Assignment Questions - Answer ALL questions.
QUESTION 1 - MULTIPLE CHOICE
REQUIRED: For each of the questions below, write down the letter of the most appropriate answer. e.g. 1.1 A Note: Calculations must not be shown in your answer book.
1.1- Which of the following statements regarding The Statement of Financial Position is true?
A. The Statement of Financial Position reflects the financial position of an enterprise for the entire financial period being reported.
B. The Statement of Financial Position reflects the financial position of an enterprise only on a specific date
C. The Statement of Financial Position is a measure of the profit or loss that the enterprise has made over a certain period, usually one year
D. The Statement of Financial Position does not take into account transactions in respect of the owners of the enterprise
1.2 Which of the following statements regarding Equity is false?
A. Equity is the interest of the owner(s) in the net assets of the enterprise
B. The Equity of an enterprise is affected by the capital contribution and drawings made by the owner
C. Equity is affected by changes in income and expense accounts
D. None of the above
1.3- The monetary columns of an account in the General Ledger are added vertically. This is known as
A. Summing
B. Balancing
C. Casting
D. Posting
1.4- Which of the following errors will not be revealed by balancing the trial balance?
A. Inventory to the value of R5 000 was incorrectly posted to the Furniture and Fittings account.
B. The Prepaid Expenses account of R 4 500 was incorrectly entered on the credit side of the trial balance.
C. The balance on Trade Creditors was incorrectly calculated to be R 56 000 instead of R 54 000 and entered on the Credit side of the trial balance.
D. The balance of Accrued expenses account of R 12 000 was omitted in full.
1.5- Which of the following is a IFRS accepted method used to determine the cost of inventories for financial reporting?
A. Last-in-Last-Out
B. Weighted Average
C. Variable costing
D. Absorption costing
1.6- The following information was extracted from the books of Cascades Wholesalers on 30 June 2014:
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June
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Units of investment
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Cost price
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01
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Opening inventory
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4,000
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R 25
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12
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Purchases
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12,000
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R 20
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20
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Purchases
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6,000
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R 22
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30
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Sales for June
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14,000
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The value of inventory on 30 June 2014 using the First-in-first out method is ________?
A. R 172 000
B. R 160 000
C. R280 000
D. none of the above
1.7 - Z-Man Stores sold goods on credit to M. Kail for R 3000 on 1 May 2014, and was given 30 days to settle the account. At the end of June 2014, M. Kail had still not made any payment to Z-Man Stores. Z-Man Stores charges 11% interest p.a. on overdue accounts. The amount (after interest) that M.Kail would owe Z-Man Stores at the end of June 2015 is ___________?
A. R3 300.00
B. R 3 330.00
C. R 3 027.50
D. R3 333.33
1.8. The Post-Closing Trial Balance of Tetris Traders on 25 February 2014 including the following balances:
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Accrued expenses
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12,000
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Current portion of long-term borrowings
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7,000
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Current account
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190,000
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Bank
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50,000
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Accrued income
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48,000
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Prepaid expenses
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3,000
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Financial assets
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20,000
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Inventory
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40,000
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Trade creditors
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5,000
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The total current assets of Tetris Traders on 28 February 2014 is __________ ?
A. R 153,000
B. R 280,000
C. R 141,000
D. R 110,000
Question 1.9 and 1.10 are based on the following information:
The following list of debtors appeared in the books of SB Appliances on 30 June 2014
Debtors list on 30 June 2014
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Debit (R)
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F Klinsman
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8,400
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C van der Berg
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6,600
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S Wulfsohn
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4,800
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19,800
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The following information has not been taken into account in the amounts above:
- F Klinsman had returned goods sold to him to the value of R 1400.
- C van der Berg's account had been incorrectly credited for goods sold to him to the value of R6 00
- S Wulfsohn had gone into liquidation. The amount owing by him was not considered recoverable
1.9- The correct balance of C van der Berg's account in the Debtors Ledger on 30 June 2014 is _______?
