Accounting Grade 11 NW/June 2018

PROVINCIAL ASSESSMENT

GRADE 11

ACCOUNTING

JUNE 2018

MARKS: 300

TIME: 3 Hours

This question paper consists of 15pages

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 Accounting Grade 11 NW/June 2018

INSTRUCTIONS AND INFORMATION

Read the following instructions carefully and follow them precisely.

1. Answer all questions.

2. A special ANSWER BOOK is provided in which to answer ALL questions.
3. Workings must be shown in order to earn part-marks.
4. Non-programmable calculator may be used.
5. You may use a dark pencil or blue / black ink to answer the questions.
6. Use the information given in the table as a guide when answering the question
paper. Try NOT to deviate from it.

QUESTION 1 :30marks ;15minutes

The main topic of the question is: This question integrates :
Bank Reconciliations Internal control Financial Accounting
and ethics Bank Reconciliation
Managing Resources
Internal control and Ethics
QUESTION 2 : 35 marks ; 20 minutes
The main topic of the questions are : The question integrates:
Creditors Reconciliations Internal Financial Accounting:
control and ethics GAAP
Creditors Reconciliation
Managing Resources
Internal control and Ethics
QUESTION 3 : 35 marks ; 20 minutes
The main topic of the questions is : This question integrates :
Fixed Assets Managing Resources
Ledger Accounts
Tangible Asset Notes
QUESTION 4 : 70 marks ; 45 minutes
The main topic of the question is : This question integrates :
Partnership Financial Accounting
Ledger accounts
Analysis and interpretation
QUESTION 5 : 70 marks ; 45 minutes
The main topic of the question: This question integrates :
Non-profit organisation Financial accounting
Clubs – ledger accounts
QUESTION 6 : 60 marks ; 35 minutes

The main topic of the question: This question integrates :

Transaction analysis Financial accounting

Accounting Equation
Problem solving

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Accounting Grade 11 NW/June 2018

QUESTION 1:

Bank Reconciliation and Internal control (30 marks;15 minutes)

1.1 What is the purpose of bank reconciliation? (2)

1.2 Indicate whether the following statements are TRUE or FALSE

1.2.1 Service fees and interest on overdraft will be debited to bank

charges (1)

1.2.2 If the bank balance is classified as a Current Liability in the Balance

Sheet, it has a favourable balance. (1)

1.2.3 To cancel a cheque entered in this month’s CPJ, you enter it in

CRJ. (1)

1.2.4 If the business has online banking facility it can transfer money to
creditors and employees without using cheque vouchers. (1)

1.3 The following information relates to Galo Traders.

Required:

1.3.1 Calculate the correct totals in the Cash Receipts Journal (CRJ)
and the Cash Payment Journal (CPJ) for March 2018. (14)

1.3.2 Prepare the Bank Reconciliation Statement on the 31 March 2019 (10)

Information:

1. Extract of the Bank Reconciliation Statement on the 29February 2018.

Debit balance according to bank statement 44 800
Credit outstanding deposit 20 400
Debit outstanding cheques
 No. 44 6 800
 No. 80 2 840
 No. 81 12 800
 No. 83 (dated April 2018) 7 420
Balance according to bank account ?

Galo traders has a current bank account with Ned Bank.

Provisional totals of the bank columns in the Cash Journals on 31 March

2018
Cash Receipts Journal 62 800
Cash Payments journal 109 600

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Accounting Grade 11 NW/June 2018

A comparison of the bank statement with the Bank Reconciliation Statement

on 29 February 2018 shows the following:
The deposit of R20 400 appears on the bank statement
Cheque no. 81 for R12 800 was presented for payment
Cheque no 44 was issued on 15 September 2018 to the Health
Organisation as a donation. The organisation has been disbanded and the
cheque must be cancelled.
Cheque no. 80 issued to Romba Distributors for packing materials appears
on the bank statement as R 8 240. The amount in the bank statement is
correct.

