(lm UNISA FAC1503 RFA1503 MAY/JUNE 2019 FINANCIAL ACCOUNTING PRINCIPLES FOR LAW PRACTITIONERS STUDENT NUMBER TT [eT TDENTHY NUMBER =i tion No: ‘Subject + Number of paper Date of examination 1 Examination contre WARNING. 1A ceandiate who wathout authonsstion takes into the examination venue any Book document of obyect which could assist fim in the ‘examiraton, and does not hand over such matenal tothe muster before the oficial commencement ofthe examinahoa, wil be gly of ‘stg the Unversys examnation regulations and wil be izle Ye punishment ae determined by Counc 2 Rough work may be done only onthe examination question caper and must be labeled as such 3 Nomnotes may be made on any pam ofthe body such as the hands ox on ary garment 4 Tas pagelpaper the property of he Unwersy end under no ercumstences may the candidate ren i of takeout ofthe examination NB PLEASE COMPLETE THE ATTENDANCE REGISTER ON THE BACK PAGE, TEAR OFF AND HAND TO THE INVIGILATORUNIVERSITY EXAMINATIONS UNIVERSITEITSEKSAMENS. UNISA le FAC1503 Maykiune 2019 RFA1503 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 18 (EIGHTEEN) pages PLEASE NOTE: Ensure that you are wnting the correct examination paper This paper consists of 4 (FOUR) questions All questions must be answered in your examination paper on the pages provided Basic calculations, where applicable, must be shown ‘White legibly in blue or black ink enone PROPOSED TIME-TABLE (Avoid deviating from this) [Question] ‘number 1 | Cash journals, bank account and bank reconciliation statement 2__ | Short questions VAT, correspondents and trust transfers 3 Accounting equation 4 __ [Trust investments Total Topic ITURN OVER]2 FAC1503 05/06 2019 QUESTION 4 (24 marks)(29 minutes) On companng Burnett Attorneys business bank statement with the business cash journals for Apnil 2018 and the bank reconciliation statement for the month ended 31 March 2018, the following were noted 1 The totals of the bank columns in the business cash journals on 30 Apni 2018 were as follows R ~ Business cash receipts journal 13.204 ~ Business cash payments journal 12050 Entries appearing in the bank reconciliation statement of the previous month (March 2018) but not on the bank statement for April 2018 - Cheque no 221, dated 10 October 2017 to J Jenkins, a business creditor, R370 - EFT no 47 on 30 March 2018 to Mobinet for the telephone account, R790 - Cheque no 533, dated 22 March 2018 to the municipality for water and electricity, R1 180, Cheque no 221 to J Jenkins 1s stale and must be cancelled Entries appeanng in the business cash journals but not on the bank statement ~ Cheque no 612, dated 27 April 2018 to Jetco Suppliers for office pnnters, R411 ~ A deposit of R1 386, dated 30 Apri 2018 from C Wright, a client, in respect of preparation of contracts regarding the registration of a company Entries appeanng on the bank statement but not in the business cash journals - Bank charges amounting to R190 + Interest on favourable bank balance of R67 - A debit order for the monthly secunty service of R540, in favour of SafeCare Secunty ~ Adirect deposit of R352 from C Clauss, a chent, in respect of fees for services rendered ~ A debit order for the monthly office rent of R2 100, 1n favour of PropCare Letting ~ An electronic fund transfer of R318, payable to N Norte, a business creditor ~ A cheque for R420, dated 14 Apni 2018 from A Ackers, a client, was returned by the bank marked “R/D", due to insufficient funds in her account Cheque no 601 for R434, dated 17 Apri 2018, issued to Bahan Services, a business creditor, was retumed by the bank due to an error on the cheque A new cheque wil be issued during May 2018 ‘A deposit of R457, for another client of the bank, was erroneously entered on the bank statement of Bummett Attorneys AA trust cheque (no 442) for R1 280, dated 21 Apnil 2018, issued to Advocate S Strumg, in respect of a third-party case of a client, was correctly recorded in the business cash payments journal The error must stil be corrected (On 30 Apni 2018, the bank statement showed a favourable balance of R2 595 On 31 March 2018, the bank account in the general ledger showed a favourable balance of Ri 054 (TURN OVER)3 FAC1503 05/06 2019 QUESTION 4 (continued) REQUIRED: L He a Marks Complete the following in the accounting records of Bumett Attorneys as at 30 April 2018 (@) The business cash receipts and cash payments journals (bank columns only), properly totalled, as at 30 April 2018 12 (b) The bank account in the general ledger, properly balanced, as at 30 Apri 2018 5 (c)_ The bank reconciliation statement, properly balanced, on 30 Apni 2018 z [24] Please note: This question must be answered on pages 4 and 5 of this