GRADE 11 NOVEMBER 2014 ACCOUNTING - besteducation.co.za€¦ · 1. This question paper comprises SIX compulsory questions. 2. Answer ALL the questions in the answer book provided

NATIONAL SENIOR CERTIFICATE

GRADE 11

NOVEMBER 2014

ACCOUNTING

MARKS: 300 TIME: 3 hours

This question paper consists of 16 pages.

*IACCNE*

2 ACCOUNTING (NOVEMBER 2014)

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INSTRUCTIONS AND INFORMATION 1. This question paper comprises SIX compulsory questions.

2. Answer ALL the questions in the answer book provided.

3. Where applicable, workings must be shown in order to achieve part-marks.

4. Non-programmable calculators may be used.

5. You may use a dark pencil or black/blue ink to answer the questions.

6. A breakdown of the questions is provided below. You must attempt to comply with the suggested time allocation for each question. To exercise good time management, try NOT to deviate from it.

QUESTION TOPIC SECTION / CONTENT MARKS TIME

(minutes)

1 Reconciliations and Fixed Assets

Financial Accounting x Analyse bank reconciliation information x Creditors reconciliation Managing Resources x Calculations and Asset disposal

50 30

2 Non-profit organisations (Clubs)

Financial Accounting x General ledger accounts for

membership fees and stock account. x Internal controls

45 27

3 Financial statements

Managerial Accounting x Income statement with adjustments x Notes to balance sheet

60 36

4 Partnerships and interpretation

Financial Accounting x Note to balance sheet x Calculation of ratios x Interpretation and comments

50 30

5 Cost accounting (Manufacturing)

Managerial Accounting x Concepts. x General ledger accounts

35 21

6 Budgeting and Problem solving

Managerial Accounting x Cash budget preparation. x Interpretation of budget information. x Problem solving – stock management.

60 36

300 180

(NOVEMBER 2014) ACCOUNTING 3


QUESTION 1: RECONCILIATION AND FIXED ASSETS (50 marks; 30 minutes) 1.1 BANK RECONCILIATION The information provided, was taken from the records of Smart Outfitters on

31 August 2014.

REQUIRED: Analyse each transaction by completing the columns in the table provided. (15) Example: The bank statement showed interest on overdraft of R85,00.

NO.

JOURNALS AND BANK ACCOUNT BANK STATEMENT NO ENTRY (Tick)

CONTRA ACCOUNT –

DETAILS AMOUNT DEBITED

AMOUNT CREDITED

AMOUNT DEBITED

AMOUNT CREDITED

E.g. Interest on overdraft

R85,00

TRANSACTIONS:

A. A deposit of R4 500 made on 30 August 2014 was in the cash journals but did not appear on the bank statement.

B. Interest of R120 earned on the credit bank balance was not recorded by

the business.

C. A stop-order payment of R5 500 for the monthly repayment on the loan

from Maxi Bank must still be recorded by the business.

D. Cheque No. 221, for R1 480 (a post-dated cheque) issued to a creditor

in part-payment of account appeared in the cash journal.

E. Cheque No. 243 for R175 appeared on the bank statement. This

cheque was issued to Oxford Tennis Club for the owner’s membership fees. It was incorrectly entered as R157 in the cash journal.

F. A cheque for R680 was received from M. Madhan (a debtor), dated

30 September 2014. This will be deposited on the due date.

G. A cheque for R570 issued to the local newspaper for an advertisement

was lost. This cheque will be replaced with a new cheque for the same amount in September 2014.

H. Cheque No. 209 for R880 from the previous reconciliation statement

issued to Telkom for the monthly telephone account appeared in the August 2014 bank statement.

I. A salary cheque of the clerk on leave was not cashed at the bank. The

gross salary of the clerk was R5 680. Total deductions for the month amounted to R2 270.



1.2 CREDITORS RECONCILIATION A statement received from Trodat Traders, on 26 September 2014, reflects

that Pretty Boutique owes them R16 091. According to Pretty Boutique, the amount due to Trodat Traders is only R10 991.

REQUIRED: Complete the table to show the differences that were discovered when

comparing the Creditors Ledger account to the statement received. Write the amounts only in the appropriate column/s. Indicate the increase or decrease by writing a (+) or (-) or (Dr) or (Cr) next to each amount. Calculate the correct balance at the end of the month.

(15)

INFORMATION: A. Pretty Boutique entered a discount of R300 when a payment of R3 000

was made during August 2014. Trodat Traders however, did not allow this discount stating that this cheque was received by them very late.

B. An invoice received from Trodat Traders for R6 280 was correctly

recorded in the books of Pretty Boutique. It was incorrectly reflected as R6 820 on the statement.

C. Goods returned to Trodat Traders for R890 was recorded as R960 on

the statement. Pretty Boutique miscalculated the cost of goods returned.

D. An invoice for R2 000 received from Trodat Traders was incorrectly

recorded as a debit note in the Creditors Ledger of Pretty Boutique.

E. A cheque for R5 000 issued on 29 September 2014 to Trodat Traders

appeared only in the Creditors Ledger account.

F. Goods were purchased for R4 670 on 30 September 2014 after the

statement received from Trodat Traders was closed off.



1.3 FIXED ASSETS

The information presented was taken from the records of East-End Stores. The financial year of the business ends on 28/29 February each year.

