended 28 February 2015. 3.2.2.1 Inventories 7 3.2.2.2 Trade and other receivables 8 3.2.2.3 Cash and Cash equivalents 4 3.2.2.4 Trade and other payables 9

The following information was obtained from Fun- land Toys that belongs to Fun Smith and Tony Land they share profits in the ratio 2.1.

Fun- land Toys

Pre-adjustment trial balance as at 28 February 2015

Balance Sheet Accounts Section Debit Credit Capital : Fun Smith 200 000 Capital : Tony Land 100 000 Current account: Fun Smith 10 000 Current account : Tony Land 16 000 Drawings : Fun Smith 8 000 Drawings : Tony Land 24 000 Vehicles 380 000 Equipment 340 00 Accumulated depreciation on vehicles 81 500 Accumulated depreciation on equipment 62 000 Trading stock 880 000 Debtors control 559 980 Provision for bad debts 11 500 Bank 7 000 Creditors control 46 500 SARS : PAYE 5 000 Petty cash 1 000 Cash float 5 000 Mortgage loan 300 000

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Fixed deposits (8%per annum) 90 000 Nominal Account Section Sales 4 015 000 Cost of sales 2 105 000 Debtors allowances 15 000 Salaries and wages 265 920 Stationery 5 200 Bad debts 4 500 Insurance 46 500 Interest on fixed deposit 4 800 Interest on mortgage loan 64 500 Rent expense 11 500 Bank charges 1 500 Sundry accounts 19 700 Loss on sale of Assets 460 4 843 300 4 843 300

Adjustments and additional information.

1. Trading stock worth R5 000 was donated to the local high school. 2. An account for R6 000 for carriage on trading stock bought was recorded as sundry

expenses 3. Stock on hand as per physical stock count was as follows:

x Trading inventory R878 000 x Stationery R 4 200

4. Included in the insurance amount is an annual premium of R12 000 for the period 1 August 2012 to 31 July 2013.

5. After the pre-adjustment trial balance was prepared, the bank statement was received. The following amounts had been debited to the bank account

x Credit card fee R340 x Interest on debit balance R115 x Cash handling fee R185

6. P. Pep, a debtor is declared insolvent. Received R 2 720 as a final payment of 40c in the rand from the insolvent estate. Write the rest off as irrecoverable, no entries have been recorded for this transaction.

7. Provision for bad debts must be adjusted to R11 200. 8. Part of the building has been leased from G Green from 1 September 2011 at R1 000 per

month on condition that the rent increased annually with 10%. 9. The salaries increase with 8% on 1 January 2013. The salaries for February 2013 will be

paid on 3 March 2013. 10. The depreciation calculated for Equipment amount to R32 000 and on Vehicles is R55 960. 11. The loan was granted on 31 December 2011 on the following conditions:

x Repayments are made in installments of R100 000 per annum, starting from 31 December 2012.

x Interest at 18% per annum is payable. 12. An additional fixed deposit of R30 000 was invested on 31 May 2012. 13. The fixed deposit of R60 000 will mature on 1 March 2013. 14. The partnership agreement stipulates the following:

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- Interest on capital is calculated at 5% per annum. The partners decided on 1 March 2012 that the capital contribution must correspond with the profit sharing ratio. Fun Smith had to reduce his capital with 20% on 31 May 2012 while Tony Land increased his capital with R10 000 on 1 June 2012.

- Tony Land is entitled to a salary of R480 000 per annual because he works full time in the partnership.

- Fun Smith is entitled to a bonus of 10% of the profit after the bonus was taken into account because he is responsible for the purchases of the toys.

