2022 TERM 2 Content Grade 10 1

NKANGALA FIRST PUSH HIGHLIGHT AND WRITE We support our grade 10 learners ACCOUNTING TERM 2 CONTENT MANUAL GRADE 10 NB. The numbering of the Activities are not changed. The numbering of the different activities is done according to the original sources where they were taken from. Book 1 of 2

RECONCILIATIONS To reconcile means to compare two sets of records to ensure that the figures agree and are accurate Debtors and creditors reconciliation with the lists  The debtors and creditors control accounts are reconciled with the lists.  The lists show the individual accounts owed by each debtor and owed to each creditor while the control accounts show the summary of all transactions affecting the debtors and creditors.  These balances (lists) are taken from the debtors’ and creditors’ ledgers.  Individual transactions from the journals are used to prepare the debtors and creditors ledger which is used to prepare the lists. Concepts and terminology No. Concept Definition/ meanings 1. Debtors Customer who are buying on credit from the business ((They owe the business) 2. Creditors Suppliers from whom the business is buying on credit 3. Debtors journal Subsidiary book in which all customers that were sold goods on credit are recorded. 4. Creditors Subsidiary in which the business records all suppliers from which journal they are buying goods on credit. 5. Debtors ledger Subsidiary ledger that has accounts of all the customers to whom goods were sold on credit (Individual debtors’ accounts) 6. Creditors ledger Subsidiary ledger that has accounts of all suppliers from whom the business is buying on credit (Individual creditors’ account) 7. Control Summary of transactions in the subsidiary ledgers. Are accounts accounts that are opened to check the accuracy of posting to the subsidiary ledgers(debtors and creditors ledger) 8. Debtors list A list of All debtors drawn from the debtor’s ledger. 9. Creditors list A list of All creditors drawn from the creditor’s ledger. 10. Debtors Control Summary of all the debtors from the debtors ledger account 11. Creditors Summary of all creditors from the creditors ledger Control account 12. Casting Totaling of journals at the end of the month 13. Under cast Means that the total is less than it should be. We must add on the amount to correct the total. 14. Overcast Means that the total is less than it should be. We must subtract the amount to correct the total. 15. Reconciliation Make the total of debtors in the debtor’s ledger to be the same (agree) as the balance of the debtors control account in the general ledger.

RECONCILIATION OF DEBTORS DEBTORS CONTROL ACCOUNT Preparing the debtors control = It is drawn from the totals of journals that affecting debtors NOTE TO TEACHERS: Learners must know the format of the Debtors’ control account and also to read back transactions. i.e. they must be able to give the original transactions if provided with the control account 1. Entries on the debit side  Opening balance = totals of each account in the debtor’s ledger  Credit sales of goods to customers from the DJ  Cash paid on behalf of debtor from PCJ  Entries of interest charged/transfers/ correction form GJ 2. Entries on the credit side  Payment from and customers CRJ  Discount to customers CRJ  Goods returned from customers / allowances to debtors from DAJ  Entries bad debts written off from GJ DEBTOR’S CONTROL ACCOUNT 2011 2011 Feb 1 Balance b/d 52 600 Feb 28 Bank CRJ 87 000 Discount allowed CRJ 600 28 Sales DJ 118 600 Debtor’s DAJ 5 100 Allowances Petty Cash PCJ 1 200 Journal credit GJ 1 000 Journal debit GJ 300 Balance c/d 79 000 172 700 172 700 Mar 1 Balance b/d 79 000

Reconcile the individual debtors accounts (total of debtors list) with Debtors control account At the end of every month it is normal procedure to compare the balance of the debtor’s control account with the total of the debtor’s list. The control account and the debtor’s ledger should be done by separate people. If the balance of the control account and the total of the list is the same, it is an indication that the work has been done accurately by both parties. If the balance of the Debtor’s control and the total of the Debtor’s list are not the same we must find out why and then correct it. This is called reconciliation of the Debtor’s Accounts. In order to do this reconciliation, we need to identify where the mistake took place. When we have done this we will have a better idea of how to do the correction. Possible errors  If the mistake took place on the Document or in the Journals we will have to correct both the Debtor’s Control and the Debtor’s Ledger accounts (i.e. the List).  If the mistake was totaling of the journals, then only the Debtor’s control account must be corrected.  If the mistake was in the posting, it will mean that either the Debtor’s control or Debtor’s Ledger will have to be corrected depending on to which account the posting was made in the first place  If there is a calculation mistake in either the Debtor’s control or Debtor’s Ledger the calculation will simply be rectified i.e. added correctly.