REQUIRED: 1.3.1 Calculate the missing amounts denoted by A to C on the

Accumulated Depreciation on Equipment account given. (11) 1.3.2 Prepare the Asset disposal account in the General Ledger. (7) 1.3.3 Provide a suitable reason for the equipment being disposed (sold). (2)

INFORMATION:

A. Extracted from the General Ledger of East-End Stores.

GENERAL LEDGER OF EAST-END STORES

EQUIPMENT (B8) 2012 Mar 1 Bank 140 000 2013

Feb 28 Balance 190 000

Sep 01 Creditors Control 50 000

190 000 190 000

2013 Mar 1 Balance 190 000 2013

Sept 01 Asset disposal 50 000

Dec 01 Bank 80 000 Balance 220 000

270 000 270 000

2014 Mar 1 Balance 220 000

ACCUMULATED DEPRECIATION ON EQUIPMENT (B9) 2013 Sept 01 Asset disposal B 2013

Feb 28 Depreciation 33 000

Sept 2013 1 Depreciation A

2014 Feb 28 Depreciation C

LOSS ON SALE OF ASSET (N12) 2013 Sept 01 Asset Disposal 1 600

B. The equipment purchased on the 1 September 2012 was sold for cash on

1 September 2013.

C. Depreciation on equipment is provided for at 20% p.a. on cost.

50



QUESTION 2: SPORTS CLUBS (45 marks; 27 minutes) You are provided with information from the club records of Amatole Hiking Club. The financial year of the club ended on 31 December 2013.

REQUIRED:

2.1 Complete the following accounts in the General Ledger of Amatole Hiking Club. Balance or close off the accounts on 31 December 2013.

2.1.1 Creditors Control (Outdoor Manufacturers). (7) 2.1.2 Hiking bags account. (Note that the club uses the perpetual

inventory method to record the stock of bags.) (12) 2.1.3 Membership fees account. (16) 2.2 The new members were unhappy about the fees they had to pay for the

year. 2.2.1 Give a possible reason why they feel this way. (2) 2.2.2 Provide a suggestion to the committee to address this matter. (2) 2.3 The chairperson is concerned with the manner in which the treasurer is

managing the collection of fees. 2.3.1 Why do you think she feels this way?

(Quote relevant figures to support your answer) (2) 2.3.2 Provide TWO suggestions that the treasurer can use to improve the

collection of fees from members. Note that the chairperson is not in favour of charging members interest on their overdue account. (4)

INFORMATION:

A. Extract from the post-closing trial balance on 31 December 2012.

DEBITS CREDITS Stock of hiking bags at R250 each 6 000 Creditors (Outdoor Manufacturers) 750 Accrued income: membership fees 5 400 Income received in advance: membership fees 1 500



B. Extract from the cash journals for the year ended 31 December 2013.

Hiking bags purchased for cash at R250 each 15 000 Payments to Outback Manufacturers (Creditor) 7 250 Hiking bags sales 28 910 Membership fees collected: 60 300 x 2012 membership fees received 3 600 x 2013 membership fees received 54 000 x Membership fees received for 2014 2 700 C. Hiking bags:

x Hiking bags are sold to members at a profit mark-up of 18%.

x All sales are for cash only.

x All bags are purchased from Outdoor Manufacturers (cash and credit). The club was fortunate to get the bags at the same price since 2011. An amount of R2 750 is still due to Outdoor Manufacturers for hiking bags bought on credit.

x Twelve (12) hiking bags were returned to Outdoor Manufacturers due to minor defects. A credit note for the full amount was received.

x Six (6) hiking bags were used as prizes in a club fund raising raffle.

x There were some unsold bags in stock at the end of the financial year. D. Membership fees:

x Membership fees amount to R300 per member per year.

x On 31 December 2012, there were 190 members registered with the club.

x Membership fees still due for 2012 must be written off and the membership of the people concerned must be terminated on 1 January 2013.

x On 6 April 2013, 14 new members joined the club. They paid their entrance fees and membership fees in full.

x On 31 July 2013, 8 new members joined the club. They also met their financial obligations.

x The secretary requested that part of his honorarium of R500 be retained by the club to cover his membership fees. This request was granted.

x Some members did not pay their fees for 2013. 45



QUESTION 3: INCOME STATEMENT AND NOTE TO

BALANCE SHEET (60 marks; 36 minutes)

You are presented with information from the books of Queen Stores for the financial year ended 30 June 2014.

REQUIRED: 3.1 Prepare the Income Statement for the year ended 30 June 2014.

Show all workings to earn part marks. (52) 3.2 Prepare the Trade and Other Receivables note to the balance sheet. (8) INFORMATION: A. Balances and totals extracted from the Pre-Adjustment Trial Balance

on 30 June 2014.

Fixed deposit: Mandi Bank (9% p.a.) 60 000 Loan (Flow Bank) 171 000 Trading stock 50 555 Debtors control 36 420 Provision for bad debts 2 195 Sales 930 000 Cost of sales 620 000 Debtors allowances 3 350 Fee income 32 550 Salaries and wages 56 400 Consumable stores 12 820 Stationery 5 440 Rent income 35 600 Interest on fixed deposit 4 725 Discount allowed 1 240 Discount received 2 565 Advertising 2 260 Bank charges 5 440 Insurance 8 800 Bad debts 2 100 Sundry expenses 18 000



2. Adjustments and additional information: a) An allowance of R240 granted to a debtor, A. Abdool, for damaged

goods sold to him, must still be recorded.

b) The following invoice issued to debtor B. Xhali, was not yet recorded:

All goods are sold at a profit mark-up of 60% on cost.

