— yea UNISA FAC1503 RFA1503 OCTINOV 2018 FINANCIAL ACCOUNTING PRINCIPLES FOR LAW PRACTITIONERS STUDENT NUMBER | TT TT IDENTITY NUMBER Subject Number of paper Date of examination [ Examination centre WARNING. 1A canaidste who witiout autnonsation takes into the examination venue any book document ar abyect whch could assist hm inthe examination anc does ot nand over such matenal to tne ivaglatar before he otal commencement of no examination wal be uty o rmfongig the Universty’s examnston regulators ard wie table to punishment as Getemned by CoUnG! 2 Ruch work may be done only onthe exarunation question paper and must be ables as such 3 Nonotes may be made on any pat of he Body, uch as he hands oF on any garment ‘This page/paper i the propery of the Unwersty and under no etcumstances may the candidate ret to tke out ofthe examination NB PLEASE COMPLETE THE ATTENDANCE REGISTER ON THE BACK PAGE, TEAR OFF AND HAND TO THE INVIGILATORUNIVERSITY EXAMINATIONS. UNIVERSITEITSEKSAMENS. UNISA lezen FAC1503 October/November 2018 Financial Accounting Principles for Law Practitioners Duration 2 Hours 100 Marks EXAMINATION PANEL AS APPOINTED BY THE DEPARTMENT Use of a non-programmable pocket calculator 1s permissible Closed book examination This examination question paper remains the property of the University of South Africa and may not be removed from the examination venue. ‘This paper consists of 21 (TWENTY-ONE) pages PLEASE NOT! Ensure that you are writing the correct examination Paper This paper consists of § (FIVE) questions. All questions must be answered in your examination paper on the pages provided Basic calculations, where applicable, must be shown Wate legibly in blue or black ink Oaowe PROPOSED TIME-TABLE {Avoid deviating from this) Question| number ee Cash journals, bank account and bank reconciliation statement Subsidiary joumals Trost investments Correspondents Trust transfers : 12 14 Total 100 {120 [Ja]a leo] {TURN OVER}2 FAC1503 10/11 2018 QUESTION 14 (22 marks)(26 minutes) 4 12 a4 22 23 24 25 26 27 28 29 The bookkeeper of Damon Attorneys provided the following information for the month ended 31 March 2018, before the additional information listed in 2 1 to 2 10 were taken into account Balances R Bank account in the general ledger (debit) 01/03/2018 1752 Bank statement (unfavourable) 31/03/2018 324 Subtotals on 31/09/2018 Business cash receipts journal - Bank column 24 540 Business cash payments journal - Bank column 28.290 Additional information On comparing the business bank statement with the business cash journals for March 2018 and the bank reconciliation statement for the month of February 2018, the bookkeeper noted the following A trust cheque (no $74) for Fit 190, issued to P Chetty, a cent, was incorrectly recorded in the business cash payments journal Cheque no 885 for Ri 622 recewved from C Moodley, a client, was incorrectly recorded as R1 662 in the business cash receipis journal Entries on the bank statement not yet recorded in the business cash journals * service fees, R242 + interest on business investment, RSS + interest on overdraft, R76 Fees for services rendered of R2.410 entered in the business cash receipts journal on 31 March 2018, was only deposited on 2 Apri 2018 A debit order for A350 for government gazettes, payable to the Government Printers, a business creditor, appeared on the bank statement but not in the relevant business cash journal Received a direct deposit of R2 210 from A Hermano, a cent, for the preparation of documents regarding the registration of a company This transaction has not yet been recorded by Damon Attorneys ‘The bank erroneously debited Oamon Attorneys’ business bank account with @ cheque of R1 195 This cheque was drawn by Demo Attorneys, another client of the bank Cheque no 380 for R462 issued to $ Singh, a business creditor, on 12 March 2018 was recorded in the business cash payments journal but was retumed by the bank on 29 March 2018 due to an error on the cheque ‘An electronic fund transfer for R1 580 payable to advocate J Edwards, in respect of a third-party claim of T Trollip, appeared on the bank statement but notin the relevant business cash journal The payment to advocate J Edwards was