A comparison of the Salary Journal with the bank statement shows the
following as outstanding:

Employees Gross salary Net salary Cheques issued

T Tobias 28 200 19 600 94
D Dalom 32 400 20 200 95

A comparison of the Cash Journals with the bank statement shows the following differences.
 The following appears in the cash journals but not on the bank statement
 Deposit R16 200
 Cheque no. 88, R17 800 (dated 15 April2018)
 The Cash Payment Journal reflects a total of R61 400 for cheques issued in
respect of salaries.
 Cheque no. 87 issued to Doty for the monthly telephone account appears in the
Cash Payment Journal as R6 560. The amount on the bank statement is R6
480. The amount on the bank statement is correct.
 Cheque 85 for R1 680 issued to Crail Service Centre for fuel was lost in the
mail. The cheque must be replaced with cheque no 90. This cheque is still
outstanding.
 An EFT deposit of R70 000 was made directly into the current account of the
business by the owner on 15 March 2018.
 A stop order for the monthly repayment of a loan with Ned bank for R4 000
appears on the bank statement but not in the journal.
 An unpaid cheque for R840 received in settlement of an account of R900;
appears on the bank statement. The cheque was received from a debtor, B
Lesola
 A deposit of R16 600 for rent was made directly into the current account of the
business by the tenant, L Lucky.
 Ned bank debited the bank account of Galo Traders with the following amount:
o Interest on debit balance, R186
o Bank charges, R760

The bank statement shows a favourable balance of R34 734 on 31 March 2018.
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Accounting Grade 11 NW/June 2018

QUESTION 2 CREDITORS RECONCILIATION AND INTERNAL CONTROL

(35 marks; 20 minutes)

2.1 Why must the balance of the Creditors’ Control Account in the General
Ledger be the same as the total of the Creditors List in the Creditors
Ledger? (2)

THE CREDITORS’ CONTROL ACCOUNT AND THE CREDITORS LIST

The bookkeeper of Amie’s Stores made some mistakes and omitted certain transactions in
preparing the Creditors’ Control and the Creditors List on 30 June 2017. You are the internal
auditor of the store.

Required:

2.2 Calculate the correct balance of the Creditors’ Control Account in the
General Ledger. If no entry is applicable, write ‘NO ENTRY’ (12)

2.3 Prepare the correct Creditors’ List of balance on 30 June 2017. (11)

INFORMATION:

Pre-adjustment figures on 30 June 2016

Creditors Control Account balance 307 600

Creditors’ List total from the Credtors’ Ledger 337 800
 Flora Traders 58 400
 Tag Wholesalers 191 200
 Rush Stores 88 200
ERRORS AND OMISSIONS

A. A payment of R84 000 to Rush Stores was correctly recorded in the Cash
Payments Journal but bookkeeper neglected to post this payment to the
creditor’s account.
B. The total of the Creditors’ Journal was inaccurately added as R102 300 instead
of R122 500
C. Credit purchases of merchandise to the value of R46 600 from Tag
Wholesalers were wrongly entered as R64 600
D. A cheque for R4 000 issued to Flora Traders in settlement of their debt of
R4 400
E. The total of the Creditors Allowance Journal was under cast by R22 000
F. A credit balance of R880 from Rush Stores’ account tin the Debtors’ Ledger
must be transferred to their account in the Creditors’ Ledger.
G. Credit purchases of merchandise to the value of R26 000, from Flora Traders
was incorrectly debited in the Creditors’ Ledger.

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Accounting Grade 11 NW/June 2018

2.4 Problem solving and internal control:

You are the manager of Quick Fix Bicycles; you have just received a statement from
Bonds Traders, a creditor. After carefully going through the statement, two
transactions were fishy. The salesman bought goods on credit from Bonds Traders
for his personal. Secondly when he made payment for merchandise bought for cash
he deliberately overstated the cheque amount so that a refund can be paid to him
personally. He thought the manager will never detect the transactions.