QUEEN STORES CREDIT SALES INVOICE

To: B. Xhali Date: 28 June 2014 Terms: 30 days less 5% QUANTITY DESCRIPTION UNIT PRICE TOTAL 4 pairs Ladies shoes R330,00 1 320,00 2 cans Shoe polish R40,00 80,00 1 400,00 Shoe repairs 120,00 1 520,00 E&OE

c) The provision for bad debts must be adjusted to 5% of the debtors

control balance (after taking into account the above).

d) According to a physical stock take on 30 June 2014, the stock on

hand balances were as follows: x Trading stock, R45 650 x Consumable stores, R720.

e) Advertisement expense includes R735 for a three month contract with

the Daily Dispatch which commenced on 1 June 2014.

f) The following information appeared on the June bank statement:

(these must still be taken into account).

x Bank charges, R350 x Interest debited, R220 x Direct deposit for the June 2014 rent from M. Moses. The rent

was increased by R200 per month from 1 April 2014. x Insurance payment of R1 250. 20% of this amount is for the

owner’s private vehicle.

g) Interest on the mortgage loan is capitalised. The loan statement

received from Flow Bank gave the following summary:

Balance on 1 July 2013 300 000 Total repayments (including interest) 129 000 Balance on 30 June 2014. 198 450 h) R30 000 of the fixed deposit matured on 31 January 2014. This was

received and used to extend a storeroom. Take into account the outstanding interest on fixed deposit.

60

No 122



QUESTION 4: PARTNERSHIPS AND RATIO ANALYSIS (50 marks; 30 minutes) The information provided relates to ST Traders. The business is a partnership owned by Sam and Tom Tibs. The financial year ended on 28 February 2014.

REQUIRED: 4.1 Complete the Current account note to the Balance Sheet.

(Refer to point 2) (21) 4.2 Calculate the following financial ratios/indicators: 4.2.1 Debt/equity ratio. (5) 4.2.2 Acid test ratio. (5) 4.2.3 Percentage return on investment earned by Sam. (6) 4.3 Should Sam be satisfied with his return on investment?

Explain and quote relevant figures or financial indicators to support your answer. (3)

4.4 Tom was concerned that the percentage net profit on sales decreased

although the operating profit on sales has improved. Provide him with an explanation. Quote appropriate figures in your explanation. (3)

4.5 Comment on the liquidity position of the business. Quote TWO relevant

financial indicators (with figures) in your response. (4) 4.6 Sam wants to increase the loan by an additional R150 000 to make

improvements to the existing buildings. What advice would you offer him? You must make reference to financial indicators and figures to support your advice. (3)



INFORMATION: 1. Extract from the Trial Balance on 28 February 2014 Capital: Sam 750 000 Capital: Tom 500 000 Current Account: Sam (1 March 2013) 6 750 Current Account: Tom (1 March 2013) 9 800 (Dr) Drawings: Sam ? Drawings: Tom ? Loan: Drago Bank 820 000 Bank (Cr) 7 750 (Cr) Cash float 1 300 Inventories (Trading Stock) 28 620 Trade and other receivables 37 500 Trade and other payables 32 300 Sales 1 120 000 Profit and loss (Net profit for the year) ? 2. Partners’ earnings and drawings: x Sam earns a salary of R102 000 per year. Tom earns 5% more than

Sam.

x Interest on capital is calculated at 8% pa. Tom’s interest amounts to

R40 000. Note that Sam increased his capital by R25 000 on 1 December 2013. This was recorded accordingly.

x Tom is entitled to a production bonus equal to 1,5% of turnover. x The remaining profit or loss is shared between Sam and Tom in the

ratio 3 : 2 respectively. The remaining profit earned by Tom was R7 500 after all adjustments were done.

x Tom also withdrew 60% of his total earnings for this financial year. x Sam ended with a credit balance of R32 550 on his current account. 3. The following financial indicators were calculated:

28 FEBRUARY 2014 28 FEBRUARY 2013 Operating profit on sales 36,6% 34% Percentage net profit on sales 30,6% 33% Current ratio 1,7 : 1 1,98 : 1 Acid test ratio ? 1,1 : 1 Stock turnover rate 14,6 times 15 times Debt/equity ratio ? 0,56 : 1 Return on partners’ equity 26,8% 27,2%

50



QUESTION 5: COST ACCOUNTING (MANUFACTURING) (35 marks; 21 minutes) 5.1 Indicate the cost category for each item listed below. 5.1.1 Advertising 5.1.2 Production wages 5.1.3 Office telephone expense 5.1.4 Depreciation on factory machinery 5.1.5 Raw material used in production. (5) 5.2 The following information was extracted from the books of Classic

Manufacturers. The financial year ended on 30 April 2014.

REQUIRED: 5.2.1 Calculate: a) Direct labour cost. (8) b) Factory overhead cost. (5) 5.2.2 Prepare the following accounts in the General Ledger. Close the

accounts off properly at the end of the financial year.

a) Work in process stock account. (10) b) Finished goods stock account. (7)



INFORMATION: 1. Stock Balances: 30 APRIL 2014 1 MAY 2013 Raw materials ? 23 430 Work-in-process 62 760 58 450 Finished goods stock ? 145 500 2. Raw material used in production, R312 654. 3. Salaries and wages: The employees register is as follows:

NUMBER BASIC SALARY/WAGE TOTAL COST OVERTIME

Employees in production 3

NORMAL TIME

(HOURS)

RATE (per hour)

?

