QUESTION 1 (16 marks)(20 minutes)

The following cash journals and bank statement of Beau Ltd are presented to you: Cash receipts journal − June 2023 (bank column only)

Cash payments journal − June 2023 (bank column only)

Bank statement − June 2023

Additional information:

1. There was only an outstanding deposit of R6 915 on the bank reconciliation statement for May.

2. The R/D cheque on 7 June was received from L Ted, a debtor, and must be written back.

3. The deposit on 12 June was inadvertently made directly into the bank account of Beau Ltd by R Riksha, another client of the bank.

4. Cheque 1004 was drawn by another client of the bank.

5. The correct amount of cheque 122 is R2 400.

6. The electronic fund transfer (eft) made on 28 June was inadvertently subtracted twice in the bank statement for June.

REQUIRED:

1.1 Complete the cash journals of Beau Ltd at 30 June 2023. (6)
1.2 Prepare the bank account in the general ledger of Beau Ltd, properly balanced on 30 June 2023.
(5)
1.3 Prepare the bank reconciliation statement of Beau Ltd as at 30 June 2023. Begin with the balance as per bank statement.(5)

Question 2

The following information pertains to a sole proprietorship of Tower Trump, trading as Trump Jewellery Traders:
R
1. Balance of creditors control account at 31 March 2023

2. Transactions for the month ended 30 April 2023: 100 240
Cash purchases  271 580
Cash sales 165 600
Credit purchases 199 200
Credit sales 381 440
Sales returns (on credit sales) 6 520
Purchases returns (on credit purchases) 11 000
Bills accepted in favour of creditors 76 240
Bills accepted by debtors 11 160
Payments to creditors 144 250
Settlement discount received on payments to creditors 3 860
Bills paid on maturity 35 450
General journal debits in respect of creditors 1 180
General journal credits in respect of debtors 1 730
Credit losses recorded 7 680

3. Additional information:

The credit balance of Ace Traders, R2 610, in the debtors ledger must be transferred to the creditors ledger.
Purchases returned to Spade Manufacturers, R2 600, were credited to the entity’s individual account in the creditors ledger of Trump Jewellery Traders because this return– transaction was incorrectly recorded as purchases in the purchases journal.
An account of R5 500, issued to Trump in his personal capacity by King Traders for the purchase of jewellery by Trump as a gift to his wife, was inadvertently debited in the general journal of Trump Jewellery Traders as purchases and credited to the drawings account of Trump. R5 500 was credited to the individual account of King Traders in the creditors ledger of Trump Jewellery Traders. Trump settled the account from his personal funds.
A cheque for R2 800, issued on 31 October 2022 in full settlement of the account of creditor Flush Repair Services, R3 000, is still outstanding. The cheque must be cancelled.
The purchases returns journal was overcast by R2 000.

A credit purchase of R2 370 was incorrectly credited as R3 270 to the individual account of creditor Q Heart.

The debit balance of R400 on J Joker’s account in the creditors ledger must be transferred to the debtors ledger.

QUESTION 2 (continued)

The total of the list of the creditors balances at 30 April 2023 amounted to R65 810.

REQUIRED:

2.1 Prepare the creditors control account, properly balanced, in the general ledger of Trump Jewellery Traders for April 2023. (15)
2.2 Reconcile the total of the list of creditors balances with the closing balance of the creditors control account as calculated in (2.1) above. (10)
Question 3

On 1 February 2021, the date on which business was commenced by a sole proprietor, trading as Eternity Tombstones, a Lily cutting and polishing machine was purchased on credit by the entity from Templar’s Trading for R135 000, transport and installation costs of R2 500 included in the price. The estimated scrap value of the Lily machine is R3 000.

On 1 May 2022, a Rose cutting and polishing machine was purchased from Stairway Manufacturing for R260 000, cash. The estimated scrap value of the Rose machine is R5 000. On 1 December 2022 the Lily machine was sold on credit for R65 500 to Heaven’s Door Restoration.

Depreciation on machinery is provided for at 20% per annum, calculated according to the fixed instalment method.

REQUIRED:

Prepare the following ledger accounts, properly balanced/closed off, in the general ledger of Eternity Tombstones for the financial year ended 31 January 2023:

3.1 Machinery at cost (5)
3.2 Accumulated depreciation: Machinery (9)
3.3 Depreciation (5)
3.4 Machinery realisation (4)

QUESTION 4 (70 marks)(84 minutes)

The following information pertains to Music @ Maestros for the financial year ended 30 April 2023: 1.

