FAC1503 Oct/Nov 2016 exam paper — questions

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  1. Question 1(a) · Subsidiary journals and ledger · 9 marks

    Helicy Cleaning Services is the entity under review for the month ended 29 February 2016. Helicy Cleaning Services applies the periodic inventory system and is registered as a VAT vendor, with VAT included, where applicable, in all amounts at a rate of 14%. During February 2016 the following transactions were entered into by Helicy Cleaning Services: on day 1 a cheque was issued to ANCO Bank as repayment on a loan of R2 200; on day 2 an automatic washing machine was purchased for R3 200 from Top of Tops Laundry and paid by cheque; on day 4 total services rendered per the cash register roll amounted to R6 500; on day 10 cleaning materials were purchased from Quick Clean for R3 250 and paid by cheque; on day 14 R1 700 was received from P Oosthuizen, a debtor, in part settlement of his account; on day 17 a cheque for R1 280 received on 15 January 2016 from H Hamel, a debtor, was returned by the bank on 26 January 2016 marked 'R/D', and a new cheque for R1 680 was issued by H Hamel to replace the previous cheque, with the new cheque of R1 680 including interest that had been charged to his arrear account on 31 January 2016; on day 19 cash of R8 230 was banked for services rendered; on day 21 packing materials were purchased on credit from O' Reilly Cleaning Solution for R6 500; on day 23 a cheque for R11 400 was issued to pay salaries and wages; on day 27 City Electric Meters was paid R5 870 in settlement of the water and electricity account by means of an electronic fund transfer; on day 28 a cash cheque for R1 800 was issued to pay the traffic fines of the delivery vehicle; and on day 29 total interest received as per the bank statement for February 2016 amounted to R1 320. Using the transactions of Helicy Cleaning Services for February 2016 described above, open a cash receipts journal for the month ended 29 February 2016 in the accounting records of Helicy Cleaning Services and record the relevant transactions in it. Make provision for the following columns: date, details, bank, services rendered, VAT output, debtors control and sundry accounts.Show the full question

  2. Question 1(b) · Subsidiary journals and ledger · 13 marks

    Helicy Cleaning Services is the entity under review for the month ended 29 February 2016. Helicy Cleaning Services applies the periodic inventory system and is registered as a VAT vendor, with VAT included, where applicable, in all amounts at a rate of 14%. During February 2016 the following transactions were entered into by Helicy Cleaning Services: on day 1 a cheque was issued to ANCO Bank as repayment on a loan of R2 200; on day 2 an automatic washing machine was purchased for R3 200 from Top of Tops Laundry and paid by cheque; on day 4 total services rendered per the cash register roll amounted to R6 500; on day 10 cleaning materials were purchased from Quick Clean for R3 250 and paid by cheque; on day 14 R1 700 was received from P Oosthuizen, a debtor, in part settlement of his account; on day 17 a cheque for R1 280 received on 15 January 2016 from H Hamel, a debtor, was returned by the bank on 26 January 2016 marked 'R/D', and a new cheque for R1 680 was issued by H Hamel to replace the previous cheque, with the new cheque of R1 680 including interest that had been charged to his arrear account on 31 January 2016; on day 19 cash of R8 230 was banked for services rendered; on day 21 packing materials were purchased on credit from O' Reilly Cleaning Solution for R6 500; on day 23 a cheque for R11 400 was issued to pay salaries and wages; on day 27 City Electric Meters was paid R5 870 in settlement of the water and electricity account by means of an electronic fund transfer; on day 28 a cash cheque for R1 800 was issued to pay the traffic fines of the delivery vehicle; and on day 29 total interest received as per the bank statement for February 2016 amounted to R1 320. Using the transactions of Helicy Cleaning Services for February 2016 described above, open a cash payments journal for the month ended 29 February 2016 in the accounting records of Helicy Cleaning Services and record the relevant transactions in it. Make provision for the following columns: date, details, bank, cleaning and packing materials, and sundry accounts.Show the full question