HOURS WORKED

(per worker)

RATE (per

hour)

1 440 R55 120 R75 Factory foreman 1 R8 000 per month R106 560 - Cleaners 2 R4 000 per month R106 560 - x Pension Fund of 8% and UIF of 1% are deducted from the basic

salaries/wages of all employees.

x The employer contributes 10% to the Pension Fund and 1% to the

UIF on behalf of all employees.

x All employee benefits (deductions) must be allocated to the relevant

cost accounts of the specific employees.

x One of the cleaners work in the factory. 4. Total factory overhead costs amounted to R98 460. This does not

include any factory salaries and wages.

5. Total sales for the year was R1 260 000. The profit mark-up on cost

is 60%.

35



QUESTION 6: BUDGETS (60 marks; 36 minutes) 6.1 Complete the following sentences. Write only the word(s) next to the

question numbers in the answer book.

6.1.1 The main purpose of preparing a budget is … 6.1.2 … is an example of an item that will appear in a cash budget and not

in a projected income statement.

6.1.3 … is an example of an item that will appear in a projected income

statement but not in a cash budget.

6.1.4 The purchase of a motor vehicle is an item which will appear in a/an

… budget.

(8) 6.2 CASH BUDGET You are provided with information relating to Sharp Traders, a sole trader.

The financial year ends on 31 October each year.

REQUIRED: 6.2.1 Calculate:

a) The cash received from debtors during November 2014. b) Bad debts to be written off during the budget period. c) Discount to be allowed during December 2014.

Show workings to earn part marks.

(8) (5) (3)

6.2.2 Complete the cash budget for November and December 2014. (24) 6.2.3 The owner compared the actual amounts spent to the budgeted

amounts and found the following differences: x The rent he budgeted to receive was far more than the actual

amount collected from the tenant. x He over-budgeted for advertising. x He under-budgeted for maintenance of vehicles and equipment. What advice would you offer him? Provide ONE recommendation for each of the items above. (6)



INFORMATION: 1. Balances on 1 November 2014. Bank overdraft 40 000 Accrued expenses (salaries) 4 500 2. Information extracted from the Income Statement on 31 October 2014

(the end of the previous financial year).

Operating expenses: x Salaries 216 000 x Advertising 21 500 x Discount allowed 11 900 x Bad debts 12 000 x Other operating expenses 168 000 3. Partially completed cash budget for 1 November 2014 to 31 December

2014.

NOVEMBER DECEMBER TOTAL RECEIPTS 168 000 120 000 CASH PAYMENTS Cash purchases 27 000 ? Payments to creditors 38 250 ? Other operating expenses 14 000 14 000 4. Total monthly sales for 2014: All sales are on credit ACTUAL BUDGETED AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER 60 000 70 000 85 000 90 000 94 000 5. Cost of sales is equal to 75% of total sales. 6. The money due by debtors for the above sales are collected as follows: 40% in the month of sales (12½% settlement discount allowed). 35% in the month following the sales. 20% in the second month following the sales. The balance is written off as bad debts in the third month. 7. 40% of purchases are paid for by cheque. Creditors are paid in the

month following the purchases. Trading stock is maintained through monthly purchases.

8. Advertising costs are based on projected monthly sales and are paid in

the same month. This is expected to increase in December from 3% to 4%.

9. The business employs 4 workers who are paid R4 500 each per month.

The salary due for October 2014 will be paid in November 2014.

10. New equipment for R17 400 will be bought on credit during November

2014. This will be paid in 6 equal instalments starting on 20 December 2014.



11. Other cash operating expenses will amount to R14 000 per month. 6.3 PROBLEM SOLVING: MANAGEMENT OF STOCK Baker is the owner of two school tuck shops. Betty is the manager of Shop A

and Benny is the manager of Shop B. Each manager is paid R1 000 per week. Each tuck shop sells only chips and juices. The chips cost R5,00 per packet and are sold at a profit mark-up of 50% on cost. The juice is marked up by 25% on cost and is sold at R10,00 each.

REQUIRED: Identify ONE problem in each tuck shop, and provide ONE solution or advice

in each case. For each problem, relevant figures must be quoted. (6) INFORMATION: For October 2014 SHOP A SHOP B CHIPS JUICE CHIPS JUICE Opening stock (units) 300 200 150 90 Stock supplied by Baker (units) 400 400 400 400 Closing stock (units) 200 150 330 120 Units sold 420 450 220 370 Cash deposited (Rands) R3 150 R4 500 R1 650 R3 200 60 GRAND TOTAL: 300

NAME:


GRADE 11

NOVEMBER 2014

ACCOUNTING

ANSWER BOOK

QUESTION MAX. MARKS MARKS OBTAINED

MODERATED MARKS

1 50

2 45

3 60

4 50

5 35

6 60

300

This answer book consists of 14 pages.

*IACABE*



QUESTION 1: RECONCILIATIONS AND FIXED ASSETS (50 marks; 30 minutes) 1.1 Bank Reconciliation NO.