Documents given to debtors e.g. invoices, receipts, credit notes. Entered in the correct Journal POST the totals POST individual amounts to the to the DEBTOR’S CONTROL account DEBTOR’S LEDGER accounts balance of total of DEBTOR’S CONTROL Should be DEBTOR’S LIST equal Procedure for Reconciliation of debtors control account with the list. STEP 1. Check that all calculations have been done accurately STEP 2. Check that all the items in the Debtor’s Control account are in the right place (debit or credit side) STEP 3. Check that all totals in the journals have been correctly calculated and have been posted to the Control account correctly. STEP 4. Check that all calculations the Debtor’s Ledger (List) have been done accurately.

RECONCILIATION OF CREDITORS As with Debtors we also are required to reconcile the Creditor’s control balance with the Creditor’s List. Again we can us the diagram below to identify where the mistake took place and where we need to do the correction. POSSIBLE ERRORS  If the mistake took place on the Document or in the Journals we will have to correct both the Creditor’s Control and the Creditor’s Ledger accounts (i.e. the List).  If the mistake was totaling of the journals, then only the Creditor’s control account must be corrected.  If the mistake was in the posting, it will mean that either the Creditor’s control or Creditor’s Ledger will have to be corrected depending on to which account the posting was made in the first place.  If there is a calculation mistake in either the Creditor’s control or Creditor’s Ledger the calculation will simply be rectified i.e. added correctly. documents received from or given to CREDITORS e.g. invoices, cheques, debit notes. POST Entered in the correct POST Journal totals individual amounts to the to the CREDITOR’S CONTROL CREDITOR’S LEDGER account accounts CREDITOR’S CONTROL balance Should be CREDITOR’S LIST total equal CREDITOR’S CONTROL ACCOUNT 2011 2011 Feb 28 Bank CPJ 99 000 Feb 1 Balance b/d 57 600 Discount Total CJ 139 500 received CPJ 300 28 purchases Total CAJ 15 100 Journal allowances credits GJ 500 Journal debits GJ 200 Balance c/d 83 000 197 600 197 600 Mar 1 Balance b/d 83 000

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QUESTION 1 DEBTORS RECONCILIATION (23 marks; 14 minutes) 1.1 Choose the correct answer from the words provided within brackets. Write only the answer, next to each number (1.1.1 – 1.1.2) in the ANSWER BOOK. 1.1.1 A (debit note/credit note) is the source document for goods returned by a debtor. 1.1.2 A (cash discount/trade discount) is offered when accounts are settled (2) within a certain time. 1.2 DEBTORS RECONCILIATION The information below, relates to JT Traders for June 2017. REQUIRED: 1.2.1 Calculate the correct Debtors Control balance on 30 June 2017. (4) 1.2.2 Calculate the balances for the debtors listed in the ANSWER BOOK. (12) 1.2.3 List TWO internal control measures that JT Traders can use to ensure that only reliable clients are granted credit. INFORMATION: A. Balances on 30 June 2017 (before errors and omissions): Debtors Control balance R74 600 Debtors list balance 70 000 N. Pillai 21 600 Y. Bosman 12 400 C. Tele 24 900 A. Botha ? B. Errors and omissions discovered: (i) The Debtors Journal was overcast by R3 500. (ii) An allowance of R800 granted to Pillai for damaged goods dispatched was entered in the wrong side of her account. (iii) Goods sold on credit to Botha for R6 300 was entered incorrectly to his account as R3 600. Posting to the General Ledger was correct. (iv) EFT for R2 500 received from Tele was recorded in the account of Bosman in error.

