FAC1503 May/Jun 2017 paper — every question, as asked

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Question 1(a) · Cash journals, bank and reconciliation · 9 marks
Riopez (Pty) Ltd compared its cash journals to its bank statement for the month ended 31 August 2016 and identified the following. (1) Balances: the bank account in the general ledger reflected a favourable balance of R4 152 on 31 July 2016, while the bank statement reflected a favourable balance of R15 559 on 31 August 2016. (2) The cash journal totals for 31 August 2016 were: cash receipts journal R33 912; cash payments journal R12 335. (3) When reconciling the cash journals to the August 2016 bank statement, the following differences were noted: a debtor, D Dollen, paid R1 350 directly into Riopez's bank account; the bank erroneously debited Riopez's account with a cheque of R1 150 that had actually been drawn by Liopet (Pty) Ltd; a cheque for R3 677 received on 17 August 2016 from debtor P Mlangeni was returned by the bank marked R/D (refer to drawer); the debit side of the bank statement contained items not yet recorded in the cash journals, namely bank charges of R158, cheque book charges of R80, internet banking fees of R30, and interest on the favourable bank balance of R335; a debit order of R5 760 for motor vehicle insurance payable to Insuresafe appeared on the bank statement but had not been entered in the relevant cash journal; and cash sales of R2 771, entered in the cash receipts journal on 31 August 2016, were only banked on 4 September 2016. (4) The following cheques had not yet been presented to the bank for payment: cheque no 395 dated 23 August 2016 to RNA Stationers for staples purchased, R122; cheque no 320 dated 25 January 2016 to creditor Mos Ltd, R980; and cheque no 390 dated 14 July 2016 to Mobinet for the telephone account, R669. You are required to complete the relevant accounting records of Riopez (Pty) Ltd as at 31 August 2016. Using the information given for Riopez (Pty) Ltd, prepare the cash receipts journal and cash payments journal (bank columns only) for August 2016, properly totalled, as at 31 August 2016.Show the full questionShow less
Question 1(b) · Cash journals, bank and reconciliation · 5 marks
Riopez (Pty) Ltd compared its cash journals to its bank statement for the month ended 31 August 2016 and identified the following. (1) Balances: the bank account in the general ledger reflected a favourable balance of R4 152 on 31 July 2016, while the bank statement reflected a favourable balance of R15 559 on 31 August 2016. (2) The cash journal totals for 31 August 2016 were: cash receipts journal R33 912; cash payments journal R12 335. (3) When reconciling the cash journals to the August 2016 bank statement, the following differences were noted: a debtor, D Dollen, paid R1 350 directly into Riopez's bank account; the bank erroneously debited Riopez's account with a cheque of R1 150 that had actually been drawn by Liopet (Pty) Ltd; a cheque for R3 677 received on 17 August 2016 from debtor P Mlangeni was returned by the bank marked R/D (refer to drawer); the debit side of the bank statement contained items not yet recorded in the cash journals, namely bank charges of R158, cheque book charges of R80, internet banking fees of R30, and interest on the favourable bank balance of R335; a debit order of R5 760 for motor vehicle insurance payable to Insuresafe appeared on the bank statement but had not been entered in the relevant cash journal; and cash sales of R2 771, entered in the cash receipts journal on 31 August 2016, were only banked on 4 September 2016. (4) The following cheques had not yet been presented to the bank for payment: cheque no 395 dated 23 August 2016 to RNA Stationers for staples purchased, R122; cheque no 320 dated 25 January 2016 to creditor Mos Ltd, R980; and cheque no 390 dated 14 July 2016 to Mobinet for the telephone account, R669. You are required to complete the relevant accounting records of Riopez (Pty) Ltd as at 31 August 2016. Using the information given for Riopez (Pty) Ltd, prepare the bank account in the general ledger, properly balanced, as at 31 August 2016.Show the full questionShow less
Question 1(c) · Cash journals, bank and reconciliation · 6 marks