examination paper {TURN OVER]4 FAC1503 05/06 2019 ANSWER SHEET: QUESTION 1 BURNETT ATTORNEYS, (a) Business cash receipts journal for April 2018 CRI R Date [Details Bank I (eseeesce Business cash payments journal for April 2018 cps R [Date [Details Bank (12) [TURN OVER]FAC1503, 05/06 2019 ANSWER SHEET: QUESTION 4 (continued) (b) GENERAL LEDGER Dr. Bank account cr Date | Details R Date’ | Details R (5) (ce) Bank reconciliation statement as at 30 April 2018 R R Details Debit Credit m (24) [TURN OVER]6 FAC1503 05/06 2019 QUESTION 2 (29 marks)'35 minutes) THIS QUESTION CONSIST OF THREE SECTIONS SECTION A: Theory (11 marks)(13 minutes) (Give your answers in the spaces provided for each question ) 11 Name two (2) types of categores of mstructions that may be given to the instructed attorney by an instructing attomey? 2 Ge two (2) examples of such instructions per category Category 1 Category 2 © 3 InpuYoutput VAT that may be charged on the items listed below can be classified under the following categones Standard rate (15%) or Zero rate or Exempted Indicate which category 1s applicable to each of the following items Collection fees earned Shentf fees pad FuelPetrol paid Salaries paid if Stationery expense 6) ITURN OVER]QUESTION 2 (continued) SECTION B Correspondents (10 marks)(12 minutes) FAC1503 05/06 2019 Komane Attorneys received a mandate from Mrs Tsoka (client) to act on her behalf in the registration of a trust for her children and to collect maintenance money from her ex-husband, Mr Ndlovu Komane Attorneys instructed Bates Attorneys to act on his behalf in the two matters in respect of Mrs Tsoka, a cent Account statement BATES ATTORNEYS KOMANE ATTORNEYS P O Box 990 PO Box 678 MAFIKENG: PRETORIA 34 August 2018 | R R Collection — T Tsoka v B Ndlovu 12000 Fees for receiving instruction 620 Fees for preparing of summons 1130 Shenff fees 250 Advocate fees 370 Tracing fees 840 Correspondence fee 420 Drawing up of acknowledgement of debt 970 ‘Subtotal 4600 Collection fees - Your share of fees (allowance) ? Electronic fund transfer to yourself 2 ae 2 2 REQUIRED’ [Marks ‘examination paper the Rules of the Attorneys Profession Ignore the implications of Value Added Tax Please note: Al calculations must be shown (Komane Attorneys does not make use of an advocate journal) Calculate the required amounts indicated in the account statement above and record the missing amounts on the account statement in the answer sheet provided on page 8 of this ‘Your answers must comply with the requirement of the Legal Practice Act 28 of 2014 and 10 {TURN OVER]FAC1503 05/06 2019 ANSWER SHEET: QUESTION 2 SECTION 8: Correspondents Account statement BATES ATTORNEYS KOMANE ATTORNEYS PO Box 990 PO Box 678 MAFIKENG PRETORIA 34 August 2018 R R Collection - T Tsoka v 8 Ndlovu 12.000 Fees for recewing instruction 620 Fees for prepanng of summons 1130 Shen fees 250 Advocate fees 370 Tracing fees 840 Correspondence fee 420 Drawing up of acknowledgement of debt 970 ‘Subtotal 4600 Collection fees Your share of fees (allowance) Electronic fund transfer to yourself Calculations [TURN OVER]9 FAC1503 05/06 2019 QUESTION 2 (continued) ‘SECTION C: Trust transfers (8 marks)(10 minutes) MQADI ATTORNEYS ‘The bookkeeper of Mqadi Attomeys presented the following list of balances as at 31 March 2018 The balances already include all transactions, including fees raised Trust creditors ledger R A Wong (ct) 11.000 B Govender (cr) 14900 C Santana nil D Dube (dr) 1.600 Chents ledger R AWong nil B Govender (dr) 18.400 Santana (dr) 4200 D Dube (dr) 5.000 REQUIRED: Marks (@) Calculate the balances of each account after the funds have been transferred from the trust bank account to the business bank account (If the balance of the account is zero, indicate by way of “0”) 6 Your answers must comply with the requirements 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 10 of this examination paper TTURN OVER]ANSWER SHEET: QUESTION 2 SECTION C: Trust transfers MQADI ATTORNEYS 10 FAC1503 05/06 2019 Client / @ | Trust ‘creditor Calculations Trust creditors ledger Clients ledger Drier) R Drier) R ‘Wong B Govender C Santana D Dube Balances after all transfers ® 4 (TURN OVER]"1 FAC1503, 05/06 2019 QUESTION 3 (27 marks)(32 minutes) “The following transactions relate to the accounting records of Nutini Attorneys for October 2018 The legal practice is not registered as a VAT vendor Transactions entered into by Nutini Attorneys for October 2018: 1 ‘The owner, Mr Nutini, withdrew cash R4 509, for his personal use 2 Charged interest of R146 on the arrear account of a cient, M Ceki 7 Paid the monthly telephone account of Nutini Attorneys with a business cheque, R980 12 Recewed a cheque for