ACCOUNTING

MARCH 2022

CONTROLLED TEST

MARKS: 100
DURATION: 1h30min

QUESTION TOPIC MARKS MINUTES

Statement of
1 50 45
Comprehensive Income
Concepts, Notes to financial
2 50 45
statements and Statement of
Financial Position
TOTAL 100 90

QUESTION 1: STATEMENT OF COMPREHENSIVE INCOME (50 marks; 45 min)

1.1 Prepare the Statement of Comprehensive Income for the financial year
ended 28 February 2022.
INFORMATION
A. Extract from the Pre-adjustment Trial Balance on 28 February 2022:
R
Vehicles 1 940 000
Equipment 720 000
Accumulated depreciation on vehicles 793 500
Accumulated depreciation on equipment 375 190
Mortgage loan: PCC-Bank 2 011 000
Debtors’ control 246 000
Trading stock 2 268 000
Provision for bad debts (1 March 2021) 14 060
Sales ?
Cost of sales 13 932 000
Salaries and wages 2 936 240
Directors’ fees 6 660 000
Audit fees 182 000
Repairs 952 000
Rent income 346 000
Interest income 50 000
Interest on loan ?
Bad debts 38 400
Advertising 51 360
Sundry expenses 904 620
Ordinary share dividends 172 800
B. Adjustments and additional information:

(a) Vehicles:
 A new vehicle with a cost price of R1 020 000 was purchased on
1 November 2021. This was properly recorded. Vehicles are
depreciated at 15% p.a. on cost.
NOTE: The old vehicle is nearing the end of its lifespan and will
soon be disposed of.

Equipment:
 Depreciation on equipment is 20% p.a. on the diminishing-balance
method. Unused equipment was sold for R80 000 on
1 October 2021. The cost price of this equipment was R150 000
and the accumulated depreciation on the equipment sold was R73
200 on 1 March 2021. No entry was made for the sales of this
equipment.

(b) The business maintains a mark-up of 120% on cost. Note that trade
discounts of R1 296 000 were granted to special customers.

(c) The account of debtor M. Penny, R1 600 must be written off.

(d) Provision for bad debts must be adjusted to 5% of outstanding debtors.

(e) The physical stock taking on 28 February 2022 reflect that the trading
stock on hand amounted to R2 122 200.

(f) 30% of the audit fees is still outstanding.

(g) The monthly rent income did not change during the year. During
February 2022 the tenant paid R18 000 for repairs to the premises, and
deducted this from his rent for February 2022. Repairs are the
responsibility of the company, and this was not recorded. The rent for
March 2022 was received in advance.

(h) The company has four directors earning the same fee. One director
resigned on 31 May 2021 and received his fees up to this date.
Another director is still owed fees for January and February 2022.

(i) Advertising consist of a contract with a newspaper for the entire

financial year. Payments are monthly, however instalments were paid
for 11 months only. NOTE: The monthly rate decreased by
R480 from 1 November 2021.

(j) The net profit after tax was accurately calculated at R2 108 000. The
income tax rate is 32%.

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QUESTION 2: CONCEPTS, NOTES TO FINANCIAL STATEMENT
STATEMENT OF FINANCIAL POSITION (50 marks; 45
min)

2.1 CONCEPTS

Choose an explanation from COLUMN B that matches a concept in COLUMN A.

Write only the letter (A – D) next to the question number (2.1.1 – 2 .1.4) in the
ANSWER BOOK.
COLUMN A COLUMN B
2.1.1 Finance cost A Consumable stores not used at the end of
the
2.1.2 Dividends financial year
B Interest on bank overdraft on the
2.1.3 Inventory Statement of Comprehensive Income
C A financial indicator which reflects liquidity
2.1.4 Current liability D Profits distributed to shareholders in
proportion to the number of shares held
E Debts payable over a short period of time
(4)

2.2 The information below relates to Tsogo Limited. The financial year ended on
28 February 2022.
REQUIRED:
2.2.1 Prepare the following notes for the financial year ended 28 February 2022.
(a) Ordinary share capital (10)
(b) Retained income (10)
2.2.2 Complete the Statement of Financial Position on 28 February 2022.
Where notes are not required, show ALL workings to earn part-marks. (26)

INFORMATION:
A Balances extracted from the accounting records on 28 February 2022
(unless otherwise stated).
R
Ordinary share capital (1 March 2021) 3 660 000
Retained income (1 March 2021) 1066 500
Loan from SRK- Bank 4 128 000
Fixed assets at carrying value ?
Fixed deposit: SAVENET- Bank 4 498 500
Trading stock 1 440 000
Creditors' control 532 500
Debtors' control 1 200 000
Packing material on hand 48 000
Accrued expenses (expenses payable) 30 000
Income received in advance (deferred income) 34 500
Bank (favourable) 3 030 300
Provision for bad debts (1 March 2021) 18 600
SARS: Income tax (provisional tax payments) 3 540 000
 Ordinary share dividends 1 050 000

B Share capital:
 Tsogo Ltd. is authorised to sell 6 000 000 ordinary shares.
 500 000 shares were in issue on 1 March 2021.
 900 000 new shares were issued on 1 August 2021 at R9,00 per share.
This has been properly recorded.
 150 000 shares were repurchased on 10 January 2022 from a disgruntled
shareholder for 225 cents above the average share price. This transaction
was not recorded. This shareholder does not qualify for final dividends.

C Dividends:
The Directors declared a final dividend of 150 cents per share on
28 February 2022.

D Provision for bad debts:

The provision for bad debts must be decreased to R16 200.

E Loan:
 The loan was received on 1 September 2019.
 This loan is to be repaid over 6 years in equal monthly instalments with
effect from 1 October 2019. All payments have been made.
 Interest is not capitalised and has been paid in full.

F Taxation:
After taking into account all relevant information, taxation for the year was
accurately calculated to be R3 444 000 at 28%.

50