NOVEMBER 2014 MAIN EXAMINATION

MODULE:
ACCOUNTING 1

PROGRAMME:
BACHELOR OF COMMERCE

DATE: 07 November 2014 TIME: 09h00-12h00

DURATION: 3 hours MARKS: 100
EXAMINER: A. Singh MODERATOR: P. Salikram

INSTRUCTIONS TO CANDIDATES:
1. Candidates are required to answer ALL questions.
2. This is a closed book examination.
3. No written material may be brought into the examination room.
4. Write legibly and neatly.
5. Do not turn over this page until permitted by the Invigilator.

This question paper consists of seven (7) typed pages excluding the cover page
QUESTION ONE [20]

1.1 Differentiate between the Perpetual Inventory System and the Periodic Inventory
System (4)
1.2 List four (4) elements of financial statements (4)
1.3 List three (3) possible errors that could occur in a creditor’s ledger (3)
1.4 Explain why a bank reconciliation is prepared (4)
1.5 Define each of the following terms:
1.5.1 Asset (1)
1.5.2 Liability (1)
1.5.3 Current Liabilities (1)
1.5.4 Current Assets (1)
1.6 Provide one (1) example of a current asset (1)

QUESTION TWO [20]

THE FOLLOWING INFORMATION WAS OBTAINED FROM THE FINANCIAL RECORDS
OF LLM TRADERS.
Balance of the debtors control account at 1 June 2014 15 300
Total of the list of individual debtors 12 155
TOTAL OF SUBSIDIARY JOURNALS:
Cash receipts journal:
Debtors column 13 400
Discount allowed column 1 150
Sales column 15 780
Cash payments journal:
Creditors column 18 785
Purchases column 12 125
Debtors column (r/d cheques) 2 200
Sales journal: sales column 12 850
Purchases journal: purchases column 8 250
Sales returns journal: sales returns column 3 600
Bills payable journal 800
Bills receivable journal 700

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General journal:
Bad debts written off 800
Accounts with debit balances transferred
from the creditors ledger to the debtors
ledger 55
Interest charged on overdue accounts 110
discount allowed on “r/d” cheques 40

On reconciling the balance on the debtors control account with the list of balances from
the debtor’s ledger, the following errors were discovered:

a) The sales journal was overcast by R350

b) Credit note no. 18 for R25 was entered correctly in the sales returns
journal but was debited to the account of Z. Zion
c) Sales invoice no. 22 for R1 130 has been entered correctly in the
sales journal but was posted to N. New account as R1 530
d) Debtor, J. Robe, who owed R750, was declared insolvent. His
estate paid 2 cents in the Rand. All the relevant entries must still be
recorded in the books
REQUIRED:

2.1 Prepare the DEBTORS CONTROL ACCOUNT in the general ledger of LLM
Traders at 30 June 2014 (15)
2.2 Reconcile the total of the list of debtors with the balance on the debtors control
account as determined in 2.1 above (5)

QUESTION THREE [20]

The following information was taken from the accounting records of AnnDan Traders, a
partnership between B. Ann and R. Dan, at 28 February 2014

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ANNDAN TRADERS
PRE-ADJUSTMENT TRIAL BALANCE AT 28 FEBRUARY 2014
DEBIT CREDIT
Capital:
B.Ann 20 000
R. Dan 5 000

Current accounts (1 March 2013)

B. Ann 1 060
R. Dan 2 800
Drawings
B. Ann 9 000
R. Dan 3 000
Loan: Nedbank 10 000
Creditors control 24 150
Bank overdraft 6 160
Land and buildings at cost 19 500
Equipment at cost 19 840
Accumulated Depreciation: Equipment (1/3/13) 5 000
Motor Vehicles 900
Accumulated Depreciation: Motor Vehicles (1/3/13) 500
Furniture at cost 350
Accumulated Depreciation: Furniture (1/3/13) 50
Inventory (28 February 2013) 21 069
Debtors control 16 020
Provision for bad debts 600
Cash on hand 32
Sales 340 628
Cost of sales 306 000
Advertising 4 409
Office salaries and wages 12 189
Administrative expenses 622
Insurance 364
Delivery expenses 2 203
Interest on mortgage loan 450
416 398 416 398

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ADDITIONAL INFORMATION
1. Terms of the partnership agreement
1.1 The partners B. Ann and R. Dan share profits and losses in the ratio of their
capital contribution
1.2 Interest at 5% p.a. is to be allowed on the opening balances of the partners
capital and current accounts
1.3 Interest is to be charged at 5% p.a. on the average monthly amount outstanding on
the partners’ drawings accounts
1.4 R. Dan is entitled to a salary of R1 000 per annum plus a management commission
of 10% on the profit for the financial year after his salary has been debited and
after adjustments for the interest on the capital, current and drawings accounts

