Prepare the general journal entry to record the adjustment.(4 marks)
The following balances, amongst others, appeared in the pre-adjustment trial balance of GH Stores on 28
February 2023, the end of the financial year:
|Debtors control||R40 000|
|Provision for bad debts||R1 800|
The provision for bad debts must be adjusted to 5% of debtors.
Prepare the correct Creditors Control account (balanced) for March 2023. (8 marks)
The following transactions of ABC Traders have been recorded for March 2023:
|Amount owed to creditors on 01 March 2023||R70 000|
|Credit purchases for the month||R88 000|
|Cash purchases for the month||R48 000|
|Goods returned to creditors||R4 000|
|Payments to creditors||R80 000|
Additional information to record:
■ A creditor’s account with a credit balance of R300 in the creditors ledger must be transferred to the account of the same creditor in the debtors ledger.
■ A credit note received from a creditor for a return of goods was not recorded, R400.
■ A payment to a creditor (included in the R80 000 above) was recorded as R5 500 instead of R5 000 in the cash payments journal and posted accordingly.
■ ABC Traders was charged interest for one month at 18% per annum on an overdue account of R3 000.
Use the information provided below to calculate the gross profit for the financial year ended 28 February 2023. (4 marks)
The following balances/totals, amongst others, appeared in the trial balance of Supra Stores on 28 February 2023, the end of the financial year:
|Inventory (on 01 March 2022)||120 000|
|Sales returns||12 000|
|Purchases returns||20 000|
|Carriage on purchases||15 000|
|Carriage on sales||22 000|
Stocktaking on 28 February 2023 revealed an inventory figure of R222 000 at cost price. 1.4 (4 marks)
The following information was extracted from the books of Samke Stores on 31 August 2023 for the only product that it sells.
|August||Transaction||Units of inventory||Price per unit|
|01||Opening inventory||11 000||R10|
|13||Purchased from a supplier||32 000||R11|
|24||Purchased from a supplier||7 000||R12|
|31||Sales for August||45 000||R20|
QUESTION 2 (20 Marks)
Show the effect of the following transactions of Algoa Stores on the Accounting equation. Use “+” to denote an increase, “–” to denote a decrease and “0” to denote no change to the elements of the equation. Follow
the example given. Assume that the bank balance is always favourable. (5 marks) Example: Paid for electricity by means of an electronic funds transfer (EFT), R800
2.1.1 Purchased a printer on credit, R10 000.
2.1.2 Received R2 000 cash from a debtor in part settlement of her account of R4 500.
2.1.3 The proprietor deposited cash to increase her capital contribution from R70 000 to R100 000.
2.1.4 Made a payment to a creditor in part settlement of account, R4 000.
2.1.5 Received rent of R3 000 from the tenant.
Use the information provided below to post to the following accounts in the general ledger. Balance or close
off the accounts.
2.2.1 Vehicles (4 marks)
2.2.2 Accumulated depreciation on vehicles (6 marks)
2.2.3 Fixed asset realisation (5 marks)
On 01 March 2022, the beginning of the financial year, the following balances (amongst others) appeared in the general ledger of Ascot Traders:
Vehicles R900 000
Accumulated depreciation on vehicles R380 000
■ A motor vehicle that cost R200 000 was sold for R52 000 cash on 31 August 2022. The accumulated depreciation on the vehicle amounted to R120 000 on 01 March 2022. Depreciation is calculated at 20% per annum using the fixed instalment method.
■ On 01 September 2022 a new vehicle was purchased for R300 000 cash to replace the vehicle that
■ Provide for depreciation on vehicles for the year ended 28 February 2023.
QUESTION 3 (20 Marks)
Use the information provided below to prepare the correct:
3.1 Debtors control account for October 2023. Balance the account. (10 marks)
3.2 Debtors List as at 31 October 2023. (10 marks)
The inexperienced bookkeeper of Tunisia Suppliers found that the balance in the Debtors Control account did not correspond with the total of the Debtors List. Upon investigation, some errors and omissions were discovered.
|Oct 01||Balance||b/d||444 120||Oct 31||Bank and discount||CRJ||465 000|
|31||Sales||SJ||501 600||Sales returns||SRJ||26 400|
|Interest income||GJ||1 080|
|945 720||945 720|
|Nov 01||Balance||b/d||453 240|
|DEBTORS LIST AS AT 31 OCTOBER 2023|
|Debtor||Debit (R)||Credit (R)|
The following errors and omissions were discovered after the above were drawn up:
1. One entry appears on the incorrect side of the Debtors Control account.
2. The Sales Journal was overcast by R10 000.
3. A receipt issued to Khoza in part payment of account, R20 000, was erroneously posted to the account
of Peter in the Debtors ledger.