JOURNALS AND BANK ACCOUNT BANK STATEMENT NO ENTRY

(X)

CONTRA ACCOUNT –


AMOUNT CREDITED

AMOUNT DEBITED

AMOUNT CREDITED

E.g. Interest on overdraft R85,00

A

B

C

15

D

E

F

G

H

I

1.2 Creditors Reconciliation

CREDITORS LEDGER ACCOUNT

STATEMENT FROM TRODAT TRADERS

Balance / total 10 991 16 091

A

B

C

D

15

E

F

BALANCE (30 SEPTEMBER 2014)



1.3 Fixed Assets

1.3.1

A

3

B

3

C

5

1.3.2

GENERAL LEDGER OF EAST END STORES ASSET DISPOSAL ACCOUNT (N10)

7

1.3.3 Provide a suitable reason for the equipment being disposed (sold).

2

Q1 50



QUESTION 2: SPORTS CLUBS (45 marks; 27 minutes)

2.1

GENERAL LEDGER OF AMATHOLE HIKING CLUB CREDITORS CONTROL (OUTDOOR MANUFACTURERS)

7

HIKING BAGS STOCK ACCOUNT (B6)

12

MEMBERSHIP FEES ACCOUNT (N3)

16



2.2 The new members were unhappy about the fees they had to pay for the year.

2.2.1 Give a possible reason why they feel this way.

2

2.2.2 Provide a suggestion to the committee to address this matter.

2

2.3 The chairperson is concerned with the manner in which the treasurer is

managing the collection of fees.

2.3.1 Why do you think she feels this way?

(Quote relevant figures to support your answer)

2

2.3.2 Provide TWO suggestions that the treasurer can use to improve the

collection of fees from members. Note that the chairperson is not in favour of charging members interest on their overdue account.

4

Q2 45



QUESTION 3: INCOME STATEMENT AND NOTE TO BALANCE SHEET.

(60 marks; 36 minutes)

3.1.1 Queen Stores

Income Statement for the year ended 30 June 2014

Sales

Cost of Sales

GROSS PROFIT

52



3.1.2 TRADE AND OTHER RECEIVABLES

Debtors Control

8

Q3 60



QUESTION 4: PARTNERSHIPS AND RATIO ANALYSIS (50 marks; 30 minutes) 4.1 NOTE : CURRENT ACCOUNT SAM TOM TOTAL Salaries 102 000

Interest on capital 40 000

Bonus

Primary distribution of profits

Final distribution of profits 7 500

Net profit as per income statement

21

Drawings

Retained income for the year

Balance at the beginning of the year 6 750

Balance at end of the year. 32 550

4.2 4.2.1 Debt/equity ratio

5

4.2.2 Acid test ratio

5

4.2.3 Percentage return on investment earned by Sam.

6



4.3 Should Sam be satisfied with his return on investment? Explain; quote relevant figures or financial indicators to support your answer.

3


although the operating profit on sales has improved. Provide him with an explanation. Quote appropriate figures in your explanation.

3


financial indicators (with figures) in your response.

4

4.6 Sam wants to increase the loan by an additional R150 000 to make

improvements to the existing buildings. What advice would you offer him? You must make reference to financial indicators and figures to support your advice.

3

Q4 50



QUESTION 5: COST ACCOUNTING (MANUFACTURING) (35 marks; 21 minutes) 5.1 Indicate the cost category for each item.

5.1.1

5.1.2

5.1.3

5.1.4

5.1.5 �

5

5.2 5.2.1 Calculate: a) Direct labour cost.

8

b) Factory overhead cost.

5



5.2.2 GENERAL LEDGER CLASSIC MANUFACTURERS

WORK IN PROCESS STOCK (B7)

10

FINISHED GOODS STOCK (B8)

7

Q5 35



QUESTION 6: BUDGETS (60 marks; 36 minutes) 6.1 Complete the following sentences. Write only the word (s) next to

the question numbers in the answer book.

6.1.1

8

6.1.2

6.1.3

6.1.4

6.2 6.2.1 Calculate

a) The cash received from debtors during November 2014. CREDIT

SALES WORKINGS NOVEMBER

September 70 000

October 85 000

November 90 000

8

b) Bad debts to be written off during the budget period.

5

c) Discount to be allowed during December 2014.

3



6.2.2 CASH BUDGET FOR NOVEMBER 2014 AND DECEMBER 2014

NOVEMBER DECEMBER

TOTAL RECEIPTS 168 000 120 000

CASH PAYMENTS

24

CASH SURPLUS (SHORTFALL)

BANK (Opening balance)

BANK (Closing balance)

6.2.3 ITEM ADVICE/RECOMMENDATION

Rent income

6

Advertising

Maintenance



6.3 Problem Solving: PROBLEM IDENTIFIED

(with figures) ADVICE OR SOLUTION

SHOP A

6

SHOP B

Q6 60

GRAND TOTAL: 300


GRADE 11

NOVEMBER 2014

ACCOUNTING MARKING GUIDELINE

(MEMORANDUM)

MARKS: 300 GENERAL PRINCIPLES: 1 Where calculations are required, award full marks for the final answer. If the answer is incorrect, mark

the workings provided. If the working amount is shown as a final answer, award the relevant marks allocated for workings (Income statement), and not the method mark for the answer.

2 Method marks are denoted by 5.

x For calculations and final totals, at least one part of the workings must be correct for the method mark to be earned. For totals – inspect operation and reasonableness of answer before awarding the mark.

x In cases where answers of previous questions must be used (carried forward answers), check the transfer.

x Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark. If no sign (+/-) or bracket is provided, assume that the figure is positive.

3 For questions requiring explanations and comments (2 marks or more), award part-marks.

A good comment will normally mention and explain a point. Beware of different ways to say the same thing. Note that the marking guideline only offers suggested answers – read and try to make sense of what the learner is attempting to convey, and award marks accordingly.

4 Where penalties are applied (such as foreign items, misplaced items, omitted details, etc.), the marks

for that section cannot be a negative. Penalties will be indicated next to the relevant questions where applicable. Where foreign items are included in any calculation, full marks cannot be awarded.

