SPECIAL EXAMINATION

Bachelor of Business Administration;

Bachelor of Commerce in Marketing Management;
Bachelor of Commerce in Human Resource Management;
PROGRAMME
Bachelor of Commerce in Information and Technology Management;
Bachelor of Commerce in Supply Chain Management
Bachelor of Public Administration

MODULE Financial Accounting

YEAR One (1)

INTAKE Mixed

DATE 27 May 2019

TIME 09h00 – 12h00

DURATION 3 hours

TOTAL MARKS 100

INSTRUCTIONS TO THE CANDIDATE

1. Questions must be attempted in the answer book provided.

2. All queries should be directed to the invigilator; do not communicate or attempt to communicate with
any other candidate.
3. You have THREE HOURS to complete this paper. You are not allowed to leave the examination room
within the first hour and in the last 15 minutes of this examination.
4. This is a CLOSED BOOK examination.
5. Read ALL instructions carefully.
6. The use of a non-programmable calculator is permitted.
7. Value Added Tax (VAT) must be ignored for all questions.

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 Answer ALL questions.

QUESTION 1 (20 Marks)

REQUIRED

REQUIRED
For each of the questions below write down only the letter of the most appropriate answer
e.g. 1.11 C. Note: Calculations must not be shown in your answer book.

1.1 The repayment of a debt to a creditor (if the bank balance is favourable) ____________.
A increases assets and decreases liabilities
B decreases liabilities and increases equity
C decreases both assets and liabilities
D decreases both liabilities and equity
(1 mark)
1.2 RT Suppliers purchased equipment for R20 000 on 01 January 2019. A deposit of R4 000 was paid
and the balance had to be paid in four equal instalments. On 28 February 2019, the end of the
financial year, the amount that should be charged as an expense in respect of this equipment would
be ___________.
A the depreciation of the equipment
B the entire cost of the equipment
C the deposit on the equipment
D zero
(1 mark)
1.3 ______________ decreases economic benefits to the enterprise, resulting in a decrease in profit and
thus equity.
A Repayment of a loan
B Withdrawing cash from the bank for petty cash
C Increasing the bank overdraft limit
D An expense
(1 mark)

1.4 The method used to value inventories is the same as the previous years. This is the
application of the _____________ in accounting.
A principle of materiality
B realisation principle
C prudence principle
D principle of consistency
(1 mark)
1.5 Which one of the following represents the correct source document for the journal stated?
A Duplicate credit sales invoice Sales Journal
B Original cash sales invoice Cash Payments Journal
C Journal voucher Petty Cash Journal
D Original receipt Cash Receipts Journal
(1 mark)

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1.6 Janet owed Balwin Traders R3 600. Her account was overdue for two months. Balwin
Traders charged her interest at a rate of 15% per year. The amount owing to Balwin Traders
by Janet is ________.
A R90
B R3 690
C R4 140
D none of the above
(3 marks)

1.7 The following information was provided by AB Suppliers for an inventory item:
February Units Unit cost price
01 Opening inventory 30 000 R20
14 Purchases 84 000 R22
24 Purchases 26 000 R24
28 Sales for February 108 000 -

The value of closing inventory as at 28 February 2019, using the first-in-first-out method of
inventory valuation, is ____________.
A R768 000
B R644 000
C R756 000
D none of the above
(3 marks)

1.8 On 31 March 2019 the bank statement reflected a debit balance of R80 000. On comparing
the bank statement with the cash journals of Darnall Traders for March 2019, the following
differences were found:
i) Bank charges for March, R800, were not entered in the relevant cash journal.
ii) A debit order of R1 400 in respect of insurance was not recorded in the Cash Payments
Journal.
iii) Cheques totalling R60 000 drawn during March 2019 were not presented to the bank for
payment.
iv) A deposit of R22 800 recorded in the Cash Receipts Journal on 31 March 2019 was not
credited by the bank.

