Requirements for this paper:

Multiple choice card: Non-programmable calculator: x Open-book exam: No

Graph paper: Laptop:

EXAMINITION: CLASS TEST 3 QUALIFICATION: B. Com, etc.

SUBJECT CODE: ACCF 121 DURATION: 65 MINUTES

SUBJECT: FINANCIAL ACCOUNTING MAX: 35 MARKS

EXAMINERS: ME M WEYERS DATE: 10 September

ME R CASSIM
ME A SMIT
ME J MANYAAPELO

TIME: 13h00
MODERATOR: ME L CORNELIUS

Test Instructions

1. Students are not allowed to handle cell phones in the examination room and cell phone
accessories including but not limited to earpieces, are not allowed.
2. Students must put their bags in front of the venue.
3. Students are subject to disciplinary procedures should they:
3.1 have books or notes in their possession (except during open book examinations);
3.2 attempt to assist another student, or attempt to obtain assistance from any student.
4. No student is allowed to leave the examination venue before half an hour of the examination
session has elapsed.
5. No refreshments are allowed in the examination venue, EXCEPT water.
6. No pages may be removed from the answer scripts.
7. Before students leave the examination venue, answer scripts must be handed to the invigilators.
8. The attendance slip that also serves as an undertaking must be completed!!!
9. All examination answers must be written in black or blue ink, no entries in pencil or erasable pen
will be marked.
10. Students may make notes on paper.
11. Non – programmable calculators can be used but not smart watches.
12. Round off all amounts to the nearest Rand.
13. Show all calculations

CONTENT MARKS MINUTES

Question 1 – Companies 16 28.8
Question 2 – Partnerships 19 34.2

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ACCF121 2018 CLASS TEST 3
QUESTION 1 (16 MARKS; 28.8 MINUTES)
Plaza Ltd (“Plaza”) is a public company listed on the Johannesburg Stock Exchange (JSE).
Their main business involves the sale of bricks and paving blocks. Due to the difficult
economic conditions caused by strikes, oil prices and the weak rand, Plaza was obliged to
retrench 30 employees. A few of these retrenchments were from their accounting
department. Fortunately for Plaza, you hold a vacation position at the company and the
financial director approached you for assistance in the preparation of the financial
statements for the year ending 31 October 2018.

The financial director and his remaining staff provided you with the following information:
Trial balance as at 31 October 2018 2018 2017
R R
Land and buildings 900 000 900 000
Equipment at cost 500 000 580 000
Accumulated depreciation on equipment 312 000 300 000
Vehicles at cost 850 000 850 000
Accumulated depreciation on vehicles 350 000 250 000
Investment: Old Mutual 60 000 60 000
Trading inventory 2 500 000 1 692 600
Trade debtors 1 200 000 700 000
Bank (debit) 150 000 129 400
Savings account 20 000 30 000
Declared ordinary share capital ? 800 000
Preference share capital ? 192 000
Retained earnings 1 300 000 1 800 000
Loan from Investec Bank Limited 650 000 650 000
SARS – Income Tax (credit balance) 600 000 450 000
Trade creditors 390 000 500 000

Additional information:

 All parties are registered VAT vendors. You may assume a VAT rate of 14%, where
applicable.
 During the year, equipment with a cost price of R80 000 and accumulated depreciation
of R50 000 on 1 November 2017 was sold at the carrying amount plus R5 000.
Depreciation for the year ended 31 October 2018 in respect of this equipment amounted
to R4 050 correctly calculated from the beginning of the financial year up to the date of
disposal. This transaction as well as the gain/loss on disposal of the asset has already
been included in the above trial balance. The equipment reached its full useful life on
30 April 2018 (the date of sale). The depreciation for the current year on the remaining
equipment is included correctly in the trial balance.
 Included in profit for the year which was closed off to retained earnings are audit fees of
R150 000. The auditors also rendered other services to the value of R25 000. The VAT
on these amounts has been correctly recorded.

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ACCF121 2018 CLASS TEST 3
 The advice of a taxation practitioner was sought during the year. The invoice amounted
to R62 700 and has not yet been paid or accounted for at year end.

 The company has three executive directors who only render services as directors. The
annual salary of these three directors is R1 200 000 per director. The company only has
one non-executive director who was paid R250 000 for his services rendered. These
amounts have already been included in retained earnings.

 One of the company's biggest debtors suddenly experienced a crisis on

25 October 2018, when their warehouse burnt down due to negligence. The debtor
owes the company R570 000 and is no longer able to pay it back. This debt must be
written off. At year end, this information was not yet taken into account.