Music @ Maestros

Pre-adjustment trial balance as at 30 April 2023

2. Additional information:

Inventory on hand at 30 April 2023:

− Trading R40 500
− Packaging material R3 500

An amount of R30 000, pertaining to the account of an insolvent debtor, must be recorded as a credit loss and the balance of the allowance for credit losses account must be decreased by R10 000.

During the entire financial year, an amount of R5 500 was paid and recorded at each month- end towards the electricity account. The balance of the municipality electricity account for April 2023 showed a closing balance (payable) of R250.

Additional insurance at R5 400 per annum was paid and recorded on 1 February 2023 for the first annual insurance period (1 February 2023 to 31 January 2024).

Provide for
– depreciation on furniture and equipment at 25% per annum according to the straight line method, and for
– depreciation on the vehicle at 20% per annum according to the diminishing balance method.

The long-term loan was obtained from Purple Bank on 1 December 2021 at 11,4% interest per annum. The interest is payable annually on 30 November, commencing as from 30 November 2022 (for the period 1 December 2021 to 30 November 2022). The capital amount of the loan is repayable on 30 November 2026.

REQUIRED:

Prepare the following in the books of Music @ Maestros:

4.1 The adjustment journal entries on 30 April 2023, narratives included. (Adjust the balances of the inventory accounts by writing out the opening balances (if any) and recording the closing balances).
(27)
4.2 The post-adjustment trial balance as at 30 April 2023. (43)
[70]
Voluntary (do not submit for marking):
4.3 The post-closing trial balance as at 30 April 2023.

Assignment 2

QUESTION 1 (29 marks)(35 minutes)

The following information pertains to Ubuntu Limited:

1. Balances as at 31 March 2023:

R

2. Additional information:

Ubuntu Limited was incorporated on 1 April 2021 with an authorised share capital of 500 000 PV ordinary shares of R2 each.

The balance of the allowance for credit losses account must be increased by R615.
The company acquired additional insurance on 1 July 2020 at R600 per annum. This amount is included in the insurance expenses as reflected in the list of balances.

Audit fees to the amount of R3 000 were in arrears at 31 March 2023.
On 1 April 2022 a long-term loan was obtained from MNB Bank at 14,5% interest per annum on the loan amount. The interest is payable in equal monthly payments. The loan must be repaid in ten equal annual instalments with the first instalment due on 1 April 2023. The loan is secured by a bond over the land and buildings.

Provision must be made for the following:
– Depreciation on machinery and equipment at 16% per annum on cost/straight line. (New machinery to the amount of R100 000 was purchased on 2 January 2023; old machinery was traded in to aid the financing of the new machinery, and the outstanding balance was paid in cash. These transactions were correctly recorded.) The new machinery has an estimated scrap value of R10 000.
– Depreciation on vehicles at 20% per annum according to the diminishing balance method. The vehicles have an estimated scrap value of R6 000.
– The estimated SA normal company income tax for the year, R27 694.
– A final dividend of 10 cents per share, as determined by the above balance of the ordinary share capital account.

REQUIRED:

Prepare the following annual financial statements of Ubuntu Limited to comply with the requirements of the Companies Act, No 71 of 2008, as amended, the Companies Regulations of 2011, and the IFRSs (notes to the financial statements and comparative figures are not required):

The statement of profit or loss and other comprehensive income for the year ended 31 March 2023. (25)

The statement of changes in equity for the year ended 31 March 2023. (4) [29]
QUESTION 2 (35 marks)(42 minutes)
The following information pertains to Riksha Limited for the financial year ended 31 March 2022:
1. Balances as at 31 March 2022:

Ordinary share capital R 500000

6,5% Preference share capital 30000

Share premium 52800

Long-term loan 72000

Land and buildings at cost 500000

Vehicles at cost 108 000

Furniture and equipment at cost 60000

Accumulated depreciation: Vehicles (1 April 2021) 2400

Accumulated depreciation: Furniture and equipment (1 April 2021) 8700

Fixed deposit: DA Bank 36 000

Prepaid expenses 1441

Debtors control 64000

Creditors control 60880

Inventory 104600

Allowance for credit losses 4225

Bank (dr) 11 584

Retained earnings (1 April 2021) 5930

SARS: income tax (dr) 15000

Profit or loss account (profit before taking any applicable additional information into account)              133690

