This Question Paper Consists of 11 Pages

Accounting1WCED mid-year exemplar

MARKS:200

TIME: 2 hours

This question paper consists of 11 pages.

Accounting1WCED mid-year exemplar

INSTRUCTIONS AND INFORMATION

Read the following instructions carefully and follow them precisely.

1.
2.
3.
4.
5. / Answer ALL the questions.
A special ANSWER BOOK is provided in which to answer ALL the questions.
Workings must be shown in order to achieve part-marks.
Non-programmable calculators may be used.
You may use dark pencil or blue/black ink to answer the questions.
6. / Use the information in the table below as a guide when answering the question paper. Try NOT to deviate from it.
QUESTION 1: 30 marks; 20 minutes
Topic of the question: / Learning outcomes covered:
Concepts
Internal control and VAT / LO1 / Financial accounting
AS1 / Define and explain accounting concepts
AS7 / Apply VAT principles
LO3 / Managing resources
AS6 / Internal control processes
QUESTION 2: 55 marks; 30 minutes
Topic of the question: / Learning outcomes covered:
General and Debtors’ Ledgers / LO1 / Financial accounting
AS2 / Within context of accounting cycle post to ledgers
QUESTION 3: 25 marks; 15 minutes
Topic of the question: / Learning outcomes covered:
Salaries and wages
Internal control / LO3 / Managing resources
AS2 / Explain salary and wage scales and record in subsidiary journals
AS5 / Ethics
AS6 / Internal control processes
QUESTION 4: 41 marks; 25 minutes
Topic of the question: / Learning outcomes covered:
Analysis of transactions / LO1 / Financial accounting
AS3 / Accounting equation
QUESTION 5: 49 marks; 30 minutes
Topic of the question: / Learning outcomes covered:
Concepts and Final accounts / LO1 / Financial accounting
AS1 / Define and explain accounting concepts
AS5 / Final accounts, financial statements and analysis and interpretation of financial statements

QUESTION 1:

CONCEPTS, INTERNAL CONTROL, VAT(30 marks; 20minutes)

This question consists of THREE independent questions.

1.1 / VAT
Concepts relating to Value-Added-Tax are listed in COLUMN A and explanations are listed in COLUMN B. Choose an explanation from COLUMN B that matches a concept in COLUMN A. Write only the letter (A – F) next to the question number (1.1.1 – 1.1.5) in the ANSWER BOOK. / (10)
Concept / Explanation
1.1.1 / VAT exempt items / A / The VAT paid by a business when buying goods and services which will be sold.
1.1.2 / Vendor / B / The law states that no VAT should be charged on certain basic items including brown bread and fruit.
1.1.3 / Input VAT / C / Current VAT rate charged in South Africa.
1.1.4 / Zero rated items / D / A business with a turnover of more than R1 000 000 must register.
1.1.5 / 14% / E / Goods and services supplied by schools and other non-profit organisations.
F / The VAT charged to customers.
1.2 / CONCEPTS:
Below are a number of statements. State whether they are true or false. Only write true or false next to the question number. / (10)
1.2.1 / Liabilities = Owners Equity – Assets
1.2.2 / When a business receives money from a customer, a receipt is issued to the customer.
1.2.3 / When the owner deposits money into the bank account of the business he/she receives a deposit slip.
1.2.4 / When payments are made from petty cash, there is no need to complete any document.
1.2.5 / A credit note is used to record stock returned by a credit customer.
1.3 / INTERNAL CONTROL
Jen Kirsty owns a gift shop. She has the following two problems in her business:

Stock is going missing from the shop. She suspects that either the customers or her employees are stealing stock from her shop.

Although Cara puts a fixed amount of R500 in the petty cash every month as an imprest amount, there is never enough money available to make small payments. The petty cashier assured her that the petty cash box is physically safeguarded against theft. She could, however, not explain to Cara what happened to the money.