QUESTION 1 1.1 1.1.1 1.1.2 1.2 DEBTORS RECONCILIATION 1.2.1 Calculate the correct Debtors Control balance on 30 June 2017 74 600 1.2.2 Calculate the balances for the following debtors: Pillai Tele Botha Bosman 1.2.3 List TWO internal control measures that JT Traders can use to ensure that only reliable clients are granted credit.

1.2 DEBTORS' RECONCILIATION Information from the records of Amber Traders for November 2017 is presented. Some errors and omissions were noted. See information B. REQUIRED 1.2.1 Calculate the correct Debtors' Control Balance on 30 November 2017. Show figures and indicate '+', '–' or 'No change' at EACH adjustment. (7) 1.2.2 Calculate the correct total of the debtors' list on 30 November 2017. (10) INFORMATION: Errors and omissions: A. i. The total of the Debtors' Journal was under-cast by R2 700. ii. Interest of R350 must be charged on the overdue account of S Muller. iii. An amount of R3 100 received from L Nkosi was incorrectly recorded as R1 300 in the Cash Receipts Journal and posted as such to the General Ledger and the Debtors' Ledger. iv. Trading stock returned by B Sandleni was posted to the wrong side of his Debtors' Ledger Account, R1 200. v. No entry was made for a credit sales invoice issued to M Dube R1 500. 1.2 DEBTORS' RECONCILIATION CORRECTIONS TO THE DEBTORS' CONTROL ACCOUNTON 30 NOVEMBER 2017 1.2.1 Balance before errors and omissions 25 700 i. ii. iii. iv. v. Correct Debtors' Control balance 1.2.2 DEBTORS' LIST ON 30 NOVEMBER 2017 L Nkosi S Muller M Dube S Sandleni Correct total in Debtors’ List

QUESTION 2: DEBTORS' RECONCILIATION 2.1 Indicate whether the following statements are TRUE or FALSE. Choose the answer and write only 'true' or 'false' next to the question number (2.1.1–2.1.3) in the ANSWER BOOK. 2.1.1 The balance in the Debtors' Control Account should equal the total of the debtors' list. 2.1.2 Bad debts will be recorded in the Debtors' Allowances Journal. 2.1.3 The source document for the debtor’s journal is the original invoice 2.2 MIZZY BOUTIQUE Use the table provided to indicate corrections that must be made to the Debtors' Control Account and the debtors' list. Provide figures and a plus (+) or minus (–) sign for each correction. INFORMATION: A. Debtors’ Control Account Debtors’ List Balance/Totals R37 710 R39 490 B. Errors or omissions to be corrected a. No entry was made for an invoice for R7 440 issued to G Gwen. b. A receipt for R9 400 issued to debtor B Crawley was recorded correctly in the relevant journal. It was posted incorrectly as R4 900 to his Debtors' Ledger Account. c. An invoice for R1 360 issued to A Naidoo was correctly recorded in the DJ. It was posted in error to the wrong side of her account in the Debtors' Ledger d. A EFT for R1 350 received from D Zulu was recorded in the CRJ and posted to the Debtors' Control Account and Debtors' Ledger accordingly. D Zulu's account was previously written off. e. A credit note for R720 issued to W Wallace was recorded in the DAJ as R270 and posted as such. f. Credit sales to J Taylor for R1 950 was not recorded. 2.3 Explain TWO measures to improve collection from debtors.

QUESTION 2 2.1 TRUE OR FALSE 2.1.1 2.1.2 2.1.3 2.2 MIZZY BOUTIQUE Use the table provided to indicate corrections that must be made to the Debtors’ Control Account and the debtors’ List Provide figures and a plus (+) or minus (-) sign for each correction. Debtors Control Account Debtors List Balance/Totals on 28 February 2017 R37 710 R39 490 a. b. c. d. e. f. Balance/Totals on 28 February 2017 2.3 Explain TWO measures to improve collection from debtors.

