QUESTION 1 (20 Marks)
1.1
REQUIRED
Answer the following questions based on the transaction provided below:
1.1.1 What type of business entity (form of ownership) is Puma Pty (Ltd)?
1.1.2 In which journal will this transaction be recorded?
1.1.3 Which account will be debited in the general ledger?
1.1.4 What effect will the transaction have on the equity of Puma Pty (Ltd)?
1.1.5 Which resource utilisation ratio will be affected by this transaction? (5 marks)
TRANSACTION
Puma Pty (Ltd) paid the amount owed to a creditor by means of an electronic funds transfer (EFT), R3 000.
1.2
REQUIRED
Show the effect of the following transactions on the accounting equation of Ami Traders. Follow the example provided. Assume that the bank balance is always favourable.
(5 marks)
INFORMATION
Example
An amount of R500 was received from the bank for interest on fixed deposit.
Assets Equity Liabilities
Increase by R500 Increase by R500 No change
TRANSACTIONS OF AMI TRADERS
a) Consumables were purchased on credit for R600.
b) Purchased a computer for office use by means of an EFT, R15 000.
c) Received R900 cash from a debtor who settled her account.
d) The tenant paid the monthly rental of R3 000 to Ami Traders.
e) The depreciation on vehicles amounted to R40 000.
1.3
REQUIRED
Study the information provided below and answer the following questions:
1.3.1 Prepare the Asset Disposal account in the general ledger. Close off the account. (4 marks)
1.3.2 Calculate the balance in the Accumulated depreciation for vehicles account as at 29 February 2024.
(3 marks)
1.3.3 Calculate the profit or loss on the disposal, if the vehicle was sold on 31 August 2023 (instead of 01 March 2023).
(3 marks)
INFORMATION
1. On 01 March 2023 (the beginning of the financial year) the following balances, amongst others, appeared in the ledger of Munster Stores:
Vehicles (at cost) R700 000
Accumulated depreciation for vehicles R560 000
2.
On 01 March 2023 a vehicle was sold for R70 000 cash. The vehicle was purchased on 01 March 2020 for R200 000 and the accumulated depreciation on it amounted to R120 000 on 01 March 2023. The vehicle was expected to have a useful life of five years. Depreciation is calculated using the straight-line method.
3. Depreciation on the remaining (unsold) vehicles amounted to R100 000 for the year ended 29 February 2024.
QUESTION 2 (20 Marks)
REQUIRED
Use the relevant information from the transactions of Irene Traders provided below and post to the following accounts in the general ledger. Do not balance or close off the accounts.
Capital (1 mark)
Inventory (6 marks)
Debtors control (4 marks)
Creditors control (2 marks)
Sales (4 marks)
Cost of sales (3 marks)
INFORMATION
The following are the transactions of Irene Traders for August 2024:
Date Transactions
01 The proprietor, K. Hamilton, commenced business by depositing R360 000 into the bank account of the business.
03 An electronic funds transfer was made to RT Suppliers for the purchase of equipment, R30 000, and inventory for resale, R80 000.
14 Cash sales to date amounted to R36 000 (Cost of sales R24 000).
15 Inventory purchased on credit from Capsicum Wholesalers amounted to R48 000.
18 Sold goods on account to K. Peters for R12 000. The goods were sold at cost plus 50%.
26 Sold goods on credit to M. Stein at a mark-up of 50% on cost. The cost price of the goods was R6 000.
28 K. Peters settled her account (see 18th) subject to a 5% early settlement discount.
31 Paid Capsicum Wholesalers R10 000 in part-settlement of account.
Cash sales to date, R45 000 (Cost of sales R30 000).
QUESTION 3 (20 Marks)
REQUIRED
Prepare the following accounts in the general ledger of Petrus Traders as at 29 February 2024. Balance or close off the accounts.
3.1 Appropriation a/c (12 marks)
3.2 Current a/c: Peter. Note: The partner’s drawings must be transferred to his
current account. (8 marks)
INFORMATION
The information given below was extracted from the accounting records of Petrus Traders, a partnership business with Peter and Russel as partners.
| Extract from the ledger of Petrus Traders as at 29 February 2024 (end of the financial year) | ||
| Debit (R) | Credit (R) | |
| Capital: Peter | 600 000 | |
| Capital: Russel | 400 000 | |
| Current a/c: Peter (01 March 2023) | 40 000 | |
| Current a/c: Russel (01 March 2023) | 30 000 | |
| Drawings: Peter | 90 000 | |
| Drawings: Russel | 130 000 | |
The following must be considered:
(a) The net profit for the year ended 29 February 2024 amounted to R600 000.