 The line item for SARS consists of the following:

o Income tax payable – R350 000

o VAT payable – R250 000

 Land and buildings are not depreciated.

 The demand for bricks has decreased significantly due to a lack of building projects.
There are 200 000 bricks in stock and the net realisable value is R8 (excluding VAT) per
brick. This information has not yet been accounted for in the trial balance.

 The loan from Investec is payable in annual instalments of which the capital portion
amounts to R215 000. The interest on the loan has already been included in retained
earnings. The first instalment is payable on 1 September 2019.

 During the year, 72 600 ordinary shares were issued at R10 per share. These shares
are no par value shares.

 After the above-mentioned issue, 68 800 no par value preference shares were issued at
R12.50 each. At the end of the financial year, preferences shares to the value of
R52 000 were converted to ordinary share capital. The conversion took place on a one-
to-one basis.

 A total dividend of R150 000 was declared during the year, but has not yet been
accounted for. All shareholders of Plaza are natural persons.

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ACCF121 2018 CLASS TEST 3
REQUIRED – QUESTION 1 Sub- Total
total
1. Prepare only the Equity section of the statement of financial position 6.5 6.5
of Plaza Ltd as at 31 October 2018 in terms of IAS 1 - Presentation
of financial statements in accordance with the requirements of IFRS.
No comparative figures are required.

Communication and layout skills 1 7.5

2. Prepare the profit before tax note in the statement of profit or loss 7.5 15
and other comprehensive income for Plaza Ltd for the year ended
31 October 2018 as required by IFRS. No comparative figures are
required.
Communication and layout skills 1 16

Page 4 of 6
ACCF121 2018 CLASS TEST 3
QUESTION 2 (19 MARKS; 34.2 MINUTES)
Max and Monique are partners in Maxinique Partnership. The following information was
given to you:

Extract from the pre-adjustment trial balance of Maxinique Partnership on 28 February 2018:
DEBITS CREDITS
Capital: Max 330 000
Capital: Monique 220 000
Current Account: Max ( 1 March 2017) 9 850
Current Account: Monique (1 March 2017) 12 750
Drawings: Max 83 610
Drawings: Monique 24 140
Equipment 900 000
Accumulated depreciation: Equipment 32 820
Trading inventory 88 770
Debtors control 27 777
Allowance for credit losses 1 420
Creditors control 64 600
Loan: Bank 12,5% 84 375
14% Fixed deposit (obtained on 1 March 2017) 50 000
Cash and cash equivalents 300 000
Sales 540 270
Cost of sales 204 180
Sales returns 18 020
Rent income 46 520
Fee income (on footwear repairs) 17 630
Consumables (1 March 2017) 15 430
Salaries and wages 42 600
Insurance 8 725
Stationary 9 288
Water and electricity 12 545
Credit losses 2 323
Interest on investment 5 250
Commission received 2 180
Sundry expenses 40 215

Additional information:
 A physical stocktake on 28 February 2018 revealed the following inventory on hand:
Consumables R1 430
 A debtor who owed R1 027 was declared insolvent and his debt must be written off as
irrecoverable.
 The allowance for credit losses must be adjusted to 4% of outstanding debtors at year
end.
 The rent increased by R320 on 1 December 2017. The tenant has paid the rent until the
end of March 2018.
 Insurance includes R675 which relates to the period 1 January 2018 to 31 March 2018.

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ACCF121 2018 CLASS TEST 3
 Depreciation on equipment for the year amounted to R15 472 and must still be taken
into account.
 Equipment with a cost price of R30 000 was sold for R18 500 cash. Accumulated
depreciation up to the date of the sale was R12 000. No entry has yet been recorded.

The partnership agreement made provision for the following:

1. Max and Monique are entitled to an annual salary of R90 000 and R86 600 respectively.
2. Interest on capital is calculated at 8% p.a. on their closing capital balances. Take into
account that Monique increased her capital by R30 000 on 1 June 2017.
3. Partners share profits and losses in proportion to their capital balances at the end of the
financial year.

REQUIRED – QUESTION 2 Sub- Total

total
1. Taking into account the adjustments and complete the statement 18.5 18.5
of profit or loss and comprehensive income for the year ended
28 February 2018 with a complete distribution section.
Communication and layout skills 0.5 19

TOTAL: 35 MARKS

– END OF PAPER –

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ACCF121 2018 CLASS TEST 3