QUESTION 3 3.1 Simply Traders have the telephone numbers of all their debtors. What other information should they obtain before allowing customers to open accounts? State TWO points with a reason in EACH case. (4) 3.2 Refer to information A, B and C.  Calculate the closing balance of the Debtors' Control Account on 31 October 2016  Calculate the correct amounts owing by debtors:  J Ramsay  W Smith  C Prince INFORMATION: A. Balance of the Debtors’ Control Account on 31 October 2016, R179 500 before adjustments. B. Debtors’ List on 31 October 2016. DEBTORS FOLIO AMOUNT M Coley D1 R60 200 J Ramsay D2 37 500 W Smith D3 19 500 D Cummings D4 42 000 C Prince D5 3 900 TOTAL R163 100 C. The following errors and omissions must be taken into account: a. An invoice for R2 500 issued to W Smith was not recorded in the books of Simply Traders. b. The total of the Debtors' Allowances Journal was posted to the Debtors’ Control Account as R20 100 instead of R21 000 c. An invoice for R4 300 issued to C Prince was posted incorrectly to the account of J Ramsay. d. Stock for R5 100 sold to C Prince was treated as a return of goods when posting it to the Debtors' Ledger Account of C Prince. e. Credit sales to J Ramsay for R8 500 was not recorded. f. An invoice for R3 600 issued to W Smith was recorded correctly in the Debtors' Journal but posted as R6 300 to his account in the Debtors' Ledger. g. The total for discount allowed in the CRJ was overstated by R500.

QUESTION 3 SIMPLY TRADERS 3.1 Simply Traders have the telephone numbers of all their debtors. What other information should they obtain before allowing customers to open accounts? State TWO points with a reason in EACH case. Information to be obtained Reason Point 1 Point 2 3.2 Calculate the closing balance of the Debtors' Control Account on 31 October 2016 Calculate the correct amounts owing by debtors: Calculations Balance J. Ramsay W Smith C Prince

1.1 CREDITORS RECONCILIATION The Creditors’ Control account and Creditors’ List of Mega Stores were prepared by an inexperienced bookkeeper. She identified the following figures at the end of the month:  Creditors’ Control balance R55 670  Creditors’ List R39 240 REQUIRED: 1.1.1 Why should these two figures agree? 1.1.2 Calculate the amended balance of the creditors’ control account and Creditors’ List. Use the format provided to show your workings. INFORMATION: An investigation revealed the following: a. An adding error in the Creditors’ List resulted in the total being undercast by R480. b. A credit purchase of Stationery from Micro Ltd for R1 960 was left out of the books in error. c. Trading stock returned to Excess Ltd, R720, was entered correctly in the Creditors Allowances Journal (CAJ) but was posted as R270 to the creditors’ account of Excess Ltd. d. The Creditors Control total in the Cash Payments Journal is R8 200. The bookkeeper credited this to the Creditors Control account by mistake.

1.1 CREDITORS RECONCILIATION 1.1.1 Why should these two figures agree? 1.1.2 Calculate the amended balance of the creditors’ control account and Creditors’ List. Use the format provided to show your workings. Creditors’ Control Creditors’ List Provisional R55 670 R39 240 balance/total Transaction (a) Transaction (b) Transaction (c) Transaction (d) Correct balance/total

QUESTION 2: RECONCILIATION (35 marks; 30 minutes) The information below relates to Charl Traders for October 2018. REQUIRED: 2.1 Explain why the Creditors Control account balance and the Creditors list total should be equal. (2) 2.2 Refer to the Creditors Control Account (Information A) and Information C: Show the corrections to the Creditors Control account by completing the table provided. Use only positive figures in either the debit or credit column. Calculate the correct Creditors Control balance on 31 October 2018. (11) 2.3 Refer to Information B and C: Prepare the correct Creditors List on 31 October 2018. Show all workings next to the appropriate Creditor. (18) 2.4 Charl wants to improve the management of his creditors. Provide TWO internal control measures that he can use to achieve his goal. (4) INFORMATION: A. The Creditors’ Control account before taking into account Information C : GENERAL LEDGER OF CHARL TRADERS Dr CREDITORS CONTROL Cr 2018 Bank and 2018 Oct 31 CPJ 62 910 Oct 1 Balance b/d 48 735 discount received Total returns CAJ 3 510 31 Credit purchases CJ 72 480 and allowances Journal debits GJ 2 250 Journal credits GJ 1 450 B. The incorrect Creditors' list on 31 October 2018: CREDITORS DEBIT CREDIT Green Stores 14 255 Becker Ltd 13 505 Suns Warehouse 5 685 Lamb Suppliers 8 940 Brown Stores 1 315 ZZ Distributors 2 120 Best Bakery 9 615