5 Markers are advised to work through the question paper and compare with this guideline, before

marking. If adjustments are necessary, do so within the framework of the mark allocation.

This memorandum consists of 14 pages.



QUESTION 1: RECONCILIATIONS AND FIXED ASSETS (50 marks; 30 minutes) 1.1 Bank Reconciliation NO.

JOURNALS AND BANK ACCOUNT BANK STATEMENT NO ENTRY

(X)

CONTRA ACCOUNT -


AMOUNT CREDITED

AMOUNT DEBITED

AMOUNT CREDITED

E.g. Interest on overdraft R85,00 A 4 500 3

B Interest income/ Interest on current account 3 120 3

C Loan: Maxi Bank 3 5 500 3

15

D 1 480 3

E Drawings 3 (175 – 157) 18 33

F X 3

G Advertising 3 570 3

H X 3

I (5 680 – 2270) 3 410 33

-1 for foreign entries (maximum -3) foreign entries are extra entries per line where marks are scored. 1.2 Creditors Reconciliation

CREDITORS LEDGER ACCOUNT

STATEMENT FROM TRODAT TRADERS

Balance / total 10 991 16 091

A 300 33

or Cr

B - 540 33

or Cr

C - 70 33

or Dr

D (2000 + 2000 )

4 000 333

or Cr

15

E One mark each for 2 000 and one mark for correct sign.

- 5 000 33

or Cr

F 4 670 33

or Dr

BALANCE (30 SEPTEMBER 2014) 15 221 5 15 221

5

Allocate one mark for the amount and one mark for the sign.



1.3 Fixed Assets

1.3.1 A

3 10% 3��5 50 000 x (20% x ½) = 5 000 (one part correct) ��

3

B

A above 5 000 + 5 000 = 10 000 (one part correct) 5 3 5 A (current depreciation) + 5 000 (accumulated depreciation on the asset sold) (50 000 x 20% x ½) from the previous year.

3

C

140 000 3 (190 000 – 50 000) x 20% = 28 000 3 80 000 3 x (20% x 3/12 ) = 4 000 3 28 000 + 4 000 = 32 000 5 (one part correct) �

5

1.3.2

GENERAL LEDGER OF EAST END STORES ASSET DISPOSAL ACCOUNT (N10)

2013 Sept 1 Equipment 50 000

3 2013 Sept 1 Accumulated depreciation

on equipment 3 (refer B) 10 000

5

Bank 3 38 400 5

Loss on sale of asset 3 1 600 3

50 000 50 000

7

1.3.3 Provide a suitable reason for the equipment being disposed (sold). Any reasonable answer 33 Upgrading – if its technology Improving the image of the business (new furniture) Re-designing the layout for more efficiency Equipment not suitable or giving problems (maintenance)

2

Q1 50



QUESTION 2: SPORTS CLUBS (45 marks; 27 minutes)

2.1

GENERAL LEDGER OF AMATHOLE HIKING CLUB CREDITORS CONTROL (OUTDOOR MANUFACTURERS)

2013 Dec 31 Hiking bags stock (CAJ) 3 000

3 2013 Jan 1 Balance (b/d) 750

3 Bank 3 7 250

3 Dec 31 Hiking Bags stock 3 (CJ) 12 250 5

Balance (c/d) 2 750 3

13 000 13 000

2014 Jan 1 Balance (b/d) 2 750

7

HIKING BAGS STOCK ACCOUNT (B6)

2013 Jan 1 Balance (b/d) 6 000

3 2013 Dec 31 Fund raising 3 1 500

33 Dec 31 Bank 15 000

3 Cost of sales 3 24 500 33

Creditors control 3 (CJ) 12 250 5 Creditors control (CAJ) 3 000

5

Balance (c/d) 4 250 5

33 250 33 250

2014 Jan 1 Balance (b/d) 4 250 28 910 x 100/118

12

MEMBERSHIP FEES ACCOUNT (N3) 2013 Jan 1 Accrued income 5 400

3 2013 Jan 1 Income received in advance

1 500 3

Dec 31 Income received in advance 3

2 700 3 Dec 31 Bank 3 60 300

3

Income and expenditure 3 206 3 x R300

61 800 5 Membership fees written

off 3 (5 400 – 3 600) 1 800 33

Honorarium 3 300 3

Accrued income 3 6 000 3

69 900 69 900

16

190 – 6 + 14 + 8 = 206 members



2.2 The new members were unhappy about the fees they had to pay for the year. 2.2.1 Give a possible reason why they feel this way.

Any valid reason 33 They had to pay the full amount even though they joined at different times during the year. Did not enjoy the same benefit as those members who were members for the whole year.

2

2.2.2 Provide a suggestion to the committee to address this matter. Any suitable explanation 33 Pay structure must accommodate a pro rata payment. Pay for the months (portion) in the first year. Use a monthly payment system.

2

2.3 The chairperson is concerned with the manner in which the treasurer is

managing the collection of fees.

2.3.1 Why do you think she feels this way?

(Quote relevant figures to support your answer)

One valid reason 3 quoting figures 3 R5 400 was outstanding last year and R6 000 this year. (20 members did not pay) This is approximately 10% of members. There is no penalty for non-payment. There appear to be no urgency on the part of members. Also large number written off as bad debts.

2

2.3.2 Provide TWO suggestions that the treasurer can use to improve the

collection of fees from members. Note that the chairperson is not in favour of charging members interest on their overdue account.