QUESTION 4 (24 marks 14 minutes) RATIOS

Ratios for 2015 J&A Pet shop is situated in the Paarl Mall and owned by partners J Kotzee and A. Moller. The business`s financial year ends on 28 February each year. You are provided with extracts from the financial statements of J & A Pet shop. Round off answers to one decimal. Read through these and answer the questions that follow:

J. Kotze and A. Moller Trading as J & A Pet Shop Income Statement for the year ended 28 February 2015

Note R R 2015 2014 Sales 1363600 1 215 500 Cost of sales (974 000) (935 000 ) Gross profit 389 000 280 000 Operating expenses (348 870 ) (284 000) Salaries and wages 205 000 170 000 Rent expense 85 600 80 000 Bank charges 3 150 3 010 Telephone, water and electricity 6 890 5 980 Advertising 8 000 5 000 Damaged stock written off 12 000 1 000 Trading stock deficit 8 560 790 Sundry expenses 19 670 18 220 Operating profit(loss) 40 730 (3 500) Interest expense (8 970) (15 600) Net profit(loss)for the year 31 760 (19 100)

Balance Sheet as at 28 February 2015 Note R R 2015 2014

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Assets Non-current assets 233 600 00 201 400 00 Fixed\ tangible assets 233 600 00 201 400 00 Current assets 221 000 00 260 900 00 Inventories 148 000 00 140 000 00 Trade and other receivable 21 000 00 19 000 00 Cash and cash equivalents 52 000 00 101 300 00 TOTAL ASSETS 454 600 00 462 300 00 Equity and liabilities Owner‟s equity 249 600 00 205 400 00 Capital 240 000 00 200 000 00 Current accounts 9 600 00 5 400 00 Non-current liabilities 120 000 00 170 000 00 Loan from XYZ bank(180 000-20 000 120 000 00 170 000 00 Current liabilities 85 000 00 86 900 00 Trade and other payables 85 000 00 86 900 00 TOTAL EQUITY AND LIABILITIES 454 600 00 462 300 00

REQUIRED: 4.1 Calculate the following Ratios: 4.1.1 Percentage gross profit on sales 4 4.1.2 Percentage profit mark- up on Cost 4 4.1.3 Percentage net profit on sales 4 4.1.4 Current Ratio 4 4.1.5 Acid test 4 4.1.6 Stock turn over 4 QUESTION 5 (52 marks: 31 minutes) CLUBS You are provided with information relating to the Greendale Running Club for the year ended 30 June 2014. REQUIRED: 5.1 Prepare the Membership Fee Account. 24 5.2 Prepare the Refreshment Account. 20 5.3 Control of refreshments is the responsibility of one of the committee members, Mary

Moss. The treasurer is concerned that some of the sales revenue has not been deposited in the bank. The club uses a 50% mark-up in setting its prices at all times.

x Calculate the cash that appears to be missing. x What advice would you offer to solve the problem now and in the future? Provide

two points.

4 4

12 INFORMATION Information from the Balance Sheet at the beginning of the financial year, 1 July 2013. Stock of refreshments R2 600

Income receivable / accrued (membership fees for 2 members) 8 800

Deferred income / Income received in advance (membership fees for 4 members) 12 000

Creditors (for Refreshment) 4 000

Information from the Statement of Receipts and Payments for the year ended 30 June 2014.

RECEIPTS Entrance fees (R2 000 each) R18 000 Membership fees received 218 000 For the 2013 financial year 4 800 For the 2014 financial year 206 800 For the 2015 financial year 6 400 Refreshment sold 92 000 PAYMENTS Refund of membership fees to a family of 3 members 7 200 Refreshment bought by cheque 46 000 Transport of refreshments to the club 1 200

Additional information: 1. Fees charged to members are:

x Entrance fees for new members: R2 000 per person. x Annual membership fees: R4 800 (or R400 per month)

2. The club had 53 members on its books on 1 July 2013 including the office bearers 3. By the end of 2014 financial year, two members were still outstanding for all or part of their

membership fees for 2013. These two members were expelled from the club with effect from the beginning of the current financial year. The fees owed by them must be written off.

4. Honorarium of R3 000 is due to the treasurer. This will be offset against his fees for 2014. He will have to pay the difference to the club but this has not yet been done.

