FAC1503 May/Jun 2012 exam paper — questions

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  1. Question 1 · Accounting equation · 21 marks

    AA Supermarket recorded the following transactions during March 2012; the entity uses a periodic inventory system and is not registered as a VAT vendor. On 2 March the owner, R Ngcobo, transferred his personal vehicle, valued at R82 000, into the entity. On 5 March inventory was bought on credit from F Osman for R1 200. On 8 March a debtor, B Gani, who owed R2 000, was declared insolvent by the North Gauteng High Court, so his account must be written off as irrecoverable. On 10 March the owner, R Ngcobo, drew a cash cheque for R4 000 and gave this R4 000 as a gift to his son for obtaining his LLB degree. On 22 March it was discovered that an office chair worth R1 200, purchased on 1 March 2012, had incorrectly been posted by the bookkeeper to the equipment account instead of the office furniture account, and this error must be corrected. On 28 March, R1 100 was received from P Heyns in full settlement of his account of R1 250. You are required to analyse these transactions of AA Supermarket in tabular format, showing for each transaction the date, the account to be debited, the account to be credited, and the effect on the basic accounting equation across the columns Assets, Equity and Liabilities, following the example given (for 1 March: paid the monthly rental by cheque, R2 000, debiting Rent expense and crediting Bank, with Assets –R2 000 and Equity –R2 000). Note that the accounting equation columns must NOT be totalled, every amount must be preceded by a plus sign (+) for an increase or a minus sign (–) for a decrease, and all calculations must be shown.Show the full question

  2. Question 2.1 · Cash journals, bank and reconciliation · 8 marks

    The information below relates to DC Traders. At 1 March 2012 the bank account in the general ledger reflected a favourable balance of R1 752, while at 31 March 2012 the bank statement showed an unfavourable balance of R432. At 31 March 2012 the cash receipts journal bank column subtotal was R24 480 and the cash payments journal bank column subtotal was R22 815. When the cash journals were compared with the March 2012 bank statement, the following came to light: a debtor, P Pinto, paid R600 directly into DC Traders' bank account; the bank erroneously debited DC Traders' account with a cheque of R1 450 drawn by another of the bank's clients; a cheque for R218 received on 17 March 2012 from debtor E Eysele was returned by the bank on 28 March 2012 because of an error on the cheque; the bank statement's debit side showed service fees of R45 and interest on the bank overdraft of R32, neither yet recorded in the cash journals; a debit order of R3 800 for the monthly office rent, payable to AP Office Ltd, appeared on the bank statement but had not yet been entered in the relevant cash journal; sales of R1 184 recorded in the cash receipts journal on 31 March 2012 were only banked on 4 April 2012; and three cheques had not yet been presented for payment to the bank - cheque no 218 dated 25 August 2011 to creditor BB Ltd for R430, cheque no 380 dated 17 March 2012 to Telecom for the telephone account of R1 100, and cheque no 394 dated 23 March 2012 to Rio Stationers for paper purchased, R750. Using the subtotals given (cash receipts journal bank column R24 480 and cash payments journal bank column R22 815) as the starting point, prepare the cash receipts journal and the cash payments journal of DC Traders for 31 March 2012, showing the bank columns only.Show the full question

  3. Question 2.2 · Cash journals, bank and reconciliation · 5 marks

    The information below relates to DC Traders. At 1 March 2012 the bank account in the general ledger reflected a favourable balance of R1 752, while at 31 March 2012 the bank statement showed an unfavourable balance of R432. At 31 March 2012 the cash receipts journal bank column subtotal was R24 480 and the cash payments journal bank column subtotal was R22 815. When the cash journals were compared with the March 2012 bank statement, the following came to light: a debtor, P Pinto, paid R600 directly into DC Traders' bank account; the bank erroneously debited DC Traders' account with a cheque of R1 450 drawn by another of the bank's clients; a cheque for R218 received on 17 March 2012 from debtor E Eysele was returned by the bank on 28 March 2012 because of an error on the cheque; the bank statement's debit side showed service fees of R45 and interest on the bank overdraft of R32, neither yet recorded in the cash journals; a debit order of R3 800 for the monthly office rent, payable to AP Office Ltd, appeared on the bank statement but had not yet been entered in the relevant cash journal; sales of R1 184 recorded in the cash receipts journal on 31 March 2012 were only banked on 4 April 2012; and three cheques had not yet been presented for payment to the bank - cheque no 218 dated 25 August 2011 to creditor BB Ltd for R430, cheque no 380 dated 17 March 2012 to Telecom for the telephone account of R1 100, and cheque no 394 dated 23 March 2012 to Rio Stationers for paper purchased, R750. Prepare the bank account in the general ledger of DC Traders, properly balanced, as at 31 March 2012.Show the full question

  4. Question 2.3 · Cash journals, bank and reconciliation · 7 marks

    The information below relates to DC Traders. At 1 March 2012 the bank account in the general ledger reflected a favourable balance of R1 752, while at 31 March 2012 the bank statement showed an unfavourable balance of R432. At 31 March 2012 the cash receipts journal bank column subtotal was R24 480 and the cash payments journal bank column subtotal was R22 815. When the cash journals were compared with the March 2012 bank statement, the following came to light: a debtor, P Pinto, paid R600 directly into DC Traders' bank account; the bank erroneously debited DC Traders' account with a cheque of R1 450 drawn by another of the bank's clients; a cheque for R218 received on 17 March 2012 from debtor E Eysele was returned by the bank on 28 March 2012 because of an error on the cheque; the bank statement's debit side showed service fees of R45 and interest on the bank overdraft of R32, neither yet recorded in the cash journals; a debit order of R3 800 for the monthly office rent, payable to AP Office Ltd, appeared on the bank statement but had not yet been entered in the relevant cash journal; sales of R1 184 recorded in the cash receipts journal on 31 March 2012 were only banked on 4 April 2012; and three cheques had not yet been presented for payment to the bank - cheque no 218 dated 25 August 2011 to creditor BB Ltd for R430, cheque no 380 dated 17 March 2012 to Telecom for the telephone account of R1 100, and cheque no 394 dated 23 March 2012 to Rio Stationers for paper purchased, R750. Prepare the bank reconciliation statement of DC Traders as at 31 March 2012, starting with the balance as per the bank statement.Show the full question

  5. Question 3.1.1 · Subsidiary journals and ledger · 3 marks

    This question concerns Zama Traders, an entity that applies the periodic inventory system and is not registered as a VAT vendor. The transactions for March 2012 are as follows: on 5 March an invoice was issued to N Passin for merchandise valued at R1 300 sold to him; on 7 March cash sales of trading inventory amounted to R560; on 10 March an invoice was received from Style Furnishers for an office desk purchased for R1 330; on 17 March a cheque for R1 500 was issued to Compute Traders, a trade creditor, as part payment of the entity's account; on 20 March a cheque for R2 500 was cashed, of which R2 000 was for monthly wages and the balance was for the owner's own use; on 21 March services were rendered to A Prince and his payment of R350 was received; on 24 March a receipt was issued to G Ramayeni for R850 for a payment received on his account; on 26 March merchandise was purchased on credit from SS Traders for R2 140; and on 31 March the water and electricity account of R1 755 was paid by electronic transfer to Electric Meter Readers. Candidates must show all calculations, and each question attempted must be commenced on a new, separate page. For Zama Traders, record the applicable March 2012 transactions in the cash receipts journal. Make provision for the columns day, details, bank, sales, services rendered and debtors control, and total only the debtors control column.Show the full question

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