1. Additional information:

• Riksha Limited was incorporated on 1 April 2019 with an authorised share capital of 60 000 PV ordinary shares of R10 each and 5 000 6,5% PV preference shares of R10 each. The company issued 75% of the recorded ordinary share capital during its first financial year, and the other 25% on 1 August 2021. The preference share capital was issued during the previous financial
• The following must still be provided for:
• Depreciation on vehicles at 30% per annum on cost price
• Depreciation on furniture and equipment at 20% per annum according to the diminishing balance method
• A final dividend on the preference shares
• A final dividend of 25 cents per ordinary share
• The estimated SA normal company income tax for the year, R25 145
• Interest on the long-term loan for the last 2 months of the financial year
• Interest on the fixed deposit
  • The long-term loan was obtained from Sharp Bank on 1 April 2020 at 12% interest per annum. Fifty percent (50%) of the capital amount of the loan must be repaid on 1 April 2022, and the remaining balance on 1 April The loan is secured by a mortgage over the land and buildings.
  • The fixed deposit was made on 1 April 2021 at DA Bank at 8,5% interest per annum for a period of 3

REQUIRED:

• Calculate the retained earnings of Riksha Limited as at 31 March (7½)
• Prepare the statement of financial position of Riksha Limited as at 31 March 2022 to comply with the requirements of the Companies Act, No 71 of 2008, as amended, the Companies Regulations of 2011, and the IFRSs (comparative figures are not required). (21)
• Prepare the note on property, plant and equipment of Riksha Limited for the year ended 31 March 2022 to comply with the requirements of the Companies Act, No 71 of 2008, as amended, the Companies Regulations of 2011, and the IFRSs (comparative figures are not required). (6½)

QUESTION 3 (23 marks)(28 minutes)

The following actual and estimated figures for 2023 are provided by Credo Manufacturers:

Additional information:

1. 40% of the total sales are on credit.

2. The bank balance on 1 March 2023 is R18 850, favourable.

3. The expense items are normally being paid as follows:
– raw materials and manufacturing costs: two months after incurred
– labour costs: during the month incurred
– selling and administrative expenses: one month after incurred

4. An analysis of the receipts from the debtors revealed the following:
– 15% during the first month after the month of sale
– 50% during the second month after the month of sale
– 25% during the third month after the month of sale
– 10% is usually irrecoverable

5. Rent receivable amounts to R8 500 per month.

6. The purchase of a computer for R10 000, cash is planned for April 2023.

REQUIRED:

Prepare the cash budgets of Credo Manufacturers for March and April 2023.

QUESTION 4 (38 marks)(45 minutes)

The following information was obtained from the financial records of Trotmann Tennis Club:

1. List of balances as at 30 June 2022:

R

3. Additional information:

The entrance fees must be capitalised.

Inventory on hand at 30 June 2023:

− Tennis balls R800
− Refreshments R85

The club rented the tennis courts for R850 per month during the 2023-financial year.

The accrued membership fees of 2020/2021, not yet received, must be written off as irrecoverable.

The club had 100 members throughout the year and the membership fees amounted to R25 per month for the 2023 financial year.

Wages of R350 were in arrears on 30 June 2023.

Provision must be made for depreciation on equipment at 30% per annum according to the diminishing balance method.

Equipment with a cost price of R1 032 and accumulated depreciation of R816 on 1 July 2022 must be written off on 30 June 2023. (Round the depreciation off to the nearest Rand.)

REQUIRED:

Prepare the membership fees account in the general ledger of Trotmann Tennis Club for the 2023 financial year. (5)

Prepare the statement of income and expenditure of Trotmann Tennis Club for the year ended 30 June 2023 in compliance with the requirements of the International Financial Reporting Standards, appropriate to the business of the club. (16)

Prepare the statement of financial position of Trotmann Tennis Club as at 30 June 2023 in compliance with the requirements of the International Financial Reporting Standards, appropriate to the business of the club. (17)

Answers to Above Questions on Intermediate Bookkeeping 

Answer 1: The cash journals of Beau Ltd at 30 June 2023 is prepared as follows

Get completed answers on the above questions on accounting and bookkeeping as offered by the accounting assignment help experts of Student Life Saviour in South Africa.