2.4.1 Quick has asked you to comment on the internal control system he has in
place. Are they adequate? Give Two points. (5)

2.4.2 Is the salesman incompetent or guilty of fraud? What action could be

taken against him in either case? Name two. (5)

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Accounting Grade 11 NW/June 2018

QUESTION 3: FIXED ASSETS (35 marks; 20 minutes)

3.1 GAAP (5)

Match the following GAAP concepts in Column A with the correct explanations given
in Column B. Write down only the letter corresponding to your choice next to the
question number (3.1.1-3.1.5) in your answer book, e.g. 3.1.1 B.

Column A Column B
3.1.1. Prudence A The financial affairs of a business must be kept
separate from the personal financial affairs of
the owner.
3.1.2. Historical cost B This concept is based on the brief that the
business will continue to operate in the future.
3.1.3. Business entity C Income earned and expenses incurred must be
reported in the same financial period so that the
correct net profit is calculated.
3.1.4. Matching D Financial statements must disclose items that
are important to the users / readers so that
correct evaluations and decisions can be made
from the information provided.
2.1.5. Going concern E Land and building are reflected at a cost price of
R900 000 in the financial statement although the
market price of is R2 000 000
F All possible losses are recorded in the Income
Statement, but anticipated profits are not
reported until they are realised.

3.2 FIXED ASSET

The following incomplete Fixed Asset Note appears in the financial statement of Hifi-
Co-operation as at 28 February 2018.

REQUIRED:
3.2.1 Draw up the Asset Disposal account to record the sale of equipment. (8)

3.2.2 Complete the Fixed Asset note to the financial statement, as it appears in
your answer book. (22)

List of balances from the Pre adjustment trial balance

Equipment (1 March 2017) 280 000
Accumulated depreciation(1 March 2017) 70 000
Vehicle ( 1 March 2017) 450 000
Accumulated Depreciation ( 1 March 2017) ?

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Accounting Grade 11 NW/June 2018

Additional Information:
During the year an invoice was received from Mias Warehouse for the following:
 A new store room built R120 000
 Repairs 12 000
The full amount has been debited to repairs.
 Vehicle are depreciated by 15% p.a. on cost
 A new vehicle was bought on credit for R300 000 on 1 November 2017. The
owner also paid to have a sound system installed costing R20 000 and paid for
the licence of R480.
 Equipment is depreciated by 20% p.a. on the diminishing balance method.
 On 31 August 2017 equipment that was bought on the 1 March 2015 for
R160 000and accumulated depreciation on 1 March 2016 R57 600 was traded
in against new equipment which cost R240 000 at a loss of R12 160.

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Accounting Grade 11 NW/June 2018

QUESTION 4: PARTNERSHIPS (70 marks; 45 minutes)

4.1. Financial Statements

You are provided with information relating to Golden Poppy Traders, a

Partnership business.

Required:

4.1.1. Prepare the Income statement for the year ended 30 June 2017. (53)

4.1.2. Compile the note to Trade and other payables. (17)

Information:

1. Extract of the Pre-adjustment Trail Balance on 30 June 2017

Balance sheet section accounts Debit Credit
Land and building 450 000
Equipment 115 000
Vehicles 250 000
Accumulated depreciation on Equipment 75 000
Accumulated depreciation on Vehicles 90 000
Fixed deposit at 6% p.a. 50 000
Mortgage loan at 12% p.a. 250 000
Debtors control 80 200
Provision for bad debts 4 450
Trading stock 123 300
Creditors control 145 400
SARS : PAYE 7 450
Pension fund 4 100
Nominal section accounts
Sales 1 193 000
Cost of sales 668 000
Debtors allowance 24 000
Rent income 40 800
Discount received 4 660
Salaries and wages ( including contributions) 152 300
Insurance 23 370
Packing materials 12 990
Repairs and maintenance 10 320
Water and electricity 18 240
Interest on fixed deposit 3 000
Interest on loan 27 000
Bad debts 3 570
Sundry expenses 16 200

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Accounting Grade 11 NW/June 2018

Information and Adjustments

1. A credit notewas left out of the relevant journals on 29 June 2017 . The
original selling price of the goods was R4 000 subjected to a 10% trade
discount. The cost price of the goods amounted to R2 055