A. R 7 800
B. R 7 200
C. R 6 000
D. none of the above
1.10- The correct total of the Debtors List, after taking into account the above errors and omissions, is ______
A. R 14 600
B. R 16 400
C. R 14 800
D. R 19 000
QUESTION 2 - PROPERTY PLANT EQUIPMENT AND DEBTORS
2.1 - REQUIRED
Use the information provided below to calculate the net book value for the asset below at 30 June 2014. IGNORE VAT
INFORMATION - A machine was purchased by Washington Enterprise for R 250 000 on 1 July 2012. The machine is expected to produce 100 000 units and the expected residual value at the end of its useful life is R 40 000. The financial year end of the business is 30 June. Production figures are as follows:
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01 July 2012 - 30 June 2013
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20,000
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01 July 2013 - 30 June 2014
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18,000
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2.2 - REQUIRED
Use the information below to prepare the Fixed Asset Realisation T-account for the financial year ended 30 June 2014 for Maryland Enterprise. IGNORE VAT
A machine with a cost of R 400 000 was sold to Mr. Kentucky on 1 May 2014 for R200 000. Maryland Enterprise provides for depreciation on machinery at 20% per annum using the diminishing balance method. The machine was purchased on 1 July 2012 and at that stage it was expected to have a residual value of nil.
2.3 - REQUIRED
Use the information provided below to prepare the correct Debtors Control Account in the General Ledger of Virginia Enterprise for the financial year ended 30 June 2014. Balance the account.
INFORMATION - The Debtors Control account below was prepared by the inexperienced bookkeeper of Virginia Enterprise. Upon investigation, some errors and omissions were discovered.
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DR
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DEBTORS CONTROL
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CR
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2014 June 01
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Balance
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b/d
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256,290
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2014 June 30
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Bank and discount
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CRJ3
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117,350
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Sales
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SJ3
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211,130
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Sales returns
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SRJ3
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650
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Interest Income
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GJ3
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Balance
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c/d
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349,370
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467,370
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467,370
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The following errors and omissions were discovered after the above was drawn up:
1. No entry has been made for goods returned by H. Michigan to the value of R 150.
2. No entry has been made for the cash settlement of J. Florida of her account, amounting to R 13 000.
3. An invoice for goods sold on credit to O. Oregon for R9 770 was erroneously recorded in the Debtors column of the sales journal as R7 990.
4. An invoice for goods sold on credit to L. Louisiana of R 350 was credited to his account. His account should have been debited.
5. M. Dakota has a balance overdue of R15 000 on 1 June 2014. At the end of the month, his account was still overdue by R15 000. Virginia Enterprise charges interest at 12% p.a. on overdue balances. No entry had been done to account for this.
QUESTION THREE - BANK RECONCILIATION
The following information was obtained from the records of Dovermans Traders for the year ended 28 February 2014.
REQUIRED -
3.1- Complete the Cash Receipts Journal and Cash Payments Journal of Dovermans Traders for February 2014. All entries must indicate the correct contra ledger account in the Details column. Cash the Journals. Use the following format:
Cash Receipts Journal
Cash Payments Journal
3.2- Post to the Bank Account in the General ledger. Balance the account.
3.3 - Prepare the Bank Reconciliation Statement as at 28 February 2014.
INFORMATION -
1. Provisional totals in the cash journals on 28 February 2014 were as follows:
Cash Receipts Journal R 17 900
Cash Payments Journal R 9 800.
2. A comparison of the bank statement for February 2014 from ZERT Bank with February Cash journals and the Bank reconciliation statement as at 31 January 2014 revealed the following:
2.1- Favourable balance as per bank account R 43 455.
2.2- The balance in the bank statement on 28 February 2014 was R 59 612 (CR).
2.3- A cheque drawn by a debtor, C. Lawson for R 450 in settlement of a debt of R500 was dishonoured on due date because of "insufficient funds".
2.4- Cheque No.311 R 4 300 made out to the Stationwagers is now stale and must be cancelled. A new cheque will be issued in March.
2.5- A deposit of R37 638 on 28 February 2014 did not appear on the bank statement for February 2014.
2.6- A debtor, S.Bagda whose account of 8800 which was previously written off, made an electronic funds transfer directly into the bank account of the firm. No entry has yet been made in the books of Dovermans Traders.
2.7- The following debit entries appeared in the bank statement only:
- Service fees R 150
- Cash deposit fee R 230
2.8- A stop order in favour of Fire Outsurance for R 4 667 for the annual fire insurance premium has not yet been recorded in the Cash Journals.
