FAC1502 May/Jun 2013 exam paper — questions

Every question, by topic

1. Question 1.1 · Financial statements of a sole trader · 29 marks

   Mill Traders' pre-adjustment trial balance as at 30 June 2012 reflects the following balances: Capital R202 000 (credit); Drawings R27 000 (debit); Debtors control R18 560 (debit); Vehicles at cost R202 100 (debit); Accumulated depreciation on vehicles R19 100 (credit); Trading inventory as at 1 July 2011 R28 300 (debit); Bank R56 520 (debit); Mortgage loan R105 000 (credit); Loan from Africa Bank (at 19,5% per annum) R15 000 (credit); Sales R272 195 (credit); Carriage on purchases R750 (debit); Import duty on purchases R782 (debit); Insurance on purchases R329 (debit); Commission income R18 000 (credit); Depreciation R19 100 (debit); Insurance R8 575 (debit); Packaging materials R4 600 (debit); Purchases R190 800 (debit); Purchases returns R245 (credit); Rent income R6 500 (credit); Sales returns R1 860 (debit); Settlement discount granted R465 (debit); Settlement discount received R225 (credit); Telephone R2 420 (debit); Carriage on sales R1 250 (debit); Repairs R2 160 (debit); Petrol R3 479 (debit); Wages R64 115 (debit); Water and electricity R5 100 (debit). Both the debit and credit columns total R638 265. The following additional information must also be taken into account: (1) on 1 July 2012 the trading inventory balance was R22 750; (2) rental income for the year should actually have been R6 000; (3) packaging material on hand at 30 June 2012 amounted to R1 200; (4) commission income of R3 600 is still outstanding; (5) water and electricity of R500 is still owing; (6) the mortgage loan was obtained from XYZ Bank and carries interest at 11,5% per annum, and the current year's interest still needs to be provided for; (7) the loan from Africa Bank is unsecured and the current year's interest on it must also still be provided for; (8) a debtor owing the business R4 640 was declared insolvent and this account must be written off as irrecoverable; and (9) the insurance figure given includes premiums already paid for July and August 2012. Using the pre-adjustment trial balance of Mill Traders as at 30 June 2012 and the additional information provided (relating to closing inventory, rental income, packaging materials on hand, outstanding commission income, water and electricity owing, mortgage loan and Africa Bank loan interest still to be provided for, the debtor written off as irrecoverable, and the prepaid insurance), prepare the statement of profit or loss and other comprehensive income of Mill Traders for the year ended 30 June 2012. All calculations must be shown.Show the full questionShow less

2. Question 1.2 · Financial statements of a sole trader · 4 marks

   Mill Traders' pre-adjustment trial balance as at 30 June 2012 reflects the following balances: Capital R202 000 (credit); Drawings R27 000 (debit); Debtors control R18 560 (debit); Vehicles at cost R202 100 (debit); Accumulated depreciation on vehicles R19 100 (credit); Trading inventory as at 1 July 2011 R28 300 (debit); Bank R56 520 (debit); Mortgage loan R105 000 (credit); Loan from Africa Bank (at 19,5% per annum) R15 000 (credit); Sales R272 195 (credit); Carriage on purchases R750 (debit); Import duty on purchases R782 (debit); Insurance on purchases R329 (debit); Commission income R18 000 (credit); Depreciation R19 100 (debit); Insurance R8 575 (debit); Packaging materials R4 600 (debit); Purchases R190 800 (debit); Purchases returns R245 (credit); Rent income R6 500 (credit); Sales returns R1 860 (debit); Settlement discount granted R465 (debit); Settlement discount received R225 (credit); Telephone R2 420 (debit); Carriage on sales R1 250 (debit); Repairs R2 160 (debit); Petrol R3 479 (debit); Wages R64 115 (debit); Water and electricity R5 100 (debit). Both the debit and credit columns total R638 265. The following additional information must also be taken into account: (1) on 1 July 2012 the trading inventory balance was R22 750; (2) rental income for the year should actually have been R6 000; (3) packaging material on hand at 30 June 2012 amounted to R1 200; (4) commission income of R3 600 is still outstanding; (5) water and electricity of R500 is still owing; (6) the mortgage loan was obtained from XYZ Bank and carries interest at 11,5% per annum, and the current year's interest still needs to be provided for; (7) the loan from Africa Bank is unsecured and the current year's interest on it must also still be provided for; (8) a debtor owing the business R4 640 was declared insolvent and this account must be written off as irrecoverable; and (9) the insurance figure given includes premiums already paid for July and August 2012. Using the same trial balance and additional information for Mill Traders as at 30 June 2012, prepare the statement of changes in equity of Mill Traders for the year ended 30 June 2012.Show the full questionShow less