Riopez (Pty) Ltd compared its cash journals to its bank statement for the month ended 31 August 2016 and identified the following. (1) Balances: the bank account in the general ledger reflected a favourable balance of R4 152 on 31 July 2016, while the bank statement reflected a favourable balance of R15 559 on 31 August 2016. (2) The cash journal totals for 31 August 2016 were: cash receipts journal R33 912; cash payments journal R12 335. (3) When reconciling the cash journals to the August 2016 bank statement, the following differences were noted: a debtor, D Dollen, paid R1 350 directly into Riopez's bank account; the bank erroneously debited Riopez's account with a cheque of R1 150 that had actually been drawn by Liopet (Pty) Ltd; a cheque for R3 677 received on 17 August 2016 from debtor P Mlangeni was returned by the bank marked R/D (refer to drawer); the debit side of the bank statement contained items not yet recorded in the cash journals, namely bank charges of R158, cheque book charges of R80, internet banking fees of R30, and interest on the favourable bank balance of R335; a debit order of R5 760 for motor vehicle insurance payable to Insuresafe appeared on the bank statement but had not been entered in the relevant cash journal; and cash sales of R2 771, entered in the cash receipts journal on 31 August 2016, were only banked on 4 September 2016. (4) The following cheques had not yet been presented to the bank for payment: cheque no 395 dated 23 August 2016 to RNA Stationers for staples purchased, R122; cheque no 320 dated 25 January 2016 to creditor Mos Ltd, R980; and cheque no 390 dated 14 July 2016 to Mobinet for the telephone account, R669. You are required to complete the relevant accounting records of Riopez (Pty) Ltd as at 31 August 2016. Using the information given for Riopez (Pty) Ltd, prepare the bank reconciliation statement, properly balanced, as at 31 August 2016.Show the full questionShow less
Question 2 · Accounting equation · 20 marks
Sheki Suppliers is not registered as a VAT vendor and uses the periodic inventory system. The following transactions took place during June 2016. On 4 June, inventory was purchased on credit from Wilkin Wholesalers for R1 850, after a trade discount of 10% had already been deducted; the creditor will allow a further settlement discount of 8% if the account is paid within 30 days, and Sheki Suppliers intends to settle the account during June 2016. On 11 June, a receipt was issued to S Struwig for R950 in part payment of his account. On 19 June, a cheque for R2 900 was cashed, of which R1 800 was used to pay the week's wages and the remainder was used to restore the petty cash float to its original balance. On 23 June, a cheque was issued to Wilkin Wholesalers to settle the amount still owing for the inventory bought on credit earlier in the month. On 29 June, a new photocopy machine was purchased on credit from Office Suppliers for R1 370. Required: analyse each of these transactions in tabular format, showing for every transaction the date, the account to be debited, the account to be credited, and the effect of the transaction on each element of the basic accounting equation (assets, equity and liabilities), following the example format provided for 4 December where stationery of R2 000 was purchased for cash (debit Stationery; credit Bank; Assets -2 000; Equity -2 000). 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 to show the effect on that element, and all calculations must be shown.Show the full questionShow less
Question 3.1 · Financial statements and analysis · 3 marks
The following financial information relates to Torino Traders. Its abbreviated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 September 2016 shows: revenue of R771 456 (including cash sales of R115 500); cost of sales of R242 956, made up of opening inventory on 01/10/2015 of R99 276 plus purchases of R264 000 (including cash purchases of R145 200), giving R363 276, less closing inventory on 30/09/2016 of R120 320; gross profit of R528 500; distribution, administrative and other expenses of R460 065; finance cost (mortgage) of R55 000; profit for the year of R13 435; no other comprehensive income; and total comprehensive income for the year of R13 435. Its abbreviated Statement of Financial Position as at 30 September 2016 shows: non-current assets of R523 600 (all property, plant and equipment); current assets of R198 390, comprising inventories of R120 320, trade and other receivables of R72 780 (with the balance on 01/10/2015 being R84 210), and cash and cash equivalents of R5 290; total assets of R721 990; total equity of R72 473 (all capital); total liabilities of R649 517, comprising non-current liabilities of R550 000 (long-term borrowings/mortgage) and current liabilities of R99 517, made up of trade and other payables of R88 517 (with the balance on 01/10/2015 being R90 235) and the current portion of long-term borrowings of R11 000; and total equity and liabilities of R721 990. Using this information, calculate the following ratios of Torino Traders (referred to in the requirement as Torino Traders CC) at 30 September 2016. All formulas and calculations must be shown, and all answers must be rounded off to 2 decimal places after the comma. Calculate the solvency ratio of Torino Traders at 30 September 2016, showing all formulas and calculations, with the final answer rounded to 2 decimal places after the comma.Show the full questionShow less

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