R550 from C Chicco, a client, in respect of fees charged for costs Incurred on the registration of a bond in her name 17 Issued a credit note of R180 to T Trollip, a client, for a calculation error made on the invoice issued to him in respect of fees, which resulted in an overcharge of the amount due 21 A cheque for R550, received from C Chicco, a client, on 12 October 2018 in respect of fees charged for costs incurred on the registration of a bond, was returned by the bank marked *R/D” 24 Paid the Sherff with a business cheque, R135, for the delivery of summons to F Foully 28 Purchased office furniture on credit from City Fumiture, R3 800 31 Issued a cash cheque for R1 000, to restore the patty cash float REQUIRED Marks| Analyse the above transactions in tabular format, as follows ‘Account to be | Account to be [Effect on the basic accounting equation debited credited Liabilities R Example 4 July Purchased stationery of R 4 | Stationery Bank Please note: This ‘The columns in respect of the accounting equation must not be totalled Each decrease, to indicate the effect on the element in the accounting equation ‘Show all calculations question must be answered on page 12 of this examination paper amount must be preceded by a plus sign (+) for an increase or a minus sign (-) for a (TURN OVER}12 FAC1503 05/06 2019 ANSWER SHEET: QUESTION 3 NUTINI ATTORNEYS Date Account to be Accounttobe | _Effect on the accounting equation baste credited Assets | Equity | Liabi R R R 7 2 7 12 7 21 24 | 28 31 27) [TURN OVER]13 FAC1503 05/06 2019 QUESTION 4 (20 marks)(24 minutes) ‘The following information was obtained from the accounting records of Madoc Attomeys for the month ended 31 July 2018 List of balances extracted from the general ledger and the trust creditors ledger of Madoc Attorneys at 4 July 2018 General ledger R Trust bank account (dr) 169 840 Trust creditors control account (cr) 169 840 Trust creditors ledger R M Moyo sec 86(4) investment Beatnx Bank (dr) 63700 P Peters (cr) 99.000 M Moyo (cr) 68 700 Singh (cr) 70.840 Additional information Transactions during July 2018 1 Madoc Attorneys receed R135 000 from Mr N Ncube, being the estimated amount to register @ property in her name He gave wntten instruction that the amount be invested in an interest- bearng fixed deposit account until the registration process 1s finalised Madoc Attorneys invested the R135 000 in a fixed deposit account at Luvo Bank on behalf of Mr N Ncube 3 Madoc Attorneys decided to mvest R75 000, not immediately needed, in a special savings account at Rhode Bank to earn interest until the end of July 2018 29° MrM Moyo requested Madoc Attorneys to withdraw his investment with Beatrix Bank Beatnx Bank deposited R67 500 into Madoc Attorneys trust bank account Madoc Attorneys paid the interest eamed on the investment to the beneficiaries 31 Madoc Attorneys redeemed the trust investment made with Rhode Bank on 3 July 2018 and received R78 625, which was paid into the trust bank account Madoc Attorneys paid the interest ‘eamed on the investment to the beneficiaries, Please note: All the investments were made in terms of section 86 of the Legal Practice Act 28 of 2014 {TURN OVER}14 FAC1503 05/06 2019 QUESTION 4 (continued) REQUIRED: IMarks| Prepare the following in the accounting records of Madoc Attorneys for July 2018 Subsidiary journals, properly totalled © Trust cash receipts journal 4% «Trust cash payments journal 7 ‘+ Calculate the amount of interest earned from each investment and indicate the amount of interest that each beneficiary would receive 8% (20) ‘Your answer must comply with the requirements of the Legal Practice Act 28 of 2014 and the Rules of the Attomeys Profession Please note’ This question must be answered on pages 15 and 16 of this examination paper [TURN OVER]15 FAC1503 05/06 2019 ANSWER SHEET: QUESTION 4 MADOC ATTORNEYS ‘SUBSIDIARY JOURNALS. Trust cash receipts journal for July 2018 TCRJ2 R R Trust creditors Date __| Details control Bank (4%) Trust cash payments journal for July 2018 Tors2 R R Trust creditors Date Details control Bank ” ITURN OVER]16 FAC1503 05/06 2019 ANSWER SHEET: QUESTION 4 (continued) Calculation of interest earned from each investment. [investment at Beatrix Bank: [Amount recewed(R)__- __ Amount nvested(R) = _ Interest earned (R) Beneficianes [Name of beneficiary Percentage allocation (%) ‘Amount of terest (R) t linvestment at Rhode Bank: : | [Amount recewed (R) __- __Amountinvested(R) = Interest eamed (R) [Beneficanes [Name of beneficiary Percentage allocation (%) ‘Amount of interest (R) (8%) [20] [TURN OVER]7 FAC1503 05/06 2019 ADDITIONAL ANSWER SHEET [TURN OVER]18 FAC1503 06/06 2019 ADDITIONAL ANSWER SHEET UNISA 2019