3. Question 2.1 · Debtors & creditors control · 10 marks

   People Traders provided the following information for April 2013. On 30 April 2013 the debtors ledger listed trade debtors as follows: Hoop CC R10 283; Slot Stationers R237; Dormat Cleaners R596; Fill Design R801; Emily Suppliers R1 980; giving a total of R13 897. On the same date the debtors control account reflected a preliminary balance of R15 123. An investigation of the individual accounts, source documents and other relevant records revealed the following errors and omissions: (i) the total of the debtors column in the sales journal was undercast by R350; (ii) the account of Hoop CC was incorrectly balanced and should actually read R9 734; (iii) the debtors column in the sales journal totalled R6 890, but this was posted to the debtors control account as R8 960; (iv) credit note no. SD2653 for R45, issued to Dormat Cleaners, was recorded in the sales returns journal but never posted to Dormat Cleaners' personal account; (v) the account of debtor Slot Stationers was written off, and all the required entries for this write-off still need to be made; (vi) a cheque of R1 850 received from Emily Suppliers in full settlement of her account was incorrectly recorded as sales in the cash receipts journal; (vii) interest of R150 was charged on the account of Emily Suppliers during the year, but this was only entered in the debtors ledger and not in the control account; and (viii) a cheque of R250 received from Fill Design was returned by the bank marked 'R/D', and the necessary entries for this dishonoured cheque still need to be made in the debtors ledger. All other entries were done correctly. Using the information given about People Traders for April 2013 (the list of debtors totalling R13 897, the preliminary debtors control account balance of R15 123, and the errors/omissions numbered (i) to (viii) above), prepare the debtors control account of People Traders as at 30 April 2013. All entries relating to the necessary corrections and/or omissions must be shown. Input and output VAT must be ignored.Show the full questionShow less

4. Question 2.2 · Debtors & creditors control · 9 marks

   People Traders provided the following information for April 2013. On 30 April 2013 the debtors ledger listed trade debtors as follows: Hoop CC R10 283; Slot Stationers R237; Dormat Cleaners R596; Fill Design R801; Emily Suppliers R1 980; giving a total of R13 897. On the same date the debtors control account reflected a preliminary balance of R15 123. An investigation of the individual accounts, source documents and other relevant records revealed the following errors and omissions: (i) the total of the debtors column in the sales journal was undercast by R350; (ii) the account of Hoop CC was incorrectly balanced and should actually read R9 734; (iii) the debtors column in the sales journal totalled R6 890, but this was posted to the debtors control account as R8 960; (iv) credit note no. SD2653 for R45, issued to Dormat Cleaners, was recorded in the sales returns journal but never posted to Dormat Cleaners' personal account; (v) the account of debtor Slot Stationers was written off, and all the required entries for this write-off still need to be made; (vi) a cheque of R1 850 received from Emily Suppliers in full settlement of her account was incorrectly recorded as sales in the cash receipts journal; (vii) interest of R150 was charged on the account of Emily Suppliers during the year, but this was only entered in the debtors ledger and not in the control account; and (viii) a cheque of R250 received from Fill Design was returned by the bank marked 'R/D', and the necessary entries for this dishonoured cheque still need to be made in the debtors ledger. All other entries were done correctly. Using the same information about People Traders for April 2013, reconcile the total of the list of trade debtors (R13 897) with the corrected balance of the debtors control account as at 30 April 2013. Input and output VAT must be ignored.Show the full questionShow less