2. According to stocktaking on 30 June 2017, the following are on hand :

 Trading stock R119 600
 Packing materials R1 915

3. Write off a further R1 200 as bad debts and adjust the provision for bad debts
to R4 380.

4. Included in insurance is an amount of R1 300 paid for July 2017.

5. The water and electricity account for June 2017 has not been paid, R1 490.

6. The rent was received up to 31 July 2017. The rent was increased by R360 on
1 March 2017.

7. The bookkeeper forgot to process the June salary of a new employee. The
details are as follows :
 Gross salary R2 700
 PAYE 20% of the Gross salary
 Pension fund R215
The business contributes R1.50 for every R1 contributed by the employees to
the Pension fund. The net salary will be paid to the employee on 1 July 2017.

8. Provide for the outstanding interest on loan

Note: A repayment of R50 000 was made and recorded on 31 March 2017. A
repayment of R45 000 is scheduled for 31 March 2018

9. Make provision for depreciation as follows :

Equipment R 11 500
Vehicles R 22 500

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Accounting Grade 11 NW/June 2018

QUESTION 5: PARTNERSHIPS

Leger Accounts and Analysis and interpretation of Financial Statement

(70 marks; 45minutes)

Ledger accounts

The following information appeared in the books of Big Brothers Trading, a

partnership with partners: G Big and R Brother, on 28 February 2018

Required:

5.1 Prepare the Appropriation account on 28 February 2018. (17)

Information:

Capital : G Big R900 000

Capital : R Brother R600 000
Current account : G Big (1 March 2017) R19 230 DR
Current account : R Brother (1 March 2017) R8 720 CR
Drawings : G Big R300 000
Drawings R Brother R310 000

1. The net profit for the year amounted to R540 000.

2. The following changes to the partners’ capitals took place during the year.
These changes were properly recorded.

 G Big transferred his new personal motor vehicle, valued at R350 000
to the business on 30 November 2017 as his additional capital
contribution.

 R Brother decreased his capital by R100 000 on 28 February 2018.

According to the partnership agreement the net profit (see no 2) should be divided as
follows:

 Partners salaries: G Big earns R10 000 per month. R Brother earns 15%
more than G Big. The salaries are paid monthly and are debited to their
respective Drawings accounts.

 Interest on capital must be provided at 12% p.a.

 Remaining profits and losses must be shared in proportion to their

capital account balances at the end ofthe financial year.

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Accounting Grade 11 NW/June 2018

5.2 Analysis and interpretation of financial information

You are provided with the information extracted from the accounting records of Pattel

Pea Stores for the year ended 31 August 2018. The business is owned by two partners

Aaron and Razak. All goods are marked at cost plus 75%.

5.2.1 Calculate the following for 2018.

5.2.1.1. Acid test ratio (4)

5.2.1.2. Stock turnover rate (5)

5.2.1.3. Debt/equity ratio (4)

5.2.1.4. Percentage return earned by Aaron (6)

5.2.2 Should the partners be satisfied with the profitability of the business?
Briefly explain, quoting three relevant financial indicators, trend and the
figures to support your answer. (9)

5.2.3 Aaron and Razak are uncertain about the liquidity position of the
business. They ask you for your opinion. Comment on the Liquidity
position of the business by quoting three relevant financial indicators,
trend and figures to support your opinion. (12)

5.2.4. Should Razak be satisfied with the return he is earning in the business.
Quote a relevant financial indicator, trend and figures in your explanation. (5)

5.2.5 The business wants to expand in the next financial year and needs
additional capital. The partners have decided to take out an additional
loan of R400 000 instead of introducing more capital. Explain by quoting
two financial indicators, trend and figures to justify your answer. (8)

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Accounting Grade 11 NW/June 2018

Information

Extract from the Income Statement for the year ended 31 August 2018.

Sales R3 296 000

Cost of sales R2 060 000

Extract from the Appropriation account prepared on 31 August 2018.