  3. Question 1(c) · Subsidiary journals and ledger · 3 marks

    Helicy Cleaning Services is the entity under review for the month ended 29 February 2016. Helicy Cleaning Services applies the periodic inventory system and is registered as a VAT vendor, with VAT included, where applicable, in all amounts at a rate of 14%. During February 2016 the following transactions were entered into by Helicy Cleaning Services: on day 1 a cheque was issued to ANCO Bank as repayment on a loan of R2 200; on day 2 an automatic washing machine was purchased for R3 200 from Top of Tops Laundry and paid by cheque; on day 4 total services rendered per the cash register roll amounted to R6 500; on day 10 cleaning materials were purchased from Quick Clean for R3 250 and paid by cheque; on day 14 R1 700 was received from P Oosthuizen, a debtor, in part settlement of his account; on day 17 a cheque for R1 280 received on 15 January 2016 from H Hamel, a debtor, was returned by the bank on 26 January 2016 marked 'R/D', and a new cheque for R1 680 was issued by H Hamel to replace the previous cheque, with the new cheque of R1 680 including interest that had been charged to his arrear account on 31 January 2016; on day 19 cash of R8 230 was banked for services rendered; on day 21 packing materials were purchased on credit from O' Reilly Cleaning Solution for R6 500; on day 23 a cheque for R11 400 was issued to pay salaries and wages; on day 27 City Electric Meters was paid R5 870 in settlement of the water and electricity account by means of an electronic fund transfer; on day 28 a cash cheque for R1 800 was issued to pay the traffic fines of the delivery vehicle; and on day 29 total interest received as per the bank statement for February 2016 amounted to R1 320. Using the transactions of Helicy Cleaning Services for February 2016 described above, open a general journal for the month ended 29 February 2016 in the accounting records of Helicy Cleaning Services and record the relevant transactions in it. Make provision for the following columns: date, details, debit and credit.Show the full question

  4. Question 2 · Accounting equation · 24 marks

    PPC Traders, which applies the periodic inventory system and is not registered as a VAT vendor, entered into the following transactions during March 2016: on 2 March it bought goods on credit from C Crack for R3 150, with terms allowing a 12% settlement discount if PPC Traders pays within 15 days; on 4 March it issued an invoice of R1 460 to K Mokgosi for goods sold to him on credit; on 8 March it issued a credit note of R460 to K Mokgosi for goods he returned; on 11 March a debtor, G Grey, who owed R1 080 to PPC Traders, was declared insolvent by the North Gauteng High Court, so his account must be written off as irrecoverable; on 12 March the owner transferred his personal delivery vehicle, valued at R45 000, into the entity; on 15 March PPC Traders received R1 000 from K Mokgosi, a debtor, in full settlement of his account; on 16 March it paid the amount owed to C Crack referred to under 2 March; and on 25 March, goods sold for R7 530 cash had incorrectly been recorded in the debtors control column of the cash receipts journal, which error must now be corrected. Using a tabular analysis, record the effect of each of the above PPC Traders transactions for March 2016 on the accounting equation. Set out the table with columns for the date, the account to be debited, the account to be credited, and the effect on the accounting equation split into Assets (R), Equity (R) and Liabilities (R), following the format illustrated by the given example of 4 December, where wages of R2 000 were paid, debiting Wages and crediting Bank, with Assets -2 000, Equity -2 000 and Liabilities 0. Do not total the accounting equation columns. Every amount must be shown preceded by a plus sign (+) for an increase or a minus sign (-) for a decrease, to indicate whether the relevant element of the accounting equation increased or decreased. All calculations must be shown.Show the full question

  5. Question 3(a) · Financial statements and analysis · 4.5 marks

    The following details were taken from the accounting records of Doreen Traders Pty (Ltd) as at 29 February 2016. The abridged statement of financial position reflects: non-current assets (property, plant and equipment) of R980 000; current assets totalling R568 000, made up of inventories R250 000, trade and other receivables R217 000, and cash and cash equivalents R101 000; giving total assets of R1 548 000. On the equity and liabilities side, total equity (capital) amounts to R616 500; total liabilities amount to R931 500, comprising non-current liabilities (long-term borrowings/mortgage) of R558 000 and current liabilities (trade and other payables) of R373 500; giving total equity and liabilities of R1 548 000. Additional information provided is as follows: (1) credit sales represent 65% of total sales (revenue), and total sales amounted to R950 000; (2) credit purchases represent 45% of total purchases, and total purchases amounted to R550 880; (3) on 1 March 2015 the opening balance of the debtors control account was R175 000 and that of the creditors control account was R325 000; (4) profit for the year ended 29 February 2016 amounted to R260 500; (5) an extract from the statement of profit or loss and other comprehensive income for the year ended 29 February 2016 shows that the interest expense for the year amounted to R74 500 and the normal income tax expense for the same financial year amounted to R50 500. All formulas and calculations must be shown, and all answers must be rounded off to 2 decimal places after the comma. Using the Doreen Traders Pty (Ltd) information given, calculate the trade receivables collection period (in days) as at 29 February 2016, showing all formulas and calculations, and rounding the answer to 2 decimal places after the comma.Show the full question

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