5. Question 3.1 · Incomplete records · 15 marks

   F Tar operates a small home-based business called F Tarta and does not maintain proper accounting records, so he needs help working out the entity's profit or loss and requests assistance. The following balances as at 30 April were established for the 2013 and 2012 financial years: furniture at carrying value R22 950 (2013) and R25 500 (2012); tools and equipment at carrying value R46 350 (2013) and R51 500 (2012); trading inventory R10 500 (2013) and R15 200 (2012); investment in shares in Solution Pty (Ltd) R25 000 (2013) and nil (2012); favourable bank balance nil (2013) and R12 480 (2012); bank overdraft R8 500 (2013) and nil (2012); long-term loan R15 500 (2013) and R19 000 (2012); creditors R9 520 (2013) and R5 700 (2012); credit card R5 380 (2013) and nil (2012); 32 days' notice deposit R21 000 (2013) and nil (2012); prepaid expenses R1 850 (2013) and nil (2012); accrued income R2 430 (2013) and nil (2012); income received in advance R3 800 (2013) and R5 000 (2012); and accrued expenses R1 600 (2013) and R1 300 (2012). Additional information: (1) F Tar withdrew R20 000 during the 2013 year for his own use; (2) during the 2013 financial year F Tar deposited R30 000 from his personal bank account into the business bank account; (3) interest on the long-term loan must still be provided for the 2013 financial year, charged at 11% per annum on the outstanding balance as at 30 April. Using the balances and additional information given for F Tarta, prepare the statement of financial position of F Tarta as at 30 April 2013. All necessary calculations must be shown.Show the full questionShow less

6. Question 3.2 · Incomplete records · 5.5 marks

   F Tar operates a small home-based business called F Tarta and does not maintain proper accounting records, so he needs help working out the entity's profit or loss and requests assistance. The following balances as at 30 April were established for the 2013 and 2012 financial years: furniture at carrying value R22 950 (2013) and R25 500 (2012); tools and equipment at carrying value R46 350 (2013) and R51 500 (2012); trading inventory R10 500 (2013) and R15 200 (2012); investment in shares in Solution Pty (Ltd) R25 000 (2013) and nil (2012); favourable bank balance nil (2013) and R12 480 (2012); bank overdraft R8 500 (2013) and nil (2012); long-term loan R15 500 (2013) and R19 000 (2012); creditors R9 520 (2013) and R5 700 (2012); credit card R5 380 (2013) and nil (2012); 32 days' notice deposit R21 000 (2013) and nil (2012); prepaid expenses R1 850 (2013) and nil (2012); accrued income R2 430 (2013) and nil (2012); income received in advance R3 800 (2013) and R5 000 (2012); and accrued expenses R1 600 (2013) and R1 300 (2012). Additional information: (1) F Tar withdrew R20 000 during the 2013 year for his own use; (2) during the 2013 financial year F Tar deposited R30 000 from his personal bank account into the business bank account; (3) interest on the long-term loan must still be provided for the 2013 financial year, charged at 11% per annum on the outstanding balance as at 30 April. Using the balances and additional information given for F Tarta, prepare the statement of assets and liabilities as at 30 April 2012 and calculate the equity balance as at 30 April 2012.Show the full questionShow less

7. Question 3.3 · Incomplete records · 2.5 marks

   F Tar operates a small home-based business called F Tarta and does not maintain proper accounting records, so he needs help working out the entity's profit or loss and requests assistance. The following balances as at 30 April were established for the 2013 and 2012 financial years: furniture at carrying value R22 950 (2013) and R25 500 (2012); tools and equipment at carrying value R46 350 (2013) and R51 500 (2012); trading inventory R10 500 (2013) and R15 200 (2012); investment in shares in Solution Pty (Ltd) R25 000 (2013) and nil (2012); favourable bank balance nil (2013) and R12 480 (2012); bank overdraft R8 500 (2013) and nil (2012); long-term loan R15 500 (2013) and R19 000 (2012); creditors R9 520 (2013) and R5 700 (2012); credit card R5 380 (2013) and nil (2012); 32 days' notice deposit R21 000 (2013) and nil (2012); prepaid expenses R1 850 (2013) and nil (2012); accrued income R2 430 (2013) and nil (2012); income received in advance R3 800 (2013) and R5 000 (2012); and accrued expenses R1 600 (2013) and R1 300 (2012). Additional information: (1) F Tar withdrew R20 000 during the 2013 year for his own use; (2) during the 2013 financial year F Tar deposited R30 000 from his personal bank account into the business bank account; (3) interest on the long-term loan must still be provided for the 2013 financial year, charged at 11% per annum on the outstanding balance as at 30 April. Based on the information provided for F Tarta, calculate the estimated profit or loss for the year ended 30 April 2013.Show the full questionShow less