5. The following changes occurred to the membership of the club: x A family of 3 members immigrated to Australia half way through the year. They had paid

in full at the beginning of the year. The committee decided to refund half their fees.

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x Several new members joined on 1 April 2014. In addition to their entrance fees their membership fees will be calculated on a monthly basis for the unexpired portion of the financial year.

6. According to the list of outstanding membership fees on 30 June 2014 the following members owe fees in respect of 2014.

x 4 members each owe fees for the full year. x 8 members each owe fees for four months. x The Treasurer owes the balance on his fees.

7. Certain refreshments have been bought on credit from Jerry‟s Juices. The statements of account for the year reflect the following:

x Balance owed to Jerry‟s Juices on 1 July 2013, R4 000. x Balance owed to Jerry‟s Juices on 30 June 2014, R6 500. x Payments to Jerry‟s Juices during the year, R21 000. x Returns of refreshments to Jerry‟s Juices, R800.

8. Refreshments on hand on 30 June 2014 were valued at cost R7 800. GRAND TOTAL: 300.

1

ACCOUNTING

GRADE 11 June 2015

Name of learner: _______________________________

Name of school: _______________________________

Name of district: _______________________________

Question Marks Mod

1.

2.

3.

4.

5.

Total

This answer book consist of 12 pages including the cover page

2

Question 1 (75 marks; 45 minutes)

1.1 Choose the correct answer from the given possible answers. Only one answer is correct. Write only the letter of the correct answer.

1.1.1

1.1.2

1.1.3

1.1.4

1.1.5

(10)

1.2 .1 Cash Receipts Journal of Logan Stores for April 2015

Doc

Day

Details

Fol.

Bank

Sundry accounts

Amount Fol. Details of sundry

(10)

3

Cash Payments Journal of Logan Stores for April 2015

Doc

Day

Details

Fol.

Bank

Sundry accounts


(14)

1.2.2 GENERAL OF LOGAN STORES

Dr BANK ACCOUNT Cr

Date Details Fol. Amount Date Details Fol. Amount

(6)

4

1.2.3 Bank reconciliation statement as at 30 April 2015

Dr. Cr.

(7)

1.2.4 Questions

1.2.4.1 Explain three major benefits of doing bank reconciliation. (6)

1.2.4.2 What does the abbreviation ‘EFT’ stands for? (1)

1.2.4.3 Identify two advantages of electronic banking (Internet banking)? (2)

1.2.4.4 Suggest one reason as to why many people do not use internet banking

(2)

(11)

5

1.3 Creditors’ reconciliation

1.3.1 Calculate the correct balance of AMA Traders in the books of BB Traders

(6)

1.3.2 Creditors Reconciliation statement as at 31 July 2014

Dr Cr

(11)


2.1 GENERAL OF SUNSHINE TRADERS

BALANCE SHEET ACCOUNTS SECTION

Dr VEHICLES ACCOUNT Cr

Date Details Fol. Amount Date Details Fol. Amount

(5)

6

Dr ACCUMULATED DEPRECIATION ON VEHICLES ACCOUNT Cr

Date Details Fol Amount Date Details Fol Amount

(11)

Dr ASSET DISPOSAL ACCOUNT Cr


(11)

2.3 Questions

2.3.1 Explain what prudence concept means and how does it apply to vehicles and equipment

(4)

2.3.2 Why land and building do not depreciate? (2)

(6)

7

2.2 Note no 3 to balance sheet

Fixed /tangible assets Land & Buildings

Vehicles Equipment

(24)


3.1 Match the GAAP principle in column A with the correct transactions in column B. Write only the correct letter in the answer book.