Any TWO valid suggestions not mentioning charge interest. 33 33 Devise a payment policy and communicate to all members. Offer incentives such as discounted amounts if paid before a certain date. Create competitions for fully paid members.

4

Q2 45



QUESTION 3: INCOME STATEMENT AND NOTE TO BALANCE SHEET

(60 marks; 36 minutes)

3.1.1 Queen Stores

Income Statement for the year ended 30 June 2014

Sales (930 000 3 + 1 400 3) – (3 350 3 + 240 3) 927 810 5�Q

Cost of Sales 620 000 3 + 875 33 (620 875) 5�P

GROSS PROFIT 306 935 5

Other income 74 545

Provision for bad debts adjustment 310 33

Fee income (32 550 3 + 120 3) 32 670 3�O

Rent income (35 600 3 + 3 400 33) 39 000 5�P

Discount received 2 565 3

Gross income 21 381 480 5

Operating expenses (116 670)

Trading stock deficit (49 680 – 45 650) 4 030 33

Salaries and wages 56 400 3

Consumable stores (12 820 3 – 720 3) 12 100 3�O

Stationery 5 440 3

Discount allowed 1 240 3

Advertising (2 260 3 – 490 3) 1 770 5�O

Bank charges (5 440 3 + 350 3) 5 790 3�O

Insurance (8 800 3+ 1 000 33) 9 800 5�P

Bad debts 2 100 3

Sundry expenses 18 000 3

52

Operating profit 264 810 5

Interest income (4 725 3 + 2 250 33) 6 975 5�O

Profit before interest expense 271 785 5

Interest expense (220 3 + 27 450 33) (27 670) 5�P

Net profit for the year 29 244 115 5

-1 each for foreign items (all balance sheet accounts) Max -2 Misplaced items must be marked wrong.



3.1.2 TRADE AND OTHER RECEIVABLES

Debtors Control (36 420 3 – 240 3 + 1 520 3) 37 700 5�P

Provision for bad debts (5% of the debtors control amount) (1 885) 5

Net trade debtors (this may not be included) 35 815

8

Prepaid expenses 490 3

Accrued income 2 250 5

Operation (one part correct above) 38 555 5

Q3 60



QUESTION 4: PARTNERSHIPS AND RATIO ANALYSIS (50 marks; 30 minutes) 4.1 NOTE : CURRENT ACCOUNT SAM TOM TOTAL Salaries 102 000 107 100

33 209 100

Interest on capital 58 500 33 40 000 98 500

Bonus 16 800 33 16 800

Primary distribution of profits 160 500 5

163 900 5

324 400 5

Final distribution of profits 11 250 33 7 500 18 750

5

Net profit as per income statement 171 750 171 400 343 150 5

21

Drawings (145 950) 5

(102 840) 3 (248 790)

Retained income for the year 25 800 5

68 560 5 94 360

Balance at the beginning of the year 6 750 (9 800) 3

(3 050) 5

Balance at end of the year. 32 550 58 760 5

91 310 5

4.2 4.2.1 Debt/equity ratio

1 341 310 820 000 : (750 000 + 500 000 + 91 310) 3��3��3��5 = 0,61 : 1 5 (accept 0,6 : 1 must be in the form x : 1)

5

4.2.2 Acid test ratio

38 800 33 40 050 33 (1 300 + 37 500) : (32 300 + 7 750) = 0,97 : 1 5 (accept 0,9 : 1 must be in the form x : 1)

5

4.2.3 Percentage return on investment earned by Sam.

5

( )

1 514 300 3333 = 22,7% 5 (as a % ; accept 21%)

6



4.3 Should Sam be satisfied with his return on investment? Explain and quote relevant figures or financial indicators to support your answer.

Yes/No 3��Good explanation with figures 33 Explanation without figures 3 Yes : better than interest rates on alternative investments; could be better than previous year (no figures given), comparable to return on total partners’ equity. No: not as good as return on total partners equity, need to compare with Tom’s return (not given)

3


although the operating profit on sales has improved. Provide him with an explanation. Quote appropriate figures in your explanation.

Good answer (quoting figures) 333 satisfactory answer 33 weak 3 Operating profit on sales – improved from 34% to 36,6% – indicates good management of operating expenses or could denote an increase in sales or gross profit. Net profit on sales – decreased from 33% to 30,6% – the difference is because of the management of debt – possibly paying too much interest on borrowed funds.

3


financial indicators (with figures) in your response.

Quoting ratios (with figures) 33�� comment 33 Any TWO ratios explained. The current ratio decreased from 1,98: 1 to 1,7: 1 The acid test ratio decreased from 1,1:1, to 0,97: 1 Stock turnover rate dropped from 15 times a year to 14,6 times a year. All ratios show a negative trend. Although the drops are not very significant amounts, it could be of concern that we are holding too much stock on hand. (therefore buying less) The cash management is also bad (overdraft).

4

4.6 Sam wants to increase the loan by an additional R150 000 to make

improvements to the existing buildings. What advice would you offer him? You must make reference to financial indicators and figures to support your advice.

33 for the advice ; 3 for quoting appropriate figures. The debt: equity ratio indicates high risk (0,6 : 1) which is an increase from the previous year (0,56 :1). This means that the business is not making efforts to reduce the loan. With an additional R150 000, the debt equity ratio will move to 0,72 : 1 (assuming equity remains unchanged). This will not be a wise decision unless it can be proven that the loan is contributing to a good return on total capital employed (positive gearing).

3

Q4 50



QUESTION 5: COST ACCOUNTING (MANUFACTURING) (35 marks; 21 minutes) 5.1 Indicate the cost category for each item.

