QUESTION 1 (28 marks)(35 minutes)
The following information pertains to F Fox, an attorney trading as Fox Attorneys: Transactions during August 2024:
| Aug 1 | F Fox deposited R30 000 as initial capital into the bank account of Fox Attorneys, and purchased furniture and equipment to the value of R6 000 for the office, paid from his personal bank account. |
| 2 | Paid a rental deposit from the bank account of the business for the consulting office rented, R3 500. |
| 3 | Purchased a coffee machine for the office on credit from Cuppa’s, R5 000. |
| 10 | Rendered consulting services to client M Chauke, who immediately thereafter settled his account of R7 000 in full. |
| 11 | Purchased revenue stamps for R80 on behalf of M Chauke, in cash from Fox’s personal funds. |
| 13 | Purchased a new computer for the office from Compuware for R10 000, cash. |
| 17 | Rendered a once-off consulting service to C Cheater for R950, cash. Paid R100 to a casual labourer for cleaning the office. |
| 26 | Fox paid his personal telephone account, R427 by making an electronic transfer from the bank account of the business. |
| 29 | Purchased refreshments, cash, for the next day’s consultations, R400. |
| 30 | Received R80 from M Chauke for the revenue stamps and R2 000 from client B Bully for a court appearance made by Fox in Bully’s defence during the day. |
| 31 | Paid R1 000 on the account of Cuppa’s by making an electronic transfer from the bank account of the business. |
REQUIRED:
Analyse the abovementioned transactions in tabular form as follows:
| Date | Account to be debited in the general ledger | Account to be credited in the general ledger | Effect on basic accounting equation | ||
| Assets | Equity | Liabilities | |||
| Example: Aug 2 Paid R800 for delivery fees. | |||||
| Aug 2 | Delivery fees |
Bank |
R | R- 800 | R |
| – 800 | |||||
| 31 | Last transaction | Last transaction | |||
| Total | xxx | xxx | xxx | ||
NB: Each amount must be preceded by a plus sign (+) for an increase or a minus sign (-) for a decrease in an account. Please note that each account used and the effect thereof on the basic accounting equation must be clearly disclosed by showing them in separate rows. (You need not show the arrows, nor do you have to “bold and italic” the credit entries; it is done in the above table for illustrative purposes only.) To check your accuracy, the columns in respect of the basic accounting equation (BAE) can be totalled after you have recorded all the transactions. However, in this question of the assignment, no marks are allotted to these totals.
If no information was given as to from which bank account payments were made, assume that it was from the account of the business. The same rule applies to all other transactions; where no indication is given of to whom a transaction applies, assume that it pertains to the business under review.
QUESTION 2 (40 marks)(50 minutes)
During February 2025, S Holmes started a private investigating agency, trading as Holmes Tracing, and entered into the following transactions:
| Feb 1 | Opened a bank account in the name of Holmes Tracing and transferred R15 000 from hispersonal bank account to this account. |
| 3 | Entered into a contract to rent offices and paid a deposit of R2 000 as well as the first month’s rent of R1 500 per cheque. |
| 6 | Purchased equipment on credit from Charlotte Hulan, the girlfriend of Holmes, for R16 000 at the rented premises, and entered the assets into the entity’s asset register. |
| 7 | Rendered services and received R7 500, cash. |
| 13 | Purchased binoculars for cash from Maxiquip, R5 000. |
| 15 | Rendered services on credit to a new client, A Agatha, R600. |
| 17 | Rendered services for cash to the following clients: A Avathar – R1 850C Christie – R2 550 |
| 23 | Received an account from the municipality for the month’s water and electricity, and paid R535. |
| 24 | Received the telephone account, R465, payable by 2 March 2025. |
| 25 | Paid half the amount owing to Charlotte for the equipment purchased on 6 February. |
| 27 | Withdrew R1 000 for the petty cash of the business. |
| 28 | A Agatha settled her account in full.Rendered services to Charlotte Hulan to settle the balance on her account. |
REQUIRED:
| 2.1 | Record the above transactions in the relevant general ledger accounts in the books of Holmes Tracing for February 2025. Each entry in a ledger account must clearly indicate the correct contra ledger account. (The transactions must be recorded and the accounts balanced according to study unit 6 of the study guide.) Individual debtors and creditors accounts are not required. | |
| (33) | ||
| 2.2 | Prepare the trial balance of Holmes Tracing as at 28 February 2025. | (7) |
| [40] |
QUESTION 3 (24 marks)(30 minutes)
The following balances at 30 September 2024 were obtained from the general ledger of Storm Cleaning Services:
| Capital: S Storm (1 October 2023) …………………………………………………………………………. | R15 000 |
| Drawings: S Storm ………………………………………………………………………………………………. | 30 000 |
| Equipment at cost ……………………………………………………………………………………………….. | 10 000 |
| Debtors control……………………………………………………………………………………………………. | 5 380 |
| Creditors control………………………………………………………………………………………………….. | 3 442 |
| Bank (Cr) …………………………………………………………………………………………………………… | 2 095 |
| Consumable inventory …………………………………………………………………………………………. | 4 617 |
| Fees earned……………………………………………………………………………………………………….. | 113 100 |
| Consumable inventory used………………………………………………………………………………….. | 10 000 |
| Water and electricity…………………………………………………………………………………………….. | 13 240 |
| General expenses ……………………………………………………………………………………………….. | 11 250 |
| Telephone expenses……………………………………………………………………………………………. | 7 800 |
| Rental expense …………………………………………………………………………………………………… | 17 350 |
| Salaries……………………………………………………………………………………………………………… | 24 000 |
REQUIRED:
Prepare the following financial statements of Storm Cleaning Services to comply with International Financial Reporting Standards, appropriate to the business of the entity:
| 3.1 | Statement of profit or loss and other comprehensive income for the year ended30 September 2024. | |
| (10) | ||
| 3.2 | Statement of changes in equity for the year ended 30 September 2024. | (5) |
| 3.3 | Statement of financial position as at 30 September 2024. | (9) |
| NB: Notes are not required. | [24] | |
QUESTION 4 (8 marks)(10 minutes)
Choose the correct answer. Write only the question number and your selected answer next to it. Example: 4.7 a
All of the questions count 2 marks each.
- A sales account is an example of an/a
- asset
- income
- expense
- liability
- One effect of income earned from a cash transaction is that it
- decreases
- decreases
- decreases
- increases
- Which one of the following statements is true?
- Assets minus Liabilities = Profit
- Equity minus Liabilities = Assets minus (2 x Liabilities)
- Liabilities minus Assets = Equity
- Equity minus Liabilities = Assets minus Equity
- Which one of the following statements is false?
- Income earned or expenses incurred during a financial period always changes
- Drawings is not an example of an expense
- A favourable bank balance is not disclosed under the heading Non-current assets in a statement of financial position.
- According to the International Financial Reporting Standards, cleaning services rendered to customers by a cleaning service business entity should not be termed Revenue but Income from cleaning services rendered in the statement of profit or loss and other comprehensive income pertaining to that entity.
Answers to Above Questions on Accounting
Answer 1:
Hire the best accounting assignment help experts from the team of Student Life Saviour in South Africa to get best answers to above accounting questions.
Content Removal Request
If you believe that the content above belongs to you, and you don’t want it to be published anymore, then request for its removal by filling the details below. It will only be removed if you can provide sufficient evidence of its ownership.