3.1.1

3.1.2

3.1.3

3.1.4

3.1.5

(10)

8

3.2 Income Statement of Fun-land Toys for the year ended on 28 February 2015

(54)

9

3.3 Notes to balance sheet

3.3.1 Inventory

(7)

3.3.2 Trade and other receivables

(8)

3.3.3 Cash and cash equivalents

(4)

3.3.4 Trade and other payables

(9)

10


4.1 Ratios

4.1.1 Calculate the percentage gross profit on sales (4)

4.1.2 Calculate the percentage profit mark – up on cost (4)

4.1.3 Calculate the percentage net profit on sales (4)

4.1.4 Calculate the current ratio (4)

4.1.5 Calculate the acid test ratio (4)

4.1.6 Calculate the stock turnover rate (4)

(24)

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5.1 General ledger of Greendale club

Nominal accounts section

Dr Membership fees Cr

Date Details Amount Date Details Amount

(24)

5.2 Dr Refreshments A/c Cr

Date Details Amount Date Details Amount

(20)

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5.3 Control of refreshments is the responsibility of one of the committee members. The treasurer is concerned that some of the sales revenue has not been deposited in the bank. The club uses a 50% mark – up in setting its prices at all times. Calculate the cash that appears to be missing.

(4)

x What advice would you offer to solve the problem now and in the future? Provide two points

(4)

TOTAL (300)

1

ACCOUNTING

GRADE 11

June 2015

Memorandum

Marking Principles:

1. Full marks for correct answer. If answer incorrect, mark the workings provided.

2. Where method marks are awarded for operation, the marker must inspect the

reasonableness of the answer before awarding the mark.

3. Where applicable part-marks may be awarded to differentiate between differing qualities answers from candidates.

4. In awarding method marks, ensure that candidates do not get full marks for any item

that is incorrect at least in part.


1.1 Choose the correct answer from the given possible answers. Only one answer is correct. Write only the letter of the correct answer.

1.1.1 A99

1.1.2 B99

1.1.3 C99

1.1.4 D99

1.1.5 E99

(10)

2

1.2 .1 Cash Receipts Journal of Logan Stores for April 2015

Doc

Day

Details

Fol.

Bank

Sundry accounts


Totals 60122 60 122

3150 Childline center 1 300 1 3009 Donations9

3410 Portco Suppliers 2 981 2 9819 Creditors control9

3470 Jackson Stores 297 2979 Trading stock9

B/S9 Dwight Logistics 4 650 4 6509 Rent income9

69 350 69 350;

(10)

Cash Payments Journal of Logan Stores for April 2015

Doc

Day

Details

Fol.

Bank

Sundry accounts


Totals 63 334 63 334

Barclay Bank 91 436 91 247 Bank charges9

Barclay Bank 9189 Interest on overdraft9

Ms D. Fraught 1 960 91 960 Debtors control9

Witness 1 340 91 340 Advertisement9

Comvoda 689 9689 Drawings9

Madoff Brokers 4 672 94 672 Insurance9

73 431 73 431;

(14)

3

1.2.2 GENERAL OF LOGAN STORES

Dr BANK ACCOUNT Cr


2015

April

1 Balance b/d 9928 706

2015

April

30

Total payments CPJ ;73 431

30 Total Receipts CRJ ;69 350 Balance c/d 9;24 625

98 056 98 056

May 1 Balance b/d 24 625

(6)

1.2.3 Bank reconciliation statement as at 30 April 2015

Dr. Cr.

Cr balance as per bank statement 25 2039

Cr outstanding deposit 7 6659

Dr outstanding cheques: No.3610 2 4459

No. 3675 3 6759

No. 3760 2 1209

Dr balance as per bank account 24 6259

32 868 32 868;

(7)

4

1.2.4 Questions

1.2.4.1 Explain three major benefits of doing bank reconciliation. (6)

x Ensure that books are up to date and corresponds with banks records99

x Enables detection of errors/ omissions/ irregularities99

x Monitor electronic payments and transfers99

1.2.4.2 What does the abbreviation ‘EFT’ stands for? (1)

Electronic funds transfer9

1.2.4.3 Identify two advantages of electronic banking (Internet banking)? (2)

x Safety9

x Convenience9

1.2.4.4 Suggest one reason as to why many people do not use internet banking (2)

x Fear of hackers, internet fraud99

x People do not have internet facilities99

(11)

