JANUARY 2024 SUPPLEMENTARY/AEGROTAT EXAMINATION

PROGRAMME Bachelor of Commerce in Supply Chain Management

MODULE Accounting 1

INSTRUCTIONS TO CANDIDATES:

• Students are advised to carefully read and understand the questions before answering

them.

• Students must answer the questions fully but concisely and as directly as possible, using

sufficient research and application. All research should be referenced, using the Harvard

referencing protocols.

• Students should follow all specific instructions for individual questions (e.g., “list”, “in

point form”, “show all workings”).

• The mark allocation is an indication of the weight and the length of the question.

• The responses must be your own work. Plagiarism is a form of academic dishonesty and

will not be tolerated.

DATE: 15 January 2024 TIME: 08h30 - 12h30

DURATION: 4 Hours MARKS: 100

Cassim Seedat
EXAMINER: MODERATOR: Thaveshan Moodley
 QUESTION ONE [25]

The following related to Ian Bender who started his own panel beating business, Bender’s
Panel Beaters, on 1 July 2023: (the financial year end is 30 June)

2023
1July (eg) Bender deposited R60 000 into the business bank account as his initial capital.

2 July Bender transferred personal equipment valued at R35 000 as additional capital.

3 July Obtained a loan of R100 000 from his cousin, A Luckman. The loan bears
interest at 10% per year and is payable in two equal annual instalments. The
first instalment is payable on 30 June 2025 and the second on 30 June 2026.

4 July Purchased new equipment from Bob Squares for R50 000 on credit The
account will be paid by five monthly instalments. The first instalment is due to
be paid on 31 August 2023.

5 July Paid R4 500 as rent for July 2023. Payment was made by means of an
electronic funds transfer to D Landlord, the owner of the premises.

10 July A client made a direct deposit of R11 420 for services rendered.

Required:

1.1. Process the above transactions through an accounting equation such as the one
shown in the format below: (12)

Date Assets Equity Liabilities

Non-current Current Capital Income/ Non-current Current
2023 R R R expenditure R R

1.7 (eg) 0 60 000 60 000 0 0 0

1.2. Briefly describe the reason for your treatment of the Loan from A Luckman (refer to
transaction dated 3 July 2023 above). With reference to IFRS (International Financial
Reporting Standards), provide a definition of the element to which you allocated the

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 “Loan from A Luckman”. An explanation and motivation for the deposit of R100 000
into the bank account is NOT required. (5)
1.3 Preparation of financial statements is based on the accrual principle. Briefly explain
the accrual principle (4)
1.4 Ian Bender enquired as to why he had to keep accounting records and prepare
financial statements. Provide a response by providing a short explanation of the
objective of financial accounting. (4)

QUESTION TWO [25]

2.1 Small Time Dealers purchased goods to the value of R19 000. All the goods were
sold within 20 days. It was determined that the following additional expenses should
be allocated to this parcel of goods; rental of R1 000, electricity of R380 and wages
of R1 500.
The total selling price of the goods was R32 300.

Required:
Calculate the total costs to be taken into account against the total selling price. (5)

2.2 The following information was provided by Smart Mobiles for the year ended 31 July
2023. Smart Mobiles rents a small kiosk in the mall where Ringo Smart, the owner
sells mobile phones to the general public. Smart Mobiles uses the periodic inventory
method to keep records of trading inventory transactions. The following information
was provided;

Extracted from the post-adjustment trial balance at 31 July 2023 R

Inventory at 1 August 2022 50 000

Sales 555 000
Carriage on sales 10 000
Purchases 408 000
Purchases returns 45 000
Customs duty 11 000
Inventory on hand at 31 July 2019 91 000

Required:

Calculate the gross profit percentage on sales for the year ended 31 July 2023. (6)

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2.3 The following information was taken from the accounting records of Midway retailers
at 30 September 2023: R

Trade receivables at 30 September 2023 36 000

Allowance for credit losses (Provision for bad debts) 1 500

Credit losses (bad debts) written off during the year 1 300

Additional information:

1. An amount of R1 200 must be written off as irrecoverable.

2. The allowance for credit losses must be maintained at 5% of outstanding debtors.

Required:
Calculate the amount to be shown as credit losses (bad debts) in the statement of
comprehensive income for the year ended 30 September 2023. (6)

2.4 Super Eats started their business on 2 January 2021 and purchased two delivery
motorbikes at R30 000 each. The financial year end of the entity ends on 31
December of every year and depreciation on the motorbikes is calculated at 30% per
year on the diminishing balance method.