(b) The partners are entitled to interest at 12% per annum on their capital balances. On 01
September 2023 Peter increased his capital by R100 000. Russel decreased his capital by R100 000 on the same date. The capital changes have been recorded.
(c) The partners are entitled to the following monthly salaries:
Peter R9 000
Russel R10 000
(d) Peter is entitled to a bonus equal to 10% of the net profit before taking any of the above
appropriations into account.
(e) The balance of the profit or shortfall must be shared in the ratio of the capital balances as at the
end of the financial year.
QUESTION 4 (20 Marks)
REQUIRED
Use the relevant information provided below to prepare the following:
Journal entries to record the payment of the first provisional tax and to record the
total company tax for the financial year. (4 marks)
Statement of Financial Position as at 31 October 2024 (16 marks)
INFORMATION
The following balances were obtained from the accounting records of Tango Limited on 31 October 2024, the end of the financial year:
| R | |
| Creditors control | 1 260 000 |
| Debtors control | 1 200 000 |
| Bank (Dr balance) | 1 675 500 |
| Ordinary share capital | 1 537 500 |
| Long-term loan | 900 000 |
| 12% Preference shares | 660 000 |
| Retained profit | 345 000 |
| Equipment (cost) | 90 000 |
| Accumulated depreciation on equipment (01 November 2023) | 18 000 |
| Vehicles (cost) | 600 000 |
| Accumulated depreciation on vehicles (01 November 2023) | 120 000 |
| Inventory | 441 000 |
| Petty cash | 3 000 |
| Shares invested in Amcor Limited | 1 005 000 |
Additional information
a) Depreciation on equipment and vehicles for the year ended 31 October 2024 amounted to R9 000
and R60 000 respectively.
b) A final dividend of 30 cents per ordinary share was declared but not paid. There were 200 000
ordinary shares in issue. (This dividend was included in the calculation of the retained profit.)
c) The total company tax for the financial year amounted to R600 000. The first and second
provisional payments made to the tax authority were R300 000 (30 April 2024) and R255 000 (31 October 2024) respectively.
QUESTION 5 (20 Marks)
REQUIRED
Calculate the following ratios for 2023 and in each case state whether there has been an improvement or deterioration in the ratio. The answers to the ratios must be expressed to two decimal places and be fully stated e.g. 23.56%; 2.34:1 etc. The ratios for 2022 are provided in brackets. Note: Use formulas provided
in the formula sheet only (that appear after QUESTION 5).
5.1 Gross profit margin (2022: 30.42%) (3 marks)
5.2 Return on capital employed (2022: 16.31%) (3 marks)
5.3 Acid test ratio (2022: 1.02:1) (3 marks)
5.4 Debt to equity (2022: 59.56%) (3 marks)
5.5 Inventory average number of days (2022: 60 days) (3 marks)
5.6 Trade receivables average number of days (2022: 46 days) (3 marks)
5.7 Interest cover ratio (2022: 4.78 times) (2 marks)
INFORMATION
The extracts of the financial statements of Volex Limited for 2022 and 2023 are provided below.
| VOLEX LIMITED | |
| STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 | |
| R | |
| Sales | 3 920 000 |
| Cost of sales | 2 480 000 |
| Operating profit/Profit before interest and tax | 944 000 |
| Interest expense | 96 000 |
| Profit before tax | 848 000 |
| Profit after tax | 619 040 |
| STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: | |||
| 2023 (R) | 2022 (R) | ||
| Assets | |||
| Non-current assets | 4 640 000 | 3 920 000 | |
| Inventories | 1 440 000 | 880 000 | |
| Trade and other receivables (Accounts receivable/Debtors only) | 720 000 | 1 000 000 | |
| Cash and cash equivalents | 880 000 | 680 000 | |
| 7 680 000 | 6 480 000 | ||
| Equity and liabilities | |||
| Ordinary share capital | 4 000 000 | 2 600 000 | |
| Accumulated profit | 1 920 000 | 1 480 000 | |
| Non-current liabilities | 960 000 | 1 640 000 | |
| Trade and other payables (Accounts payable/Creditors only) | 800 000 | 760 000 | |
| 7 680 000 | 6 480 000 | ||
Additional information
The profit after tax for the year ended 31 December 2022 was R480 000.
All purchases and sales of inventories are on credit.
Answers to Above Questions on Financial Accounting
Answer 1: The type of entity that Puma Pty Ltd is Proprietary Limited which suggest that it is a kind of private limited company.
Hire the best financial accounting experts from the team of writers of Student Life Saviour in South Africa to get answers to above questions.
Content Removal Request
If you believe that the content above belongs to you, and you don’t want it to be published anymore, then request for its removal by filling the details below. It will only be removed if you can provide sufficient evidence of its ownership.