1.3 Creditors’ reconciliation

1.3.1 Calculate the correct balance of AMA Traders in the books of BB Traders

6 107 9+ 509 – 2 70099 = R3 4579; (6)

1.3.2 Creditors Reconciliation statement as at 31 July 2014

Dr Cr

Dr balance as per statement9 914 777

Cr discount not granted9 9320

Cr amount paid but not yet reflected on the statement9 910 000

Cr discount not yet reflected on the statement9 91 000

Cr balance as per account in the Creditors ledger9 ;3 457

14 777 ;14 777

(11)

5


2.1 GENERAL OF SUNSHINE TRADERS

Dr VEHICLES ACCOUNT Cr


2014

April


2014

Oct

30

Asset disposal GJ 963 000

Oct 30

Creditors control CJ 9180 000

2015

Feb Balance c/d 9267 000

330 000 330 000

March 1 Balance b/d ;267 000

(5)

Dr ACCUMULATED DEPRECIATION ON VEHICLES ACCOUNT Cr


2014

Oct 1

Asset disposal9

;42 350

2015

Mar


Feb 28 Balance c/d 959 400 Oct 1 Depreciation9 ;7 350

Feb 28 Depreciation 9 (15 000+17 400) 9 9

;32 400

101 750 109 750

2015

Mar 1 Balance b/d ;59 400

(11)

6

Dr ASSET DISPOSAL ACCOUNT Cr


2015

Oct

1 Vehicles9 GJ 963 000

2015

Oct

1

Accumulated depreciation on vehicles9

GJ 42 350;

(35 000+7 350)9 9

Profit on sale of asset9 GJ 91600 Creditors

control9 GJ 9;22 250

64 600 64 600

(11)

2.2 Note no 3 to balance sheet

Fixed /tangible assets Land & Buildings

Vehicles Equipment

Carrying value at the beginning of the year 450 000 988 000 962 000

Cost price 9450 000 9150 000 998 000

Accumulated depreciation 9 (62 000) 9 (36 000)

Movements

Additions at cost 934 000 9180 000 9922 500

Disposal at carrying value 9; (20 650) 0

Depreciation 9; (39 750) 9 9 (19 719)

Carrying value at the end of the year 484 000 ;207 600 ;64 781

Cost price 9484 000 9267 000 9120 500

Accumulated depreciation ; (59 400) ; (55 719)

(24)

7

2.3 Questions

2.3.1 Explain what prudence concept means and how does it apply to vehicles and equipment

(4)

x Be realistic in the presentations of figures 9 9

x Vehicles and equipment loose value over time. 9 9

2.3.2 Why land and building do not depreciate? (2)

x The value of land and buildings appreciate over time. 9 9

(6)

Question 3 (92 Marks; 55 minutes)

3.1 Match the GAAP principle in column A with the correct transactions in column B. Write only the correct letter in the answer book.

3.1.1 C9 9

3.1.2 E9 9

3.1.3 A9 9

3.1.4 B9 9

3.1.5 D9 9

(10)

8

3.2 Income Statement of Fun-land Toys for the year ended on 28 February 2015

Sales (4 015 0009 – 15 0009) ; 4 000 000

Cost of sales 9 (2 105 000)

Gross profit ; 1 895 000

Other operating income ; 300

Provision for bad debts adjustment (11 5009 – 112009) 9300

Gross operating income ; 1 895 300

Operating expenses ; (467 845)