One of the bikes was involved in an accident on 31 March 2023 and was completely
written off. Insurance paid out R12 500 for the damaged bike.

Required:

Calculate the profit or loss on scrapping the motorbike that was involved in an
accident. All workings must be rounded off to the nearest whole number. (8)

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QUESTION THREE [25]

The information below was extracted from the accounting records of Happy Wholesalers, a
partnership with M Noha and T Mora sharing profits and losses equally.

Balances extracted from the general ledger as at 31 December 2023 R

Bank balance 236 600
Capital: M Noha 700 000
Capital: T Mora 700 000
Current account: M Noha – credit balance 14 640
Currant account: T Mora – debit balance 4 800 Dr
Drawings: M Noha 160 000
Drawings: T Mora 256 000
Profit and loss account: profit for the year 997 520

Additional Information:
The partnership agreement provides for the following which must be taken into account:
1. Interest on capital at 15% per year is allowed on the capital balances. Note that the
following took place on 1 July 2023: M Noha decreased his capital by R96 000, and T
Mora increased his capital by R120 000. The changes have been recorded and are
included in the balances as at 31 December 2023 shown in the extract above.
2. Interest at 10% per year on the opening balances of the current accounts.
3. M Noha is to receive a bonus equal to 5% of the profit for the year as calculated in the
profit and loss account.
4. The interest on the drawings accounts are: M Noha R8 200 and T Mora R11 400.

Required:
3.1 Prepare the statement of changes in equity for the year ended 31 December 2023.
Use the following format:

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Capital accounts M Noha - R T Mora - R Total - R
Balance at 1 January 2023
Changes in capital

Balance at 31 December 2023

Current accounts M Noha - R T Mora - R Appropriation-R

Balance at 1 January 2023
Profit for the year
Interest on capital
Interest on current account
Bonus to M Noha
Interest on drawings
Share of profits

Drawings for the year

Balance at 31 December 2023

(20)

3.2 List at least 5 factors that can lead to the dissolution of a partnership. (5)

QUESTION FOUR [25]

The following information was extracted from the accounting records of Totela Stolo at 28
February 2023, the end of the financial year.

Pre-adjustment trial balance at 28 February 2023 Debit - R Credit - R

Land and buildings at carrying amount 550 000

Vehicles at carrying amount 180 000
Equipment at carrying amount 132 000
11% Fixed deposit: Kayi Bank 90 000
Trading inventory 80 600
Trade debtors 90 010
Allowances for credit losses (provision for bad debts) 1 000
Bank balance 33 490

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Capital: Totela 700 000
Drawings 130 000
16% Mortgage Bond: Templar House 150 000
Trade creditors 81 190
Sales 994 870
Cost of sales 268 770
Sales returns 13 000
Salaries and wages 260 000
Credit losses/bad debts 8 400
Consumable stores used 14 620
Rates and taxes 35 700
Sundry accounts 70 510
Bank charges 3 810
Insurance 38 900
Interest on mortgage bond 12 000
Interest on fixed deposit 6 750
Rent income 78 000

2 011 810 2 011 810

Additional information
1. Physical stock take and subsequent valuation on a first-in-first-out basis revealed the
following inventory values on hand at 28 February 2023:
• Trading inventory R79 300
• Consumable inventory R 1 850

2. A section of the premises has been sub-let since 1 March 2022 at a monthly rental of
R6 000. Rent for the year was received and recorded correctly. However, a refundable
rental deposit of R6 000 was received on 1 March 2022 and posted to the rent income
account.

3. The allowance for credit losses (provision for bad debts) must be increased by R600.

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4. The balance in the insurance account at 28 February 2023 includes an annual insurance
premium of R6 000 that was paid for the period 1 June 2022 to 31 May 2023.

5. Provide for the outstanding interest on the mortgage bond which was raised on 31
August 2019. The initial amount of the Bond was R200 000 and was payable in four (4)
equal annual instalments. The first instalment was paid on 31 August 2022 and
subsequent instalments are payable on 31 August each year.

6. Interest of R3 150 is still receivable on the fixed deposit as at 28 February 2023.

7. Bank charges of R610 must still be recorded.

8. An amount of R760 was received from a debtor whose account was written-off as a
credit loss (bad debt) in the previous accounting period.

9. Record depreciation as follows:

• Equipment R30 000, and
• Vehicles R54 000.

Required:
Prepare the statement of comprehensive income of Totela Stolo for the year ended 28
February 2023 to comply with the requirements of generally accepted accounting practice
appropriate to Totela Stolo’s business.
Comparative figures are not required. Show all workings.
END OF QUESTION PAPER