List the main internal control measures that Jen Kirsty should apply in her business to:
1.3.1 / Solve the stock problem (THREE points) / (6)
1.3.2 / Solve the petty cash problem (TWO points) / (4)
40

QUESTION 2GENERAL LEDGER(55 marks; 30minutes)

The following information was extracted from the accounting records of Excellent Stores.

REQUIRED:

2.1 / Post to the following General Ledger accounts:
2.1.1 / Debtors’ control / (18)
2.1.2 / Creditors’ control / (16)
2.1.3 / Sales / (7)
2.2 / Prepare J Jack’s account in the Debtors’ Ledger. / (14)
INFORMATION
1. / Opening balances/totals on 1 July 2010:
Debtors’ control / R2 000
Creditors’ control / R4 000
Sales / R500
2. / J Jack, a debtor, owes Excellent Stores R800 on 1 July 2010.
3. / Excellent Stores uses a 50% mark-up on both cash and credit sales.

Cash Receipts Journal – July 2010CRJ7

Doc / D / Details / Fol / Bank / Debtors’ control / Discount allowed / Sales / Cost of sales
R01 / 06 / P Peter / 300 / 330 / 30
B/S / 10 / J Jack / 550 / 550
R02 / 17 / Cash / 600 / 600 / 400
1 450 / 880 / 30 / 600 / 400

Cash Payments Journal – July 2010CPJ7

Doc / D / Name of payee / Fol / Bank / Creditors’ control / Discount received / Debtors’ control
B/S / 08 / RR Retailers / 3 000 / ? / 300
B/S / 23 / J Jack (R/D) / 550 / 550
3 550 / ? / 300 / 550

Debtors’ Journal – July 2010DJ7

Debtors control / Sales / Cost of sales
101 / 02 / P Peter / 300 / 300 / 200
102 / 03 / J Jack / 450 / 450 / 300
103 / 15 / C Colin / 375 / 375 / 200
1 125 / 1 125 / 700

Debtors’ Allowances Journal – July 2010

Debtors control / Sales / Cost of sales
C01 / 04 / J Jack / ? / ? / 50
C02 / 07 / C Colin / 200 / 200 / -
? / ? / 50

Creditors Journal – July 2010 CJ 7

Doc / Date / Details / fol / CreditorsControl / Stationery / ConsumableStores
V06 / 17 / ST Stores / 1150 / 950 / 200

Creditors Allowances Journal – July 2010CAJ 7

D/N / Date / Details / fol / CreditorsControl / Stationery / ConsumableStores
003 / 19 / ST Stores / 200 / 200

General Journal – July 2010 GJ 7

Debtors’ Control / Creditors’ Control
D / Details / Debit / Credit / Debit / Credit / Debit / Credit
15 / J. Jack / 20 / 20
Interest Income / 20
Interest charged on overdue account.
17 / Bad Debts / ?
J. Jack / ? / ?
Write off J Jack’s account in full as irrecoverable
25 / Sock Shop / 2000 / 2000
Sock Stores / 2000 / 2000
Correction of error
20 / ? / 2000 / 2000
55

QUESTION 3SALARIES AND WAGES (25 marks; 15 minutes)

Below are the totals that appeared in the Wages Journal of Pelican Pool Shop for the week ending 18 February 2011. All employees are paid at the same rate of R40 an hour for normal time and R60 per hour for overtime.