C. ADDITIONAL INFORMATION (i) The total in the Creditors Journal was under-stated by R2 000. (ii) Due to a calculation error, the balance of Becker Ltd.’s creditor’s ledger account was reflected as R13 505 instead of R23 505. (iii) An invoice for goods bought from Suns Warehouse, R895, was recorded in the Creditors' Journal as R985, and posted as such. (iv) A debit note of R960 was issued to Suns Warehouse for goods returned to them. They did accept the returns but no entry was made in the books of Charl Traders for this transaction. (v) An invoice for R1 460 received from Brown Stores and correctly recorded in the journals, was incorrectly posted to the creditors ledger account of Lamb Suppliers. (vi) The Creditors’ Control column in the Cash Payments Journal included an amount of R2 120 paid to ZZ Distributors for cash purchases. (vii) Merchandise of R1 285 was returned to Best Bakery and correctly entered in the Creditors’ Allowances Journal. However, it was posted to Best Bakery's account in the Creditors’ Ledger as a purchase.

QUESTION 2 (35 marks; 30 minutes) 2.1 Explain why the Creditors Control account balance and the Creditors list total should be equal. 2 2.2 Corrections to the Creditors Control Account DETAILS DEBIT SIDE CREDIT SIDE Balance on 1 October 2018 48 735 Credit purchases of stock 72 480 Journal credits 1 450 Bank and discount received 62 910 Total returns and allowances 3 510 Journal debits 2 250 Additional information (i) (ii) (iii) (iv) (v) (vi) TOTAL OF EACH COLUMN Balance on 31 October 2018 11

2.3 CREDITORS' LIST ON 31 OCTOBER 2018 CREDITOR DEBIT CREDIT Green Stores 14 255 Becker Ltd  Suns Warehouse (5 685 Lamb Suppliers (8 940 Brown Stores ZZ Distributors Best Bakery 18  2.4 Charl wants to improve the management of his creditors. Provide TWO internal control measures that he can use to achieve his goal. 4

ACTIVITY 1 1.1 GAAP PRINCIPLES Match the example in column A to the concept in column B. Write only the letter (A–D) next to the question number (1.1.1. – 1.1.4) in the ANSWER BOOK. Example Concept 1.1.1 A debtor, who owes R1 270, was written off as a bad A Materiality debt as he could not be traced. 1.1.2 Interest on overdraft is not shown as part of bank B Entity charges. 1.1.3 An amount of R450, still due for telephone at the end C Matching of the financial year, will be added to telephone expense in the income statement for the current year. 1.1.4 The owner pays her personal cell phone account with D Prudence a business debit card. She does not record the amount as an expense to the business. 1.1.1 1.1.2 1.1.3 1.1.4 GAAP PRINCIPLES Choose a GAAP principle in COLUMN B that matches the description in COLUMN A. Write only the letters (A–F) next to the question numbers (4.1.1 to 4.1.5) in the ANSWER BOOK. 4.1.1 The original cost of the assets of a business need A prudence to be recorded. 4.1.2 All significant information needs to be clearly B matching shown in the financial statements of a business. 4.1.3 Income and expenses must be recorded in the C business entity correct financial period. 4.1.4 Financial Statements are prepared with the D materiality assumption that the business does not expect to close down in the near future. 4.1.5 The owner and business are seen as two E historical cost separate entities for accounting purposes. F going concern 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5

