The following adjusting transactions appeared in the accounting records of ROPS Properties (Pty) Ltd:

1. The interest on the bond of R900 000 at 12.5% has not yet been accounted for at year-end. The bond was originally obtained on 1 March 2023 through Bruma Bank.
2. Included in the rental income account was an amount of R90 000, which
related to income for November and December 2023.
3. Management decided to write off 25% of the debtors whose accounts were over 90 days. At year-end, the total debtors balance for accounts over 90 days is R175 000.
4. On 31 October, the company received R28 000 from a debtor whose account was written off in the previous year.
5. Depreciation on office equipment should be provided for. Equipment was bought at a cost price of R240 000. On 1 November 2022, the accumulated depreciation for office equipment was R15 800. The company uses the diminishing balance method to calculate the depreciation for office equipment at a rate of 25% per annum.

The company’s year-end is 31 October 2023:

Required:

Using the table below, indicate the effects of the above transactions on the accounting equation of ROPS Properties (Pty) Ltd for the year ended 31 October 2023.

Example: The business rented out property worth R25 000 on credit.

Question 2 (10 marks)

The following transactions took place in August 2023 but have not yet been recorded. You are required to record the entries in the Cash Payments Journal of the company for August 2023.

Please note:

• Amounts include VAT at 15%, where applicable.
• Round off amounts to the nearest rand.

Transactions during August 2023:

1. The owner contributed R125 500 as capital, consisting of cash of R50 000 and equipment worth R75 500 – receipt REC001 – on 1 August 2023.
2. Purchased a second-hand vehicle from a dealership for R30 000 cash –
cheque 001 was issued on 3 August 2023.
3. Purchased stationery from Lolos-Mart for R5 000 – paid by cheque 002
– on 5 August 2023.
4. Cashed cheque 003 to pay wages, with an amount of R45 000 on 8 August 2023.
5. Sold goods on credit to Mams Stores – invoice INV001 – on 15 August 2023.
6 Paid the telephone bill of R1 500 for their telephone account with cheque 004 on 12 August 2023.
7. Received R18 000 rent from the tenant – receipt REC002 – on 20 August 2023.

Use the following format:

Question 3 (13 marks)

The Cash Receipts Journal (CRJ), Debtors Journal (DJ) and Cash Payments Journal of Major Enterprise for July 2023 are presented below:

Cash Receipts Journal for July 2023 – CRJ1

Debtors Journal for July 2023 – DJ1

Cash Payments Journal for July 2023 – CPJ1

The trade debtors and bank account had opening balances of R10 000 (DR) and R10 700 (CR), respectively, on 1 July 2023.

Prepare the following General Ledger accounts, after considering the transactions above that have been recorded in the journals of Major Enterprise for July 2023:
3.1 Trade debtors (5)
3.2 Bank (5)
3.3 Sales (3)

SECTION B (32 MARKS) – PARAGRAPH QUESTIONS

Question 1 (24 marks)

Read the scenario below and answer the question that follows.

The following transactions and events were recorded in the books of a company for the year ended 31 December 2022, unless otherwise indicated:

On 31 December 2022, the company donated party decorations to the local old-age home. The donations cost the company R8 700.
On 1 October 2022, the company invested R250 000 in a 48-month fixed deposit, earning 5% interest per annum. The fixed deposit was already recorded on 1 October 2022. Interest is paid out three months in arrears on the first day of the fourth month. As the interest was not yet received, the accountant did not make an entry.
On 31 October 2022, the owner took goods for his son as a birthday gift. The cost price of the goods was R15 000.
Before year-end, a debtor notified the company that they could not pay their debt for financial reasons. The company, therefore, had no choice but to write the debt amounting to R3 500 off as irrecoverable.
Vehicles amounting to R500 000 were bought on credit on 1 December
2022. Depreciation is accounted for using the straight-line method, applying 15% as per the company policy.

Required:

Prepare the General Journal entries to account for the above transactions.

Question 2 (8 marks)

Read the scenario below and answer the question that follows.

The following financial information relating to fixed assets was presented to you by the accountant of a company that manufactures steel. The company’s financial year-end is 31 December.

Additional Information

1. A machine was bought on 1 March 2021 at a cost price of R276 000 (including VAT at 15%).
2. The useful life of the machine is eight years, with no residual value.
3. The company’s policy is to depreciate machinery on a straight-line basis.
4. The machine was sold on 1 August 2023 for R50 000.

Required:

Calculate the depreciation charge, accumulated depreciation and book value of the asset at the end of the 2021, 2022 and 2023 (until 1 August 2023) financial years, using the straight-line method of calculating depreciation.

Important: Present your answer as follows:

Answers to Above Questions on Principles of Accounting

Answer 1: The effect of the transactions on the accounting equation of ROPS Properties (Pty) Ltd for the year ended 31 October 2023 is indicated as follows:

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