2.9- ZHB Bank deposited R30 000 interest on fixed deposit directly into the current account of the business
2.10- The following cheques issued during January 2014 have not yet been presented to the bank for payment:
Cheque No. 115 R40
Cheque No. 458 R755
QUESTION 4 - PARTNERSHIPS
REQUIRED - Use the information provided below to prepare the Statement of Changes in Equity for the year ended 30 June 2014. Use the following format
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2014
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Capital Accounts
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Fuji
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Film
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Total
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Balance at 30 June 2013
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Changes in capital
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Balance at 30 June 2014
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Current Accounts
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Fuji
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Film
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Total
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Balance at 30 June 2013
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Net profit for the year
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Interest on Capital
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Salaries
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Bonus
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Profit Share
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Drawings
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Balance at 30 June 2014
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INFORMATION - Extract from the ledger of Fuji-Film. Traders on 30 June 2014
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Capital: Fuji
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350 000
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Capital: Film
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100 000
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Current a/c: Fuji
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50 000
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Current a/c: Film
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20 000
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Drawings: Fuji
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90 000
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Drawings: Film
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40 000
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The following must be taken into account:
(a) On 30 June 2014 the net profit for the year amounted to R520 000
(b) The partnership agreement makes provision for the following:
Interest on capital must be provided at 12% per annum on the balances in the capital accounts for the first 6 months of the year. The interest rate increases to 15% for the last 6 months of the year.
The partners are entitled to the following annual salaries:
Fuji R 25 000
Film R 20 000
Film is entitled to a special bonus equal to 5% of the net profit before any of the above appropriations have been taken into account.
Fuji decreased his capital contribution by R50 000 on 1 January 2014. This capital decrease has been recorded.
Fuji and Film share the remaining profits or losses in the ratio of 3:2 respectively.
QUESTION FIVE - FINANCIAL STATEMENTS
The Trial balance and additional information given below were extracted from the accounting records of MRC Traders on 28 February 2014, the end of the financial year.
REQUIRED -
Use the Trial Balance and additional information to prepare the Income Statement of MRC Traders for the year ended 28 February 2014. Use the following format:
Income statement format
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Sales
Cost of Sales
Gross profit
Other operating income
Gross operating income
Operating expenses
Operating profit
Interest income
Interest expense
Net profit for the year
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MRC Traders - PRE-ADJUSTMENT TRIAL BALANCE ON 28 February 2014
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Debit (R)
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Credit (R)
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Balance sheet accounts section
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Capital
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500 000
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Drawings
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50 000
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Land and buildings
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450 000
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Equipment
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200 000
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Furniture and fittings
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124 500
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Accumulated depreciation on equipment (1 March 2013)
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60 000
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Accumulated depreciation on furniture and fillings (1 March 2013)
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5 400
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Fixed deposit: Romans Bank (15% p.a.)
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120 000
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Trading inventory
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80 000
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Debtors Control
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55 000
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Provision for bad debts
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2 000
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Bank
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65 000
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Creditors control
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450 600
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Nominal Accounts Section
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Sales
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740 560
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Cost of Sales
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565 880
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Sale returns
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5 500
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Rent income
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32 500
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Interest income on fixed deposit: Romans bank
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16 000
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Bad debts
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1 500
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Salaries and wages
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35 000
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Rates and taxes
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3 300
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Water and electricity
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27 600
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Insurance
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21 000
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Telephone
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2 780
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1 807 060
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1 807 060
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Adjustments and additional information
1. Provide for depreciation for the current year on equipment and motor vehicles, using 20% per annum on the diminishing balance.
2. Account for the outstanding interest income from Romans Bank.
3. A debtor, S. Khumalo, who owed R 3 200 is declared insolvent. His estate paid MRC Traders a first and final dividend of 80 cents in the rand. This has been recorded. The balance of the account must now be written off.
4. The provision for bad debts needs to be 5% of the Debtors control.
5. Trading inventory on hand according to physical stock taking on 28 February 2014 amounted to R74 570.
6. Part of the building has been rented out. Included in the Rent income is rent received in advance for the month of March 2014. Make the necessary adjustment.
7. Bank charges of R120 had not yet been recorded.
8. One of the staff members of MRC Traders was in financial difficulty. She made an arrangement with the owner of MRC Traders to receive an advancement on her salary. Her March salary of R 6 500 which has been paid out to her, has been included in the Salaries and Wages account.
9. Rates and taxes includes a payment of R1 500 which was made for the period 1 January 2014 to 30 March 2014.
10. The insurance expense is for the period 1 March 2013 to 28 February 2014.