.

NAMIBIA UNIVERSITY
OF SCIENCE AND TECHNOLOGY
FACULTY OF MANAGEMENTSCIENCES

DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE

QUALIFICATION: BACHELOR OF MARKETING, BACHELOR OF ACCOUNTING, BACHELOR OF

TRANSPORT MANAGEMENT, BACHELOR OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT
QUALIFICATION CODE: 07BMAR/ LEVEL: 5
07BOAC/ 07BLSC / 07BTMM ,
COURSE CODE: FAC511S COURSE NAME: FINANCIAL ACCOUNTING 101

SESSION: NOVEMBER 2018 PAPER: THEORY AND CALCULATIONS

DURATION: 3 HOURS MARKS: 100

FIRST OPPORTUNITY EXAMINATION QUESTION PAPER

EXAMINER(S) C. MAHINDI and A. KAYAMBU

MODERATOR: J. van WYK

INSTRUCTIONS
1. Answer ALL questionsin blue or black ink only
2. Write clearly and neatly.
3. Start each question on a new page and number the answers
clearly.
4. No programmablecalculators are allowed.
5. Questions relating to the paper may beraised in the initial 30
minutesafter the start of the paper. Thereafter, candidates must
usetheirinitiative to deal with any perceived error or ambiguities
& any assumption made by the candidate should beclearly
stated.
6. The names of people and businesses used throughoutthis test
paperdo notreflect reality and are purely coincidental.

THIS QUESTION PAPER CONSISTS OF 3 PAGES(Excluding the front page)

QUESTION 1 (20 marks)

a) List any 4 users of financial statements and provide a reason as to why they would
need financial information. (8)

b) For financial information to be useful, it has to meet certain requirements be

considered useful. List the qualitative characteristics of useful information and
categorise them into fundamental or enhancing qualitative characteristics. (6)

c) Sheila Afrikaner has decided to open a school. She estimates that she would earn
revenue of N$1 million (NS1 000 000)in the first year from tuition fees. She does not
expect the school to generate any other income apart from the tuition fees. Explain
to Sheila whether she needs to register as a VAT vendor. Include in your discussion
the VAT registration requirements. (4)

d) Assets may be categorised as non-current or current assets. Provide a definition for

non-current assets and provide an example. (2)

QUESTION 2 (12 MARKS)

Phone-mobile (Pty) Ltd (PM) is a telecommunications companythat specialises in selling cell-

phonesto the general public. Sertex LTD a mobile phone manufacturer has recently launched
a new cell-phone; the Galaxy X. The Galaxy X is aimed at the higher end of the market. Sertex
LTD sells the Galaxy X to mobile phone companiesat a cost price of NS11 500 per phone. Both
companies are registered for VAT. The VATrate is 15%.

Required:

a) Whatis the cost price of the Galaxy X phone to beincluded in the records of PM?
Provide a reason for your answer. (2)
b) Assuming it is the policy of PM to maintain a profit margin of 25% on the cost of
inventory, calculate the selling price and the profit to be obtained by PM from selling
the Galaxy X phone. (3)
c) As PM is a regular customer of Sertex LTD, Sertex has decided to offer PM a 5%
discount. Calculate the revenue to be recognised by Sertex LTD and provide the
journal entries to recognise the revenue. (7)
QUESTION 3 (35 MARKS)

The following trial balance has been prepared by the inexperienced accountant extracted of
Namibian General Dealers, a sole trader for the reporting period ended 31 October 2018.

Namibian General Dealers

Trial Balance as at 31 October 2018
Account name Dr NS Cr NS
Sales - 1,602,000
Purchases 1,400,000 -
Sales returns 20,000
Purchases returns 24,800
Inventory at 1 November 2017 400,000
Allowancefor credit losses - 1,200
Wagesandsalaries 144,000
Telephone 9,100
Fixtures and fittings 160,000
Vehicles 120,000
Accounts receivable 39,200
Accounts payable 28,000
Credit losses 800 -
Capital 721,100
Bank (favourable) 12,000 -
Drawings 72,000 ~
2,269,900 2,484,300

Additional information:

a) Closing inventory at 31 October 2018 NS480 000

b) Wages unpaid at 31 October 2018 amounted to NS9 000
c) The telephone expense amounts to NS690 per month
d) Areceivable to the value of N$1 200 is unable to pay his debt and it was decided to
write this receivable’s accountoff as bad.
e) The allowancefor credit losses should be adjusted to 5% of outstanding receivables
f) Assets are depreciated on the straight-line method using the following rates:
Fixtures andfittings 10%
Vehicles 20%

Required:

i. Prepare the adjusted trial balance as at 31 October 2018. (11)

ii. Prepare the Statementof profit of loss for Namibian General Dealers for the
reporting period ended 31 October 2018. (11)
iii. Prepare the Statementof Financial position of Namibian General Dealers as at 31
October 2018. (13)
QUESTION 4 (33 MARKS)

Mungolo Trading, a companywith a 31 Decemberyear end had the following balances of

property, plant and equipmentas at 1 January 2017:

Cost price Accumulated Depreciation policy

depreciation
NS NS
Plant 1500 000 380 000 15% p.a straight line
Machinery 800 000 240 000 10% reducing balance
Fixtures and fittings 1240000 248 000 5% p.a straightline

During the year the following happened:

01 May 2017

A new machinewaspurchased costing NS 126 500 andpaid by electronic funds transfer

(EFT), its residual value is expected to be NS15 000. The same depreciation policy for
machinery applies.

30 June 2017

Fixtures and fitting s costing NS300,000 and a carrying amount of N$210 000 at January
2017 were sold for NS250 000

01 November 2017

The following costs paid by bank transfer where applicable, were incurred in respect of an
extension to the plant owned by Mungolo Trading:

NS
Materials , 35 200
Labour 22 000
General administration 32 000
Cost of borrowing fundsto finance extension 55 000

Required:

a) Prepare the following ledger accounts for Mungolo Trading as at 31 December 2017,
to record the abovetransactions for Plant; Machinery; and Fixtures andfittings:
i. Cost (9)
ii. Accumulated depreciation (13)
iii. Disposal (fixtures and fittings) (4)
b) Whatis the balanceof property, plant and equipment that would be shownin the
Statementof financial position? (7)
NOTE:Ignore VAT
END OF EXAM PAPER!