QUESTION 1 (20 MARKS)

1.1. (5 MARKS)

a. Give five examples of income.
b. Give five examples of expenditure.

1.2.Name the five elements of financial statements. (5 MARKS)

1.3. (10 MARKS)

a. Calculate the cost price of goods which were sold for R150 000 if the profit mark-up was 20% on the cost price.
b. Calculate the cost price of goods which were sold for R150 000 if the profit mark-up was 20% on selling price.

Question 2:

The following transactions were made by B. Baloyi Consulting Ltd for the month of March 2024

Required
For each of the transactions listed above, indicate the effect of the transaction on the accounting equation. Use a “+” sign to indicate an increase and a “-” sign to indicate a decrease in the elements of the accounting equation. Also indicate the general ledger accounts affected.

Question Three:

The following information relates to Richfield Distributors:
Pre-adjustment trial balance of Richfield Distributors as at 31 December 20.1

The following adjustment must still be accounted for:
1. Packaging material on hand at 31 December 20.1 to the value of R980.
2. The long-term borrowing was entered into on 1 October 20.1. according to the agreement, interest is payable bi-annually at a rate of 18%vper annum.
3. Advertisements includes an amount of R400 paid for January 20.2
4. Rental income includes an amount in respect of January 20.2.
5. Interest on fixed deposit has not yet been received for the last two months of the financial year. Interest is calculated at a rate of 12% per annum.
6. Insurance includes an amount of R750 paid for the period 1 November 20.1 to 31 October 20.2.
7. The telephone account of R165 for December 20.1 has not yet been paid.
8. Equipment of R2 000 (cost price) was [purchased on 1 July 20.1.
9. Depreciation must be provided as follows:
a. Vehicle: 20% per annum on the diminishing balance method
b. Equipment: 10% per annum on the diminishing balance method
10. The account of Loose-Ends Ltd, a debtor who owes the entity R200, must still be written off as irrecoverable.
11. It was determined that on 31 December 20.1 the allowance for credit losses should amount to R250.

Required
Prepare the journal entries with narration of the above additional information or adjustments given.
SPIKIRI Traders is registered as a VAT vendor. The applicable VAT rate is 15%. The periodic inventory system and control accounts are used by the entity.

The following transactions took place in Spikiri Traders for June 2021.
6 Mr Kekana was declared insolvent and his outstanding account of R2 200 must be written off as irrecoverable.
7 Mr ZK Legodi’s account of R3 330 was five months overdue and simple interest was charged at 10%
per annum.
8 It was discovered that repairs done to the delivery vehicle for R800 was incorrectly debited to the stationery account. This error must still be corrected.
9 Printing done by ZK Printers for R2 200, was paid for with EFT no 19.
10 The owner, J Spikiri, increased his capital contribution with R15 000. Receipt no 101 was issued to him.
11 Cleaning material was purchased from TP Cleaners for R1 500 and paid for with EFT no 20.
12 The total cash sales as per cash register roll no 15 amounted to R7 800.
13 Merchandise was purchased from GD Traders for R8 000 and paid for by cheque no 21.
14 EFT no 22 to the amount of R2 500 to pay the week’s wages.
15 Received a direct deposit from D Maluleka in payment of his account of R5 600. Receipt no 104 was issued.
16 EFT no 23 to the amount of R7 000 was made to settle the account of BP Suppliers.
17 The total cash sales as per cash register roll no 16 amounted to R9 800.

REQUIRED
Record the above transactions in the following subsidiary journals of Spikiri Traders for June 2021:
a. Cash receipts journal (columns for analysis of receipts, bank, sales, VAT output, trade receivables control and sundry accounts).
b Cash payments journals (columns for bank, purchases, trade payables control, wages, VAT input and sundry accounts).
Note: You do not have to close off the journals at the end of the month. Show all your calculations.

Question Five:

The following information was obtained from the financial records of Fine Traders on 28 February 20.8(Ignore VAT)

Additional information
a. The trade receivables column in the cash receipts journal was overcast by R1 000
b. The trade payables column in the purchases journal was overcast by R2 000
c. A sales invoice for the amount of R600 was entered twice in the sales journal and posted twice to the personal account B Broad.
d. Credit note no 31, for R500, was credit to the account of T Thin, but no other entry was made in the books.
e. An invoice for the amount of R50 was correctly entered in the purchases journal but posted as R150 to the account of N Narrow.
f. An invoice for the amount of R400 was correctly entered in the purchases journal but posted as R150 to the account of D Dandy.
g. The balance of P Pauper’s account for R1 420 has still to be written off as irrecoverable.
h. It was determined that the the allowance for credit losses account should amount to R538 at 28 February 20.8
i. The credit losses must be written off against the allowance for credit losses account.
Required
Prepare a properly balanced trade receivables control account for the month ending February 20.8.

Answers to Above Questions on Financial Accounting

Answer 1: a: The five examples of income are salaries and wages, business profits, income from business, freelancing income and pension income.

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