4. The account of Roopan must be written off.
5. No entry was made in the books for goods returned by Cantona, R4 000.
6. An invoice for goods sold on credit to Dlamini was erroneously credited to the account of Dlamini in the
Debtors ledger, R6 000.
QUESTION 4 (20 Marks)
Prepare the Statement of Changes in Equity of Sinclair Traders for the year ended 28 February 2023.
The information given below was extracted from the accounting records of Sinclair Traders, a partnership business with Sindy and Claire as partners.
|Extract from the ledger of Sinclair Traders as at 28 February 2023|
|Capital: Sindy||1 000 000|
|Capital: Claire||600 000|
|Current a/c: Sindy (01 March 2022)||60 000|
|Current a/c: Claire (01 March 2022)||50 000|
|Drawings: Sindy||250 000|
|Drawings: Claire||350 000|
The following must be considered:
(a) The net profit for the year, according to the Profit and Loss account, amounted to R1 000 000.
(b) The partners are entitled to interest at 15% per annum on their capital balances. On 01 December 2022
Sindy increased her capital by R200 000 whilst Claire decreased her capital by R200 000. The capital changes have been recorded.
(c) The partners are entitled to the following monthly salaries:
Sindy R15 000
Claire R18 000
(d) Claire is entitled to a bonus equal to 5% of the net profit before taking any of the above appropriations
(e) The balance of the profit must be shared between Sindy and Claire in the ratio of the capital balances
as at the beginning of the financial year.
QUESTION 5 (20 Marks)
Use the information provided below to prepare the Statement of Financial Position of Umbilo Traders as at 28 February 2023. The Statement of Comprehensive Income and notes to the financial statements are not required. The workings or adjustments made to the accounts must be shown in the appropriate column provided.
The trial balance and additional information given below were extracted from the accounting records of Umbilo Traders on 28 February 2023, the end of the financial year.
|PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2023|
|Debit (R)||Credit (R)|
|Balance sheet accounts section|
|Capital||3 834 200|
|Vehicles at cost||3 700 000|
|Equipment at cost||2 730 000|
|Accumulated depreciation on vehicles||1 560 000|
|Accumulated depreciation on equipment||1 092 000|
|Fixed deposit: Namib Bank (10% p.a.)||584 000|
|Trading inventory||325 000|
|Debtors control||377 200|
|Provision for bad debts||29 200|
|Petty cash||2 000|
|Creditors control||541 600|
|Loan: Namib Bank (15% p.a.)||960 000|
|Nominal accounts section|
|Sales||7 288 000|
|Cost of sales||3 290 000|
|Sales returns||148 000|
|Salaries and wages||1 696 000|
|Bad debts recovered||8 000|
|Commission income||527 800|
|Rent expense||598 000|
|Motor expenses||390 000|
|Electricity and water||198 000|
|Bank charges||32 000|
|Interest on mortgage loan||108 000|
|Interest on fixed deposit||29 200|
|15 870 000||15 870 000|
Adjustments and additional information
1. On 28 February 2023 an amount of R20 000 was received from Weimer Distributors for commission
on goods sold for them. No entry was made for this transaction.
2. Trading inventory according to stocktaking on 28 February 2023 amounted to R315 000.
3. Stationery valued at R4 000 was donated to a pre-school. This was not recorded.
4. Interest on fixed deposit has been received until 31 August 2022. Provide for the outstanding interest.
The fixed deposit matures on 01 March 2025. Interest is not capitalised.
5. Provide for the outstanding interest on loan. The loan was obtained from Namib Bank on 01 March 2022 and repayments will only commence from March 2023. An amount of R180 000 (excluding interest) is expected to be paid during the financial year ended 28 February 2024. Interest is not
6. Included in the insurance total is an amount of R12 000 that was paid for fire insurance for the period
01 December 2022 to 30 November 2023.
7. The water and electricity account for February 2023 was due to be paid on 02 March 2023, R25 000.
8. Rent has been paid for the period 01 March 2022 to 31 March 2023. The rental amount was unchanged
during this period.
9. The bank statement for February 2023 reflected an amount of R3 600 for bank charges. No entry was
made for this.
10. No entry has been made for an account of R30 000 received from Sigma Motors for the repairs to two
11. Write off the account of a debtor who was declared insolvent, R13 000.
12. The provision for bad debts must be decreased by R9 000.
13. Provide for depreciation as follows:
13.1 On vehicles at 20% per annum on the diminishing balance.
13.2 On equipment at 10% per annum on cost.
14. The net profit for the year ended 28 February 2023 AFTER taking the above adjustments and additional information into account was R149 600.
Answers to Above Questions on Financial Accounting
Answer 1: The gross profit for the financial year ended 28 February 2023 is calculated as follows:
Get completed answers on the questions above on financial accounting from the best accounting assignment help experts of Student Life Saviour.
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