FAC1501 May/Jun 2014 exam paper — questions

Every question, by topic

1. Question 1 · Accounting equation & classification · 18 marks

   Score Traders is a service entity that opened an internet shop in 2008. The following transactions were extracted from those entered into by Score Traders during April 2014: (1) printing ink cartridges were bought for R2 550 cash and immediately used to replace the old ones; (2) one of the computers was sent for repairs on credit, with invoice number 2022 for R350 received; (3) Score Traders, which also sells memory sticks, purchased inventory of 20 memory sticks for R3 000 cash; (4) 7 memory sticks were sold for cash at R250 each, with the cost of sales for these 7 sticks amounting to R1 050; (5) total internet fees charged to customers during the month came to R9 500 cash. Additional information: Score Traders is not registered for VAT, and the entity uses the perpetual inventory system. Using a table similar to the format illustrated (with columns for the transaction number, the account debited and account credited in the general ledger, and the effect on the accounting equation split into Assets (A), Equity (E) and Liabilities (L)), analyse each of the five transactions of Score Traders for April 2014. For each transaction, indicate which account must be debited and which account must be credited in the general ledger, and show the effect of the transaction on the accounting equation using a '+' sign for an increase and a '-' sign for a decrease. Where applicable, assume that the bank balance is positive. As an example, if the entity paid wages of R150 cash, this would be shown as: account debited - Wages; account credited - Bank; effect on A = -R150; effect on E = -R150; effect on L = no effect (-).Show the full questionShow less

2. Question 2.1 · Bank reconciliation · 6 marks

   Question 2 consists of two unrelated parts, Part A and Part B. Part A: Computer Traders provides the following information for its financial year ended 31 January 2014: inventory on 1 February 2013 was R50 700; sales amounted to R480 500; purchases amounted to R230 100; sales returns were R14 800; purchase returns were R5 600; carriage on sales was R20 300; carriage on purchases was R12 400; and customs and excise duties on purchases were R8 900. Computer Traders applies a periodic inventory system, and a physical inventory count performed on 31 January 2014 revealed inventory on hand valued at R40 200. Calculate the cost of sales of Computer Traders for the financial year ended 31 January 2014, showing all calculations and not only the final answer.Show the full questionShow less

3. Question 2.2 · Bank reconciliation · 5 marks

   Question 2 consists of two unrelated parts, Part A and Part B. Part B: The accountant of Camera Traders drew up the cash receipts journal and cash payments journal for April 2014 before receiving the April 2014 bank statement. Before the bank statement was received, the journal totals were: total cash receipts R68 300 and total cash payments R53 400. On 1 April 2014 the bank account in the general ledger showed a favourable balance of R26 950, and on 30 April 2014 the bank statement showed a favourable balance of R15 600. Comparing the bank statement to the cash journals revealed the following: (1) items appearing only on the bank statement were bank charges of R500 and interest income of R600; (2) cheques recorded in the cash payments journal but not yet presented to the bank were cheque no. 930 for R2 500, cheque no. 940 for R4 700 and cheque no. 970 for R1 900; (3) a credit entry of R3 100 appearing only on the bank statement was a direct deposit made by a debtor; (4) deposits totalling R35 850 recorded in the cash receipts journal had not yet been credited by the bank; (5) a cheque for R4 300 drawn by another entity was incorrectly reflected on Camera Traders' bank statement; (6) the bank returned, unpaid and marked 'refer to drawer', a cheque for R2 000 that had been received from a debtor; and (7) Camera Traders sublets part of its building to Radio Dealers, who pays a monthly rental of R3 600 via internet banking, and this R3 600 credit entry appears only on the bank statement. Required: complete the cash receipts journal and the cash payments journal of Camera Traders for April 2014, showing the details and bank columns only.Show the full questionShow less

4. Question 2.3 · Bank reconciliation · 5 marks

   Question 2 consists of two unrelated parts, Part A and Part B. Using the same Camera Traders information given for April 2014 (Part B), prepare the properly balanced/closed-off bank account for April 2014 in the general ledger of Camera Traders.Show the full questionShow less

5. Question 2.4 · Bank reconciliation · 6 marks

   Question 2 consists of two unrelated parts, Part A and Part B. Using the same Camera Traders information given for April 2014 (Part B), prepare the bank reconciliation statement of Camera Traders as at 30 April 2014.Show the full questionShow less