5.1.1 Selling and distribution cost 3

5.1.2 Direct labour cost 3

5.1.3 Administration cost 3

5.1.4 Factory overhead cost 3

5.1.5 Direct material cost 3�

Abbreviations are not allowed

5

5.2 5.2.1 Calculate: a) Direct labour cost.

(1 440 x R55) x 3 3 = 237 600 5 ; (120 x R75) x 3 = R27 000 5 79 200 3��9000 3 237 600 x 11% = 26 136 33 Total Direct Labour cost = 237 600 + 27 000 + 26 136 = 290 736 5 (3 marks) (2 marks) (2 marks)

8

b) Factory overhead cost.

53 280 (2 marks) 98 460 + 106 560 + (106 560 ÷ 2) = 258 300 3 3 3 3 5

5



5.2.2 GENERAL LEDGER OF CLASSIC MANUFACTURERS

WORK IN PROCESS STOCK (B7) 2013 May 1 Balance (c/d) 58 450

3 2014 Apr 30 Finished good stock

account 3 857 380

5 2014 Apr 30 Direct material cost 3 312 654

3 Balance (b/d) 62 760 3

Direct labour cost 3 290 736 5

Factory overhead cost 3 258 300 5

920 140 920 140

2014 May 1 Balance (b/d) 62 760

Check the transfer of totals for direct labour and factory overheads

10

FINISHED GOODS STOCK (B8) 2013 May 1 Balance (b/d) 145 500

3 2014 Apr 30 Cost of sales 3 787 500

33 2014 Apr 30 Work in process stock

account 3 857 380

5 Balance (c/d) 215 380 5

1 002 880 1 002 880

2014 May 1 Balance (b/d) 215 380

Check the transfer of the work in process total from above. 7

Q5 35



QUESTION 6: BUDGETS (60 marks; 36 minutes) 6.1 Complete the following sentences. Write only the word(s) next to the question

number in the answer book.

6.1.1 Financial planning / forecasting receipts and payments / assessing future receipts and

payments / planning financial needs / Any valid explanation with future implications 33

8

6.1.2 Any balance sheet payment 33 (capital contribution; loan received/paid; payments to creditors; receipts from debtors; purchase of assets; cash drawings etc.)

6.1.3 Any non-cash items of income or expense 33 (depreciation; bad debts; discount received/allowed; cost of sales; etc.)

6.1.4 Capital budget 33

6.2 6.2.1 Calculate

a) The cash received from debtors during November 2014.

CREDIT SALES WORKINGS NOVEMBER

September 70 000 X 20% 3 14 000 3

October 85 000 X 35% 3 29 750 3

November 90 000 X 40% 3x 87,5% 3* 31 500 3

*or minus R4 500 (which is 12,5% of R36 000) 75 250 5

8

b) Bad debts to be written off during the budget period.

Credit sales workings Bad debts

amount August 60 000 60 000 x 5% in November 3 000 33 September 70 000 70 000 x 5% in December 3 500 33 Total bad debts 6 500 5

Mark any format or workings. Does not have to be presented as above.

5

c) Discount to be allowed during December 2014.

0,05 94 000 x (40% x 12,5%) = R4 700 3 3 5

3



6.2.2 CASH BUDGET FOR NOVEMBER 2014 AND DECEMBER 2014

NOVEMBER DECEMBER

TOTAL RECEIPTS 168 000 120 000

CASH PAYMENTS Cash purchases

94 000 x 75% x 40% 27 000 3 28 200 33

Payments to creditors 90 000 x 75% x 60%

38 250 3 40 500 33

Operating expenses 14 000 3 14 000 3

Advertising 90 000 x 3% and 94 000 x 4%

2 700 33 3 760 33

Salaries 22 500 33 18 000 3

Equipment 2 900 3

24

TOTAL PAYMENTS operation 104 450 5 107 360 5

CASH SURPLUS (SHORTFALL) 63 550 5 12 640 5

BANK (Opening balance) (40 000) 3 23 550 5

BANK (Closing balance) operation 23 550 5 36 190 5

6.2.3 ITEM ADVICE/RECOMMENDATION

One valid advice for each item.

Rent income

Budget more realistically; make use of debit orders/direct deposits; send reminders before due dates; 33

6

Advertising

Make more effective use of advertising – it will improve sales; reduce the budget if not needed; Try different ways of advertising such as pamphlets, flyers etc. 33

Maintenance

Budget more realistically; Ensure that maintenance is not neglected; Effective production depends on well functioning machines; Will improve the lifespan of equipment; 33



6.3 Problem solving: PROBLEM IDENTIFIED

(with figures) Identifying problem 33�

Quoting figures 33

ADVICE OR SOLUTION One valid point 33

SHOP A

High stock (300 opening and 200 closing ) They still received 400 units although they had stock on hand, Units missing (closing stock should be 280 units if only 420 sold. (80)

Monitor sales and stock accordingly. Stock control should be done daily. Control where stock is displayed. Could be within reach of children.

6

SHOP B

Juice cash deposited is short by R500. Chips too much unsold stock compared to opening balance (150 opening and 330 closing)

Do daily reconciliations with managers. (till control) Monitor sales to order appropriately.

Q6 60

GRAND TOTAL: 300

Documents

GRADE 11 NOVEMBER 2014 ACCOUNTING - besteducation.co.za€¦ · 1. This question paper comprises SIX compulsory questions. 2. Answer ALL the questions in the answer book provided