2. Year-end adjustments

2.1 A further amount of R20 must be written off as irrecoverable

2.2 The provision for bad debts must be adjusted to R800
2.3 Depreciation is to be provided as follows:
Equipment: 15% p.a. according to the diminishing balance method (NB A new
machine was purchased on 1 September 2013 for R1 560)
Motor Vehicles: 20% p.a. on cost
Furniture: 10% p.a. according to the diminishing balance method
2.4 Interest on the mortgage loan up to 28 February 2013 amounts to R600
R4 000 of the loan is repayable during the 2013 financial year. The loan is secured
by a mortgage over land and buildings
2.5 Office salaries of R69 have not been paid or taken into account
2.6 The following expenses have been paid in advance:
Insurance R62
Advertising R948
2.7 Interest calculated on the partners’ drawings accounts amounted to R320 to
B. Ann and R80 for R. Dan
2.8 In terms of the partnership agreement, the following must still be provided
for: interest on the partners’ capital and current accounts R. Dan’s salary and
management commission
REQUIRED:
3.1 Statement of Comprehensive Income of AnnDan for the year ended
28 FEBRUARY 2013 (12)
3.2 Statement of changes in equity for the year ended (8)

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QUESTION FOUR [20]

ABB LTD
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014

Sales 3 400 000

Directors remuneration (620 000)
Audit fees (35 000)
Depreciation (187 500)
Operating profit 757 500
Interest expense (128 000)
Net profit before tax 629 500
Income tax (281 800)
Net income after tax 347 700

STATEMENT OF FINANCIAL POSITION OF ABB LTD AS AT 30 JUNE 2014

ASSETS 2014 2013
Non-current assets
Fixed assets 3 257 700 2 895 000
Current assets 3 257 700 2 895 000
Inventories 562 000 566 000
Trade and other receivables 310 000 281 000
Cash and cash equivalents 162 000 109 000
TOTAL ASSETS 90 000 176 000
3 819 700 3 461 000
SHAREHOLDERS’ EQUITY AND LIABILITIES
Ordinary shareholders’ equity 2 587 700 2 000 000
Ordinary share capital
Share premium 2 000 000 1 600 000
Retained income 240 000 200 000
Non-current liabilities 347 700 200 000
Loan from LA Family Trust 800 000 1 100 000
Current liabilities 800 000 1 100 000
Creditors 432 000 361 000
SARS (Income tax) 260 000 220 000
Expenses payable (Interest on loan*) 22 000 45 000
Shareholders for dividends 30 000 16 000
TOTAL EQUITY AND LIABILITIES 120 000 80 000
* Interest on loan is not capitalized 3 819 700 3 461 000

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NOTES TO THE FINANCIAL STATEMENTS OF ABB LTD

Land & buildings Equipment

ASSETS

1. FIXED ASSETS
Carrying value on 1 July 2013 1 650 000 1 245 000
Cost 1 650 000 1 755 000
Accumulated depreciation - (510 000)
Movements:
Additions 350 000 -
Disposals at carrying value - -
Depreciation - 187 500
Carrying value on 30 June 2014 2 000 000 1 257 700
Cost 2 000 000 1 955 200
Accumulated depreciation - (697 500)

2. CASH AND CASH EQUIVALENTS 2014 2013

Bank 75 000 171 500
Cash float 5 000 2 000
Petty cash 10 000 2 500
90 000 176 000

3. RETAINED INCOME 2014 2013

Retained income at beginning of year 200 000 110 000
Net profit after tax 347 700 210 000
Dividends paid and declared (200 000) (120 000)
Retained income at end of year 347 700 200 000

REQUIRED:
Cash Flow Statement for the year ended 30 June 2014

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QUESTION FIVE [20]
The transactions below relates to T Tasco for the month ended 30 April 2013.

Date Transactions Amount

2013 R
Apr Deposited capital in business bank account. 120 000
01
05 Received a cheque for services rendered. 20 000

07 Purchased stationery on credit from Steyn Stationers. 1 500

08 Debited Olivier for services rendered. 5 500

10 Paid week’s wages by cheque. 8 000

12 Paid Steyn Stationers cash. 750

14 Paid telephone account via EFT. 1 000

16 Received a cheque from Olivier. 4 250

18 Bought furniture and paid by cheque. 7 000

20 Acquired motor vehicle on credit from TATA Motors. 25 000

22 Paid TATA Motors cash. 10 000

25 T Tasco drew a cheque for private use. 6 000

Required:
Analyse the above transactions in tabular form as follows:

A/C.DEBIT A/C.CREDIT A = E+ L

END OF QUESTION PAPER