After taking the appropriate information into account, the bank account in the general ledger of
Darnall Traders will reflect a _______________ on 31 March 2019.
A debit balance of R42 800
B credit balance of R117 200
C credit balance of R82 200
D none of the above
(3 marks)

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Questions 1.9 and 1.10 are based on the following information:

The following balances, amongst others, appeared in the post-closing trial balance of Jehcon
Stores on 28 February 2019, the end of the financial year:
R
Bank overdraft 42 000
Accrued expenses 6 000
Accrued income 4 500
Provision for bad debts 7 500
Mortgage bond 720 000
Creditors control 96 000
Debtors control 87 000
Prepaid expenses 9 000

Note: R60 000 of mortgage bond is expected to be repaid during the next financial year.

1.9 The total current liabilities in the Statement of Financial Position of Jehcon Stores as at
28 February 2019 was __________.
A R204 000
B R868 500
C R144 000
D none of the above
(3 marks)
1.10 The total current assets in the Statement of Financial Position of Jehcon Stores as at
28 February 2019 was __________.
A R93 000
B R108 000
C R90 000
D none of the above
(3 marks)

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 QUESTION 2 (20 Marks)

The information given below was extracted from the records of Tata Traders for March 2019.
REQUIRED
2.1 Prepare the correct Creditors Control account for March 2019. Balance the
account. (11 marks)
2.2 Prepare the correct Creditors List as at 31 March 2019. (9 marks)
INFORMATION
The Creditors Control account in the ledger of Tata Traders for March 2019 and Creditors List
as at 31 March 2019, before the additional information given below was considered, are as
follows:

DR CREDITORS CONTROL CR
2019 2019
Mar 31 Bank and discount 963 000 Mar 01 Balance b/d 385 650
Purchases returns 11 565 31 Purchases 990 000
Balance c/d 423 090 Equipment 21 800
Interest expense 205
1 397 655 1 397 655
Apr 01 Balance b/d 423 090

CREDITORS LIST AS AT 31 MARCH 2019

Creditor Debit Credit
Surfers Limited 62 000
Coco Suppliers 84 900
Huawei Manufacturers 253 900
Gianni’s Enterprises 45 960
Siggis Wholesalers 4 050
4 050 446 760

Additional information not yet recorded:

1. The amount owing by Siggis Wholesalers was refunded by cheque to Tata Traders. This
transaction was not recorded.
2. An invoice received from Surfers Limited for goods purchased was not recorded in the
Purchases Journal, R8 000.
3. The balance in the account of Huawei Manufacturers was overcast by R1 620.
4. Merchandise returned to Coco Suppliers was not recorded in the Purchases Returns Journal,
R6 200.
5. An electronic funds transfer to Gianni’s Enterprises for R18 000 was recorded in the Cash
Payments Journal but not posted to their account in the Creditors ledger.

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 QUESTION 3 (20 Marks)

REQUIRED
Answer the following questions based on the information provided below:
3.1 Calculate the profit or loss on the vehicle sold. (5 marks)
3.2 Prepare the following note to the financial statements as at 28 February 2019: (15 marks)

Property, plant and equipment Vehicles Equipment

Carrying value at the beginning of the year
Cost
Accumulated depreciation
Additions at cost
Disposals at carrying value
Depreciation for the year
Carrying value at the end of the year
Cost
Accumulated depreciation

INFORMATION
■ On 01 March 2018 the following balances, amongst others, appeared in the books of Alpha
Suppliers:
R
Vehicles (at cost) 400 000
Accumulated depreciation on vehicles 240 000
Equipment 300 000
Accumulated depreciation on equipment 180 000

■ On 01 June 2018, a new vehicle was purchased on credit from Ford Motors for R200 000.
■ On 30 November 2018, an old vehicle that cost R100 000 was sold to K. Mortaza for R9 000 cash.
The accumulated depreciation on the vehicle sold amounted to R75 000 on 01 March 2018.
■ Depreciation is calculated on equipment at 20% p.a. on the diminishing balance and on vehicles
at 15% p.a. on cost. The financial year ends on the last day of February each year.