made from the business bank account as T Trollip does not have sufficient funds available in the trust bank account [TURN OVER]3 FAC1503, 10/11 2018 QUESTION 4 (continued) 210 The following cheques and electronic fund transfer were not yet presented to the payment * no 201 — dated 14/08/2017 to B Ngale, a business creditor, R630 = no 370 — dated 07/03/2018 to the municipality for water and electricity, R2 550 ‘+ EFT no 53 on 31/03/2016 to Anco Adverts for advertisements, R470 Cheque number 201 to N Ngaie is stale and must be cancelled bank for REQUIRED i Marks Complete the following in the accounting records of Damon Attorneys as at $1 March 2018 {(@) The business cash receipts and cash payments journals (vank columns only) properly totalled, as at 31 March 2018 12 (©) The bank account in the general ledger, properly balanced, as at 31 March 2018 5 (c)_ The bank reconciiation statement, properly balanced, as at 31 March 2018 5 (22) Please note ‘This question must be answered on pages 4 and § of this examination paper [TuRN OVER]4 FAC1503 10/11 2018 ANSWER SHEET: QUESTION 1 DAMON ATTORNEYS. (a) Business cash receipts journal for March 2018 CRJ Date Details Bank pee R yl [ Business cash payments journal for March 2018 SoHE ces Date _| Details Fe Bank | R (12) {TURN OVER]5 FAC1503 10/11 2018 ANSWER SHEET- QUESTION 1 (continued) (b) GENERAL LEDGER Dr. Business bank cr Date | Detaris R Date | Details R 6) (ce) Bank reconciliation statement as at 31 March 2018 Details Debit Credit R R (6) (22) (TURN OVER]6 FAC1503 40/11 2018 QUESTION 2 (17 marks)(21 minutes) The following transactions relate to the accounting records of Nthati's Legal Practice for July 2018 ‘The legal practice is registered as a VAT vendor VAT at 15% 15 included where applicable Non-cash transactions entered into by Nthati’s Legal Practice for July 2018 7 Nthat's Legal Practice returned a new photocopier which was purchased on 30 June 2018 on credit, from Office Suppliers for R3 100 The photocopier was defective Nthat's Legal Practice did not replace the copier 12 Received an invoice from the City Council for water and electncity usage for June 2018 to the amount of R2 850, payable in August 2018 20 The account of a client, L Zapon, was wntten off as irrecoverable, R1 980 22 The owner, Nthatl, took a desk and chair owned by the business and valued at R2 500 for his son to use at home 31 MrNthati invested R45 000 of the business funds in a 65% 12 months fixed deposit with Almera Bank Ltd on 1 July 2018 The interest must stil be recorded in the accounting records for the month of July 2018 REQUIRED: Marks Prepare the general journal of Nthat’s Legal Practice to record the business transactions for | the month of July 2018 w Please note This question must be answered on page 7 of this examination paper All calculations must be shown All answers must be rounded off to 2 decimal places after the comma, ¢g 13,458% to 13,46% [TURN OVER]ANSWER SHEET: QUESTION 2 NTHATI'S LEGAL PRACTICE ‘General journal for July 2018 FAC1503 10/11 2018 GJS Date Details Fol Debit Credit July 7 July 12 July 20 July 22, July 31 07) [TURN OVER]8 FAC1503 10/11 2018 QUESTION 3 (25 marks)(30 minutes) The senior partner in the legal firm, Etheqint Attoreys, instructed Mr Wiseman from Kgorong Ltd to act on his behalf in the matter between Mr ES Nkonki and Dr T Tsotsi Mr ES Nkonki instituted a claim against Dr T Tstotsi for medical negligence However, before the case could be served before the court, the parties settled at an amount of R115 500 payable by DrT Tstotsi to Mr ES Nkonki Or T Tstots! immediately paid the amount in the trust bank account of Kgorong Ltd Etheaini Attorneys received the following statement from Kgorong Ltd as at 31 May 2018 Account statement KGORONG LTD ETHEQINI ATTORNEYS PO Box 253 PO Box 4000 MBOPANE DURBAN 31 May 2018 R R Collection of settlement amount - Mr ES Nkonkt vs Dr T Tstotsi 115 500, Fees for receiving instruction 9.900 Correspondence 800 Expert witness fees — Or Ndaba 2.500 Medical records obtained — 850 Subtotal 44050 Collection fees 2 Your share of fees (allowance) ? Electronic fund transfer to yourself 2 fale pete REQUIRED: Z cere trea [Marks (a) Complete the above account statement (answer on the statement) | 5 | (b) Record all the entnes reflected in the account statement above in the relevant | ‘subsidiary journals of Etheqini Attomeys | 7 To simplify this, the entnes can be done in the following order | + Record the electronic fund transfer recewed + Record the cash collected from Dr Tstotst | + Record the expenses incurred and total fees levied by Kgorong Ltd ‘+ Record the fees earned by Etheqini Attorneys. | + Calculate and record the amount that must be transferred from the trust bank | account to the business bank account | + Calculate and record the payment to Mr ES Nkonkt j (c) Post the entries in the subsidiary journals n (b) to the general ledger, cents ledger and | the trust creditors ledger 1 13 | | 125) [TURN OVER}9 FAC1503 10/11 2018 QUESTION 3 (continued) REQUIRED (continued) Your answers must comply with the requirement of the Legal Practice Act 28 of 2014 and the Rules of the Attorneys Profession Ignore the implications of Value Added Tax Please note Parts (b) and (c) of this question must be answered on pages 10 to 12 of this examination paper [TURN OVER]40 FAC1503 10/11 2018 ANSWER SHEET: QUESTION 3 ETHEQINI ATTORNEYS, (b) SUBSIDIARY JOURNALS ‘Trust cash receipts journal for May 2018 ToRJ Trust Date | Details Fol | creditors | _ Bank PRES eee erect EEE Ee R R 31_| Kgorong Ltd (ES Nkonki vs D T Tstotsi) ‘Trust cash payments journal for May 2018 Hi ____teps / Trust | Date | Details Fol | creditors |__Bank R Rg 31 [Business bank account (transfer) ES Nkonk (trust creditor) ee ae — Business cash receipts journal for May 2018 BCRJ1 Date | Detanis ___| Fol | Bank L a [_31_ | Trust bank account (transter) | General trust journal for May 2018 GT1 Date | Details a [Fol | Debit Credit a i . — 31 | Kgorong Ltd (trust creditor) a ES Nkonki (trust creditor Settlement amount recewed on behalf of ES Nkonkt 31 | ES Nkonkt (trust creditor) A a Kgorong Lid (trust creditor Pee Expenses incurred by Kgorong Ltd on behaif of ES Nkonki | | Fees journal for May 2018 ae cee an) Date | Details _ 7 Foi | Debit | Creait Hee eee i a 31_| Kgorong Lid (cent) Fees YA share of fees [TURN OVER]" FAC1503 10/11 2018 ANSWER SHEET: QUESTION 3 (continued) (b) SUBSIDIARY JOURNALS (continued) Transfer journal for May 2018 ie ww Date | Details Fol | Debit Credit eee I R R 31_| Kgorong Ltd (trust creditor) Kgorong Ltd (client) Amount of trust cheque to deposited in business account a (b) LEDGER ACCOUNTS GENERAL LEDGER iH ‘Trust bank account Ag [2018 R [aoe R [May 31/Recerpts May 31)Payments fee Business bank account — M0 (2078 ] R R May 31|Receipts Peer eee Clients contro! account AM (2018 ] R [2018 R (May 31) Fees May 31) Kgorong Ltd (trust ‘credhtor) (transfer) L eee J __Trust creditors contro! account A12 [2018 R208 R | (May 31) Trust journal debits [May 31) Trust bank | Ikgorong Ltd (transfer) [Trust journal credits | Payments t J} Fees account a Ata R f2018 R May 24|Chients control TTURN OVER)12 FAC1503 10/11 2018 ANSWER SHEET: QUESTION 3 (continued) CLIENTS LEDGER _ Kgorong Ltd cL 2018 R fore T R [Mey 91 Fees [May 31|Kgorong Ltd (trust \creditor) (transfer) ‘TRUST CREDITORS LEDGER jorong Ltd (ES Nkonki) TOLe (2018 R_ [2018 Pee IMay 34/€S Nkonk (trust creditor)| IMay 31}Trust bank i |Kgorong Ltd (chent) IES Nkonkt (trust creditor), —“ ES Nkonki a TCLT 2018 R [2018 R May 31] Kgorong Lid (trust May 31!Kgorong Ltd (trust creditor) 2018 a May 31)Balance bid (13) (25) [TURN OVER]13 FAC1503 10/11 2018 QUESTION 4 (24 marks)(29 minutes) The following information for the month ended 30 May 2018 relates to Betina Attomeys TRIAL BALANCE OF BETINA ATTORNEYS ON 30 APRIL 2018 Capital 244 200 Furniture and fittings 19000 Motor vehicies 65 000 Stationery on hand 110 Fees eared 10 840 | Business bank 143 700 Trust bank 133.100 Trust creditors control G George sec 86(4) investment CAPTIX Bank 0.000 P Miambo 82 500 G George 55 000 M Charles 50.600 Clients contro! P Mlambo 9350 G George 11.700 M Charles 41.180 He 443140] 443 140 Additional information ‘Transactions during May 2018 1 AA client, Mr M Charles, authonsed Betina Attorneys in writing, to invest R30 000 from his trust account in a special 31-day money market account at KADA Bank 2 Betina Attorneys received