8. Question 4.1 · Property, plant & equipment and depreciation · 8 marks

   CAMP Dealers is used for this question, which starts with an extract from its trial balance as at 1 March 2012 showing a bank debit balance of R2 150, machinery at cost of R220 000, equipment at cost of R70 000, sales of R250 000, VAT input of R1 600, VAT output of R1 800, accumulated depreciation on machinery of R22 000 and accumulated depreciation on equipment of R7 000. The cash receipts journal for May 2012 reflects, in total, a bank column of R74 335, sales of R25 000, cost of sales of R9 300, debtors control of R8 500, settlement discount granted of R250, VAT output of R8 120, VAT input of R35 and sundry amounts of R33 000, with the sundry amount relating to the sale of machinery. The cash payments journal for May 2012 shows a bank total of R117 601, machinery purchases of R47 000, equipment purchases of R56 400, VAT input of R14 476, VAT output of R75, settlement discount received of R200 and no sundry amounts. A general journal extract for the year ended 28 February 2013 records, on 1 February 2013, the purchase of equipment on credit from AZH Design: equipment R36 000 and VAT input R5 040 are debited, and creditors control/AZH Design is credited with R41 040. Additional information provided is that CAMP Dealers depreciates machinery at 10% per annum on the straight-line method and equipment at 10% per annum on the diminishing-balance method; the machinery that was sold had originally been bought on 1 March 2011 for R50 000; and the only acquisitions and disposals of property, plant and equipment during the period took place in May 2012 and February 2013. For CAMP Dealers, calculate the depreciation on machinery and the depreciation on equipment for the year ended 28 February 2013, using the information given about the trial balance as at 1 March 2012, the May 2012 cash receipts and cash payments journals, the February 2013 general journal entry for the equipment bought from AZH Design, and the note that machinery is depreciated at 10% per annum straight-line while equipment is depreciated at 10% per annum diminishing-balance, bearing in mind that the machinery sold was originally purchased on 1 March 2011 for R50 000 and that the only additions and disposals of property, plant and equipment occurred in May 2012 and February 2013.Show the full questionShow less

9. Question 4.2.1 · Property, plant & equipment and depreciation · 4 marks

   CAMP Dealers is used for this question, which starts with an extract from its trial balance as at 1 March 2012 showing a bank debit balance of R2 150, machinery at cost of R220 000, equipment at cost of R70 000, sales of R250 000, VAT input of R1 600, VAT output of R1 800, accumulated depreciation on machinery of R22 000 and accumulated depreciation on equipment of R7 000. The cash receipts journal for May 2012 reflects, in total, a bank column of R74 335, sales of R25 000, cost of sales of R9 300, debtors control of R8 500, settlement discount granted of R250, VAT output of R8 120, VAT input of R35 and sundry amounts of R33 000, with the sundry amount relating to the sale of machinery. The cash payments journal for May 2012 shows a bank total of R117 601, machinery purchases of R47 000, equipment purchases of R56 400, VAT input of R14 476, VAT output of R75, settlement discount received of R200 and no sundry amounts. A general journal extract for the year ended 28 February 2013 records, on 1 February 2013, the purchase of equipment on credit from AZH Design: equipment R36 000 and VAT input R5 040 are debited, and creditors control/AZH Design is credited with R41 040. Additional information provided is that CAMP Dealers depreciates machinery at 10% per annum on the straight-line method and equipment at 10% per annum on the diminishing-balance method; the machinery that was sold had originally been bought on 1 March 2011 for R50 000; and the only acquisitions and disposals of property, plant and equipment during the period took place in May 2012 and February 2013. Using all the CAMP Dealers information supplied (the 1 March 2012 trial balance extract, the May 2012 cash receipts and payments journals, and the February 2013 general journal entry for equipment bought from AZH Design), prepare the properly balanced general ledger account for Machinery at cost for the year ended 28 February 2013.Show the full questionShow less

10. Question 4.2.2 · Property, plant & equipment and depreciation · 4 marks

    CAMP Dealers is used for this question, which starts with an extract from its trial balance as at 1 March 2012 showing a bank debit balance of R2 150, machinery at cost of R220 000, equipment at cost of R70 000, sales of R250 000, VAT input of R1 600, VAT output of R1 800, accumulated depreciation on machinery of R22 000 and accumulated depreciation on equipment of R7 000. The cash receipts journal for May 2012 reflects, in total, a bank column of R74 335, sales of R25 000, cost of sales of R9 300, debtors control of R8 500, settlement discount granted of R250, VAT output of R8 120, VAT input of R35 and sundry amounts of R33 000, with the sundry amount relating to the sale of machinery. The cash payments journal for May 2012 shows a bank total of R117 601, machinery purchases of R47 000, equipment purchases of R56 400, VAT input of R14 476, VAT output of R75, settlement discount received of R200 and no sundry amounts. A general journal extract for the year ended 28 February 2013 records, on 1 February 2013, the purchase of equipment on credit from AZH Design: equipment R36 000 and VAT input R5 040 are debited, and creditors control/AZH Design is credited with R41 040. Additional information provided is that CAMP Dealers depreciates machinery at 10% per annum on the straight-line method and equipment at 10% per annum on the diminishing-balance method; the machinery that was sold had originally been bought on 1 March 2011 for R50 000; and the only acquisitions and disposals of property, plant and equipment during the period took place in May 2012 and February 2013. Using all the CAMP Dealers information supplied, prepare the properly balanced general ledger account for Equipment at cost for the year ended 28 February 2013.Show the full questionShow less