Aaron Razak
Interest on capital 60 000 86 250
Salaries 150 000 132 000
Share of profits 34 600 69 200
244 600 287 450

Extract of the balance sheet as at August

2018 2017
Fixed assets 760 000 810 000
Investment :fixed deposit at 6% p.a. 250 000 200 000
Current assets 378 200 286 000
Total assets 1 388 200 1 296 000
Partner equity 988 200 300 000
Capital account : Aaron 500 000 600 000
Capital account : Razak 500 000 4 000
Current account : Aaron 42 400 8 000
Current account : Razak 30 600

Non- current liabilities at 10%p.a. 220 000 250 000

Current liabilities 180 000 150 000
Total equity and liabilities 1 388 000 1 296 000

Trading stock( included in current assets) 176 000 156 000

Financial indicators

2018 2017
Mark-up percentage achieved 60% 63%
Operating expenses on sales 21% 18%
Net profit on sales 16,1% 19,2%
Current ratio 2,1 : 1 1,9 :
Acid test ratio ? 0,9 :1
Stock turnover rate ? 10 times
Debtors collection period 38 days 45 days
Debt/equity ratio ? 0,3 :1
Return on total capital employed 47,1% 45,8%
Percentage return earned by Aaron ? 59,8%
Percentage return earned by Razak 51,2% 53,4%

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Accounting Grade 11 NW/June 2018

QUESTION 6: ClUBS (60 marks; 35 minutes)

The following information was taken from the accounting records of Mubs
Football Club on 31 December 2018, the last day of the financial year.

Required:
6.1 Use the relevant information to prepare the Statement of Receipts and
Payments for the year ended 31 December 2018 (27)
6.2 Answer the questions which follow. (33)

Information:
The following information was taken from the ledger on 31 December 2018
Cash at bank (01:01:20.18) (Favourable) R 43 730
Membership fees received during the year:
2017 5 000
2018 80 000
2019 8 000
Entrance fees received 50 000
Bank charges 2 360
Cash donations received 3 670
Cash sales of annual dance tickets 34 500
Annual dance expenses paid by cheque 13 200
Creditors paid by cheque 2 400
Computer received as a donation 3 490
Equipment purchased but not yet paid for 49 900
Payment for hire of tennis courts 6 000
Honorarium paid to secretary 6 700
Interest on fixed deposit received from bank 1 000
Municipal grant received 40 000
Refreshments purchased for cash 25 900
Refreshment donated to charity 1 200
Rent paid 12 000
Telephone charges paid by cheque 8 970
Repairs and maintenance paid by cheque 5 210
Repayment of loan by cheque 14 000
Cash sale of old tennis balls 280
Sale of refreshment for cash 32 800
Stationery purchased for cash 4 440
Tennis balls purchased for cash 2 300
Tennis balls purchased on credit 1 400
Wages paid 64 900

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Accounting Grade 11 NW/June 2018

Note:

 Some members sold tickets for the dance but they have not yethanded over the
money to the treasurer of the club. The total amount outstanding is R3 560.
 The value of refreshment on hand on 31 December 2018 amounted
to R3 000 according to the stock-take. On 1 January 2018 refreshment on
hand amounted to R2 200.

6.2
6.2.1 Calculate the profit made on:
(a) The annual dance (4)
(b) Refreshments (6)

6.2.2 Refer to the information above. Identify 4 items which would not be
recorded in the statement of Receipts and Payment (4)

6.2.3 Some senior members of the club are of the opinion that the club should
discontinue having the annual dance in the future as it is too rowdy’ and it
‘attract the wrong people’. The club management requested you to present them
with a report on this issue. Your report of three valid points must contain, amongst
others, the financial benefits of having the dance and also how you would intend
addressing the concerns of the senior members. (6)

6.2.4 The membership fee is R1 00 per member per annum while the
entrance fee payable by new members is R5 000 per member.
Calculate the following:

(a) How many new members joined the club in 2018? (3)
(b) How many members paid their 2017 fees during 2018? (2)
(c) How many members paid their 2018 fees during 2018? (2)
(d) How many members paid their 2019 fees during 2018? (2)

6.2.5 Would club members be satisfied with the cash position of their club? Give
two reasons for your answer. (4)

TOTAL: 300

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