ACTIVITY 2 CONCEPTS Match the correct definition in COLUMN B to the correct concept in COLUMN A. Only write the alphabetical letter next to the number on the answer book, do not rewrite the definition COLUMN A COLUMN B 2.1.1 Non-current A Earnings made when incomes are greater than assets expenses 2.1.2 Current assets B Resources that remain in the business for longer than a year 2.1.3 Non-current C Debts which are due for payment within the current liabilities year 2.1.4 Current D Cash or resources which will be changed into cash liabilities within a year E Debts which are due to be paid in a future financial year 1.1.1 1.1.2 1.1.3 1.1.4 QUESTION 1 1.1 SOURCE DOCUMENTS Match the purpose in COLUMN A with the source document in COLUMN B. Write only the letter (A – E) next to the question number (1.1.1 – 1.1.5) in the ANSWER BOOK. COLUMN A COLUMN B 1.1.1 The document indicating payments A Credit note from petty cash. 1.1.2 The document used for recording B Duplicate receipt cash sales. 1.1.3 The document used when a debtor C Petty cash voucher returns goods. 1.1.4 The document used for recording D Cash register roll credit sales. 1.1.5 The document used for recording E Duplicate invoice money received from a debtor. 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5

QUESTION 1 GENERAL LEDGER (37 marks : 30 minutes) The information given below was extracted from the accounting records of ACE Traders during June 2018. This business applies a mark-up of 33 1/3 % REQUIRED: 1.1 Prepare the following accounts in the General Ledger 1.1.1 Trading stock (12) 1.1.2 Debtors control (10) 1.1.3 Bank (5) 1.1.4 Creditors control (10) INFORMATION: A Balances in the General Ledger as at 1 June 2018 Trading stock R14 500 Debtors control R15 368 Bank (debit) R2 349 Creditors control R12 420 B Total columns in the Journals: on 30 June 2018 1 Cash Receipts Journal Debtors control Bank Receipt Discount Sales Cost of Sundry s allowed sales accounts ? 7 540 340 5 400 ? 4 500 2 Cash Payments Journal Creditors control Bank Debtor Wage Trading Payment Discount Sundry s s stock s received accounts control 21 040 600 3 800 ? 7 040 340 4 200 3 Debtors Journal Sales Cost of sales 9 488 ? 4 Debtors Allowance Journal Debtors allowance Cost of sales 396 200

5 Creditors Journal Creditors Trading Equipment Stationery Consumable Sundry control stock stores accounts ? 4 800 1 600 700 1 300 800 6 Creditors Allowance Journal Creditors Trading Equipment Stationery Consumable Sundry control stock stores accounts 2 400 ? 600 300 200 400 7 General Journal Debtors control Creditors control Debit Credit Debit Credit Debit Credit 492 236 632 298

QUESTION 1 GENERAL LEDGER OF ACE TRADERS TRADING STOCK 2018 2018 June 1 June 30 30 July 1 DEBTORS CONTROL 2018 2018 June 1 June 30 30 July 1 BANK 2018 2018 June 1 June 30 30 July 1

CREDITORS CONTROL 2018 2018 June 30 June 1 30 July 1

1.2 ANALYSIS OF TRANSACTIONS REQUIRED: Analyse the following transactions according to the headings provided in the ANSWER BOOK. (25) Assume that the Bank balance is favourable for all the transactions. Example: Paid the telephone account, R800. TRANSACTIONS: 1.2.1 A debtor, M Spark was declared insolvent. Received R450 and the final dividend of 40c in a rand must be written off. 1.2.2 The owner donated stock on behalf of the business to the local high school for their matric farewell, R900. 1.2.3 Bought duplicating papers from Waltons on credit, R400. 1.2.4 Direct deposit or R200 was made by a debtor in settlement of an account of R240 1.2 ACCOUNTING EQUATION GENERAL LEDGER AMOUNT EQUATION Account debited Account credited R A O L E.g. Telephone Bank 800 - - O 1.2.1 450 1.2.2 Trading Stock 900 1.2.3 400 1.2.4 200 25 40