Salaries and wages (265 9209 + 25 9209;) ; 291 840

Rent expense (11 5009 + 1 1009) 912 600

Stationery (5 2009 -4 2009) 91 000

Bad debts (4 5009 + 4 0809;) ; 8 580

Insurance (46 5009 - 5 0009) ;41 500

Bank charges (1 5009 + 5259) 92 025

Sundry expenses (19 7009 - 6 0009) 913 700

Donations 995 000

Loss on sale of asset 9460

Trading stock deficit (880 0009 -5 0009 + 6 0009 - 878 0009) ; 3 000

Depreciation (55 960 + 32 000) 9987 960

Operating profit ; 1 427 455

Interest income (4 8009 + 1 8009) ; 6 600

Operating profit before interest expense ; 1 434 055

Interest expense (64 500 9+ 4 5009 +1159) ; (69 115)

Net profit for the year ; 1 364 940)

(54)

9

3.3 Notes to balance sheet

3.3.1 Inventory

Trading stock (880 0009 + 6 0009 - 5 0009 -3 0009) 9878 000

Consumable stores on hand 94 200

;882 200

(7)

3.3.2 Trade and other receivables

Debtors control (559 9809 -4 0809) ;555 900

Less provision for bad debts 9 (11 200)

Net trade debtors ;544 700

Income accrued 91 800

Prepaid expense 95 000

;551 500

(8)

3.3.3 Cash and cash equivalents

Petty Cash 91 000

Cash float 95 000

Fixed deposit (Matured) 960 000

;66 000

(4)

3.3.4 Trade and other payables

Creditors control 946 500

SARS (PAYE) 95 000

Current portion of the loan 9100 000

Accrued expense (1 1009 + 25 920 9+4 5009) ;31 520

Bank overdraft 97000

;190 020

(9)

10


4.1 Ratios

4.1.1 Calculate the percentage gross profit on sales (4)

9 389 000 x 100 9 = 28.5%;

91 363 600 1

4.1.2 Calculate the percentage profit mark–up on cost (4)

9 389 000 x 100 9 = 40%;

9 974 000 1

4.1.3 Calculate the percentage net profit on sales (4)

9 31 760 x 100 9 = 2.3%;

91 363 600 1

4.1.4 Calculate the current ratio (4)

9221 000 : 85 0009

2.6 : 19;

4.1.5 Calculate the acid test ratio (4)

9 221 000 – 148 0009 : 85 0009

0.9 : 1;

4.1.6 Calculate the stock turnover rate (4)

974 000 9 = 6.7 %;

9140 000 + 148 000 9

11


5.1 General ledger of Greendale club

Nominal accounts section

Dr Membership fees Cr

2013 July

1 Income receivable9 98 800 2013 July

1 Deferred income9 912 000

2014 June

30 Bank9 97 200 2014 June

30 Bank9 9218 000

Deferred income9 96 400 Membership fees written off9

994 000

Income & expenditure9 ;248 400 Honorarium9 993 000

Income receivable9 ;9933 800

270 800; 270 800;

Calculation of membership fees written off (8 800 – 4 800) (24)

5.2

Dr Refreshments Cr

2013 July

1 Stock of refreshments9 92 600 2013 July

1 Creditors9 9800

2014 June

30 Bank9 946 000 2014 June

30 Stock of refreshments9 97 800

Bank9 91 200 Bank9 992 000

Creditors control*9 ;9924 300

Income & expenditure9 ;;26 500

100 600; 100 600;

*Calculation of refreshments bought on credit: 21 000 + 800 +6 500 – 4 000 = 24 300 (20)

12

5.3 Control of refreshments is the responsibility of one of the committee members. The treasurer is concerned that some of the sales revenue has not been deposited in the bank. The club uses a 50% mark – up in setting its prices at all times. Calculate the cash that appears to be missing.

(4)

Sales should be = R65 500 + (50% of R65 500) = R98 250;;

Deposited = R92 0009

Missing = R6 250;

x What advice would you offer to solve the problem now and in the future? Provide two points

(4)

Weekly /monthly stock count99

Weekly /monthly calculation of gross profit99

Documents

ACCOUNTING JUNE EXAMINATION 2015 GRADE 11 · Match the GAAP principles in COLUMN A with the correct transactions in COLUMN B write only the correct letter (A-E) next to the question