11. Question 4.2.3 · Property, plant & equipment and depreciation · 5 marks

    CAMP Dealers is used for this question, which starts with an extract from its trial balance as at 1 March 2012 showing a bank debit balance of R2 150, machinery at cost of R220 000, equipment at cost of R70 000, sales of R250 000, VAT input of R1 600, VAT output of R1 800, accumulated depreciation on machinery of R22 000 and accumulated depreciation on equipment of R7 000. The cash receipts journal for May 2012 reflects, in total, a bank column of R74 335, sales of R25 000, cost of sales of R9 300, debtors control of R8 500, settlement discount granted of R250, VAT output of R8 120, VAT input of R35 and sundry amounts of R33 000, with the sundry amount relating to the sale of machinery. The cash payments journal for May 2012 shows a bank total of R117 601, machinery purchases of R47 000, equipment purchases of R56 400, VAT input of R14 476, VAT output of R75, settlement discount received of R200 and no sundry amounts. A general journal extract for the year ended 28 February 2013 records, on 1 February 2013, the purchase of equipment on credit from AZH Design: equipment R36 000 and VAT input R5 040 are debited, and creditors control/AZH Design is credited with R41 040. Additional information provided is that CAMP Dealers depreciates machinery at 10% per annum on the straight-line method and equipment at 10% per annum on the diminishing-balance method; the machinery that was sold had originally been bought on 1 March 2011 for R50 000; and the only acquisitions and disposals of property, plant and equipment during the period took place in May 2012 and February 2013. Using all the CAMP Dealers information supplied, including the depreciation rates (machinery 10% per annum straight-line; equipment 10% per annum diminishing-balance) and the fact that the disposed machinery was bought on 1 March 2011 for R50 000, prepare the properly balanced general ledger account for Accumulated depreciation: Machinery for the year ended 28 February 2013.Show the full questionShow less

12. Question 4.2.4 · Property, plant & equipment and depreciation · 4 marks

    CAMP Dealers is used for this question, which starts with an extract from its trial balance as at 1 March 2012 showing a bank debit balance of R2 150, machinery at cost of R220 000, equipment at cost of R70 000, sales of R250 000, VAT input of R1 600, VAT output of R1 800, accumulated depreciation on machinery of R22 000 and accumulated depreciation on equipment of R7 000. The cash receipts journal for May 2012 reflects, in total, a bank column of R74 335, sales of R25 000, cost of sales of R9 300, debtors control of R8 500, settlement discount granted of R250, VAT output of R8 120, VAT input of R35 and sundry amounts of R33 000, with the sundry amount relating to the sale of machinery. The cash payments journal for May 2012 shows a bank total of R117 601, machinery purchases of R47 000, equipment purchases of R56 400, VAT input of R14 476, VAT output of R75, settlement discount received of R200 and no sundry amounts. A general journal extract for the year ended 28 February 2013 records, on 1 February 2013, the purchase of equipment on credit from AZH Design: equipment R36 000 and VAT input R5 040 are debited, and creditors control/AZH Design is credited with R41 040. Additional information provided is that CAMP Dealers depreciates machinery at 10% per annum on the straight-line method and equipment at 10% per annum on the diminishing-balance method; the machinery that was sold had originally been bought on 1 March 2011 for R50 000; and the only acquisitions and disposals of property, plant and equipment during the period took place in May 2012 and February 2013. Using all the CAMP Dealers information supplied, prepare the properly balanced general ledger account for Asset realisation for the year ended 28 February 2013, reflecting the disposal of the machinery originally purchased on 1 March 2011 for R50 000 and sold during May 2012 for the sundry amount of R33 000 recorded in the cash receipts journal.Show the full questionShow less