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 QUESTION 4 (20 Marks)
The information given below was extracted from the accounting records of Jupiter Traders, a partnership
business with Judy and Peter as partners.
REQUIRED
Prepare the Statement of Changes in Equity for the year ended 28 February 2019, using the following
format:

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 2019

Capital Accounts Judy (R) Peter (R) Total (R)
Balance at 28 February 2018
Changes in capital
Balance at 28 February 2019

Current Accounts Judy (R) Peter (R) Total (R)

Balance at 28 February 2018
Net profit for the year
Interest on capital
Salaries
Bonus
Profit Share
Drawings
Balance at 28 February 2019

INFORMATION
Extract from the ledger of Jupiter Traders as at 28 February 2019
Debit (R) Credit (R)
Capital: Judy 600 000
Capital: Peter 400 000
Current account: Judy (01 March 2018) 30 000
Current account: Peter (01 March 2018) 25 000
Drawings: Judy 300 000
Drawings: Peter 320 000
The following must be taken into account:
(a) The net profit according to Statement of Comprehensive Income for the year ended
28 February 2019 amounted to R700 000.
(b) The partners are entitled to the following monthly salaries until 30 November 2018:
Judy: R15 000
Peter: R20 000
The salaries will increase with effect from 01 December 2018 as follows:
Judy: 10% increase
Peter: 12.5% increase
(c) The partners are entitled to interest on their capitals at a rate of 12% per year.
Note: The partners increased their capital balances by R100 000 each on 01 September 2018. The
capital changes have been recorded.
(d) Judy is entitled to a special bonus of R120 000.
(e) The remaining profit or shortfall must be shared between Judy and Peter in the ratio 3:2 respectively.

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 QUESTION 5 (20 Marks)

The trial balance, adjustments and additional information given below were extracted from the
accounting records of Netmed Traders on 28 February 2019, the end of the financial year.
REQUIRED
Prepare the Statement of Comprehensive Income of Netmed Traders for the year ended
28 February 2019. Use the following format:

Sales
Cost of sales
Gross profit
Other operating income

Gross operating income

Operating expenses

Operating profit
Interest income
Interest expense
Net profit for the year

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INFORMATION

NETMED TRADERS
PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2019
Debit (R) Credit (R)
Balance sheet accounts section
Capital 140 900
Drawings 56 200
Vehicles at cost 200 000
Equipment at cost 100 000
Accumulated depreciation on vehicles 80 000
Accumulated depreciation on equipment 30 000
Trading inventory 55 000
Debtors control 35 000
Provision for bad debts 4 000
Bank 20 000
Cash float 500
Creditors control 40 000
Mortgage loan: Leo Bank (18% p.a.) 80 000

Nominal accounts section

Sales 520 000
Cost of sales 240 000
Sales returns 10 000
Salaries and wages 95 000
Bad debts 2 000
Stationery 4 000
Rent expense 26 000
Motor expenses 19 000
Bad debts recovered 2 000
Discount allowed 1 000
Telephone 8 000
Electricity and water 12 000
Bank charges 4 000
Insurance 5 000
Interest on mortgage loan 13 200
Commission income 9 000
905 900 905 900

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 Adjustments and additional information
1. According to physical stocktaking undertaken on 28 February 2019, the following were on hand:
1.1 Trading inventory, R53 000
1.2 Stationery, R500.

2. An account received from Honda Motors for repairs to a motor vehicle has not been recorded,
R3 000.
3. No entry has been made for a cheque of R3 000 received from a debtor P. Wilson in settlement
of his debt of R3 100.
4. Write off the account of debtor H. Burns, R2 000.
5. It was decided to charge a debtor R100 interest on his overdue account. The entry to record this
has not yet been made.
6. The provision for bad debts must be adjusted to R1 750.
7. The water and electricity account for February 2019 was still unpaid on 28 February 2019,
R1 400.
8. Rent has been paid up to 31 March 2019.
9. Interest on loan for February 2019 was owed on 28 February 2019.
10. The insurance total includes an annual premium of R1 800 that was paid for the period 01 July
2018 to 30 June 2019.
11. The bank statement for February 2019 reflected service fees of R200 that was not recorded.
12. Commission income at R20 per unit for 250 units of inventory sold during February 2019 was still
due from a supplier.
13. Provide for depreciation as follows:
13.1 On equipment at 10% per annum on cost.
13.2 On vehicles at 20% per annum on the carrying value.

END OF PAPER

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