QUESTION 1 [32 Marks]
The following list of accounts was extracted from the general ledger of Alpha Traders on 29 February 2024, the latest financial year of the business.
| Accounts in the general ledger | Balance(R) |
| Capital | 655500 |
| Drawings | 187618 |
| Landandbuildings | 526000 |
| Machinery | 106950 |
| Vehicles | 255600 |
| Furniture | 68170 |
| Bankoverdraft | 34080 |
| Inventory | 43800 |
| Long-termloan | 184040 |
| Tradereceivables | 85200 |
| Tradepayables | 42600 |
| Incomereceivedinadvance | 75000 |
| Sales | 639000 |
| Costofsales | 298200 |
| Rentincome | 32650 |
| Interestonloan | 19200 |
| Commissionreceived | 18910 |
| Rentexpense | 12650 |
| Waterandelectricity | 9500 |
| Wages | 7562 |
| General expenses | 58340 |
| Interest on overdraft | 2990 |
Required:
1.1Calculate the total of current assets and non-current assets as at 29 February 2024. 7 marks
1.2Calculate the net profit or loss for the year ended 29 February 2024.
Note: Ignore taxation in your calculation. 14 marks
1.3 There are two methods by which owners’ equity can be calculated.
Use these two methods to calculate the owner’s equity. 11 marks
Read the below statement and answer the following questions.
A legal, binding agreement is an agreement in which assets are transferred into the custody of a named individual i.e., those who then act as instructed, usually for the benefit of another individual, business, or group.
Required:
2.1
Identify the kind of legal entity that the scenario is describing. 2 marks
2.2
Correctly identify any FIVE groups of people that this kind of legal entity in 2.1, is typically established for and on behalf of. 5 marks
Read the below statement and answer the following question.
A franchise agreement is a legal document covering the relationship between the two parties, that is, the franchisor, who is expanding his or her original business, and the franchisee, who is looking to follow the success of a tried and tested business model.
Required:
2.3.
Properly outline any three duties of each of the various parties to a franchise agreement.8 marks
2.4
Correctly identify any FOUR steps that public companies should follow to register manually. 4 marks
Read the scenario below and answer the following question.
Joan Porter started her retail business in 2020 with R1 million in cash, which she inherited from her deceased Uncle’s estate. The total operating income from the business exceeded the total operating expenses by R500 000 in the first year. Against all expectations, Joan found herself with a major cash flow dilemma at the start of the second financial year. Her bank account was in overdraft, and within six months, her business was sequestrated.
Required:
3.1
Explain how possible it is for Joan’s business to go bankrupt, given the large profit she made in the first year. 3 marks
3.2
Literature is a bookstore which buys and sells a variety of books and magazines. The business is a registered VAT vendor, and it is the policy of the business to buy only from other vendors who can provide tax invoices. September 2023 is the business’s first month of trading.
The bookkeeper has the following petty cash vouchers on file for the month. September 2023: list of petty cash vouchers
| Day | Details | Doc.no. | Reason | Amountpaid(R) |
| 3 | Chemren Stationery | PC1 | Businessstationery | 400 |
| 5 | Forsman’s Garage | PC2 | Petrolforthedeliveryvan | 280 |
| 6 | Grocery Mall | PC3 | Tea,coffeeandsugarforstaff | 806 |
| 24 | Chemren Stationery | PC4 | Businessstationery | 334 |
| 25 | Forsman’s Garage | PC5 | R185.00ofthisamountwasfor
petrol,andtheremainderwasfor repairstothebusinessvehicle |
1480 |
| 30 | JohnPenn | PC6 | Part-timewages | 1500 |
Required:
Draw up the petty cash journal for the month with analysis columns for petty cash, input VAT, stationery, petrol and sundries. 22 marks Use the below table format and round off answers to the nearest rand.
Show all calculations.
| Doc.no. |
Day |
Details |
Pettycash(R) |
InputVAT (R) |
Stationery (R) |
Petrol (R) |
Sundryaccounts | |
| Amount (R) | Details | |||||||
QUESTION 4 [24 Marks]
4.1
Analyse the effect of the following transactions that took place in the books of Johnson’s
Ltd in June 2023 on the accounting equation using the format below:
Example:
The owner withdrew R1000 from the business bank account to buy a necklace for his son on his birthday.
| Transaction day | Account
debited |
Account
credited |
Assets | = | Owner’sequity | + | Liabilities |
| Example | Drawings | Bank | -R1000 | -R1000 | 0 |
| Day | Transactiondetails |
| 1 | Purchased R62000 worth of trading inventory on credit. |
| 3 | Paid for maintenance and repairs, R23000 cash. |
| 5 | Paid R3500 to transport inventory from the supplier.Paid with cash. |
| 8 | Sold goods with a selling price of R48000 for cash. The trading stock
originally cost R26500. |
| 10 | Purchased a new printer for the office, the R3200 owing was put on the
company’s account. |
| 12 | Purchased softdrinks for refreshment after a staff meeting. Paid R320 from
the petty cashbox. |
| 15 | Received R11600 from Daniel,a debtor. |
| 18 | Paid Komson suppliers,a creditor R55000 of the balance owing. |
| 19 | The owner withdrew R2500 cash from the business for personal use. |
Answers to Above Questions on Financial Accounting
Answer 1: The total of current assets and non-current assets as at 29 February 2024 is calculated as follows:
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