R100 000 from Mrs A Brits, being the estmated amount to register a Property located in the southern suburbs of Johannesburg in her name She gave wnitten instruction that the amount be invested in an interest bearing fixed deposit account until the registration process 1s finalised Betina Attomeys invested the R100 000 in a fixed deposit ‘account at ABTA Bank on behalf of Mrs A Brits 3 Betina Attorneys decided to invest R60 000, not immediately needed, in a special savings account at CKB Bank to earn interest until the end of May 2018 29° Mr G George requested Betina Attorneys to withdraw fis investment with CAPTIX Bank CAPTIX Bank deposited RS4 000 in the trust bank account of Betina Attorneys No payments have been made to the beneficiaries yet 31 Betina Attorneys redeemed the trust investment made on 3 May 2018 and recewed R62 900, which was then paid into the trust bank account No payments have been made to the beneficianes yet All the investments were made in terms of section 86 of the Legal Practice Act 28 of 2014 [TURN OVER]14 FAC1503 10/11 2018 QUESTION 4 (continued) REQUIRED Prepare the following in the accounting records of Betina Attorneys for May 2018 Subsidiary journals, propery totalied + Trust cash receipts journal a + Trust cash payments journal 4% + Trust general journal 6 (15) Trust creditors ledger accounts, properly totalled ‘* G George sec 86(4) investment CAPTIX Bank 4 '* G George trust creditor account 4 ‘+ Legal fidelity fund account 2 (10) (24) Your answer must comply with the requirements of the Legal Practice Act 28 of 2014 and the Rules of the Attorneys Profession Please note | This question must be answered on pages 18 to 17 of this examination paper [TURN OVER]15 FAC1503 40/14 2018 ANSWER SHEET: QUESTION 4 BETINA ATTORNEYS SUBSIDIARY JOURNALS Trust cash receipts journal for May 2018 TeRJ2 [Trust creditors} Date | Detaiis control Bank | R R t _ . _] ee eee (4%) Trust cash payments journal for May 2018 7 Teps2 [Trust creditors i Date | Details control Bank R R Be | (4A) ITURN OVER]16 FAC1503 10/11 2018 ANSWER SHEET QUESTION 4 (continued) SUBSIDIARY JOURNALS (continued) Trust general journal for May 2018 BEEEEEEEEHE EEE eee Date | Detans Debit Credit R R [TURN OVER]7 FAC1503 10/11 2018 ANSWER SHEET: QUESTION 4 (continued) TRUST CREDITORS LEDGER ACCOUNTS Dr. G George sec 86(4) investment CAPTIX Bank cr R | (4) Dr G Geo cr R R (4) Dr. Legal Practitioners Fidelity Fund cr R R (2) [10] {24} [TURN OVER]18 FAC1503 40/11 2018 QUESTION 5 (12 marks)(14 minutes) ‘The bookkeeper of Tunez Attorneys presented the following list of balances as at 31 March 2018 to you The balances already include all transactions, including fees raised Chent/Trust creditor Trust creditors iedger| Clients ledger Holmes Legal R22 000 (credit) Rail Maddock Attorneys R29 800 (credit) R36 800 (debit) Santana Prokureurs Rril RB 400 (debit) Legalmse Ltd RS 200 (debit) R10 000 (debit) REQUIRED. [Marks | (a) What will the maximum amount be thet can be transferrad from the trust bank account to the business bank account to ensure that no trust deficit (shortage) will arise? The balance of the trust bank account before the transfer is R48 600 (b) Calculate the balances of each account after the transfer journals are posted to the ledger accounts and the funds transferred from the trust bank account to the business bank account (c) Reconcile the trust creditors control account with the trust bank account Your answers must comply with the requirement of the Legal Practice Act 28 of 2014 and the Rules of the Attorneys Profession Please note: All calculations must be shown. ‘This question must be answered on page 19 of this examination paper 4 (12) pay a [TURN OVER}19 FAC1503 10/11 2018 ANSWER SHEET: QUESTION 5 TUNEZ ATTORNEYS (a) | Chent/Trust creditor Transfer i amount Holmes Legal Maddock Attorneys Santana Prokureurs Legaiwise Ltd Nett amount (4) {b) /Attorney Practices Calculations Maddock Attorneys / Legalise Ltd Holmes Legal ‘Santana Prokureurs (6) (c) |Account Calculations: Balance {Trust bank account = [Trust creditors contro! | = (2) (12) [TURN OVER]20 FAC1503 10/11 2018 ‘ADDITIONAL ANSWER SHEET [TURN OVER]2 FAC1503 10/11 2018 ADDITIONAL ANSWER SHEET unis 2018