Total hours (normal time) / 1 800 hours
Total hours (overtime)
Gross wages / 97 320
Total deductions / R?
PAYE deductions / R14 598
Medical aid deductions / R9 800
Medical aid contributions / R4 900

REQUIRED:

Answer the following questions:

3.1 / Briefly explain the main difference between wages and salaries. / (4)
3.2 / With the exception of Medial aid and PAYE mention two other possible deductions an employee could have on their wage advice. / (2)
3.3 / How much will be paid to the employees as net wages? / (4)
3.4 / Calculate the number of overtime hours worked during the week. / (5)
3.5 / The Medical Aid has remained constant for the four weeks in February. How much must be paid to the Medical Aid Fund at the end of February? / (4)
3.6 / The owner, Mr Pelican, is unhappy with the number of overtime hours worked. Provide two possible reasons why working overtime is necessary. / (4)
3.7 / What measure could Mr Pelican introduce to control the number of overtime hours worked? Mention one point. / (2)
25

QUESTION 4ACCOUNTING EQUATION (41 marks; 25 minutes)

J. Jackson, the owner of TT Stores, sells stationery.

REQUIRED

Using the transactions, listed below, complete the table provided in the answer booklet.

ASSUME THAT BANK HAS A FAVOURABLE BALANCE AT ALL TIMES.

EXAMPLE:

J. Jackson opened a current bank account and deposited R30 000 as a capital contribution.

No. / Account Debit / Account Credit / Journal / Source Document / A / O / L
Eg. / Bank / Capital / CRJ / Duplicate receipt / + 30000 / +30000 / 0

Transactions for May 2010:

The bookkeeper that J. Jackson hired was not too experienced; as a result she incorrectly posted the salaries in the CPJ to the wages account. This error needs to be corrected. Salaries for the month amounted to R5 000.

J. Jackson decided to donate stock, to the value of R300 (cost price) to a needy school.

TT Stores paid one of their creditors, BB Books, R1 300 in full settlement of their account of R1 500.

TT Stores bought stock on credit from KZN Traders, R12 800. They also charged a deliveryfee of R350 to the business.

A Fixed deposit of R50 000 matured. Received a cheque from Excel Bank for R60000 including interest.

QUESTION 5FINAL ACCOUNTS(49 marks; 30 minutes)

The following information was taken from the financial records of Chetty Traders on 28 February 2011, the end of the financial year.

REQUIRED

5.1 / Briefly describe the following concepts:

Gross profit
Net profit
Owners’ equity

/ (6)
5.2 / Prepare the Trading account / (8)
5.3 / Prepare the Profit and Loss account / (29)
5.4 / Answer the following questions
5.4.1 / Which GAAP principle is applied when the insurance adjustment is taken into account? Explain briefly. / (3)
5.4.2 / Calculate the mark up percentage that Chetty Traders uses? / (3)

INFORMATION

1.CHETTY TRADERS

PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2011

BALANCE SHEET SECTION / DEBIT / CREDIT
Capital / 840 000
Drawings / 120 000
Vehicles / 450 000
Equipment / 125 000
Fixed deposit: Zozo Bank (6% p.a.) / 100 000
Loan: Wise Bank (12 %p.a.) / 35 000
Trading stock / 92 000
Debtors’ Control / 46 000
Creditors’ Control / 52 061
Bank / 5 176
Petty cash / 1 200
NOMINAL ACCOUNTS SECTION
Sales / 889 345
Cost of sales / 620 000
Debtors allowances / 21 345
Bad debts / 2 500
Discount received / 1 650
Insurance / 11 200
Interest on fixed deposit / 4 500
Consumable stores / 22 000
Rent expense / 48 000
Stationery / 7 354
Telephone / 6 853
Wages / 154 280
1 827 732 / 1 827 732

Accounting1WCED mid-year exemplar

2.ADJUSTMENTS

A. / A physical stocktaking on 28 February 2011 revealed the following stock on hand:
Trading StockR88 350
Consumable stores 1 400
B. / A cheque for R5 000 was received from a debtor, B. Bad, whose account was previously written off as irrecoverable.
C. / Insurance includes a premium of R7 200 which is paid annually on 30June.
D. / The loan was received on 1 September 2010. Provide for the outstanding interest.
E / The fixed deposit was invested on 1 May 2008.
F / Write an additional amount of R1 600 off as irrecoverable.
G / The telephone account for February 2011 of R785 has not yet been paid.
49

TOTAL: 200