Accounting Grade 12 Paper 2 GAU June 2023 Memo

Downloaded from hlayiso.com JUNE EXAMINATION GRADE12 2023 FINAL MARKING GUIDELINES 13 pages MARKING PRINCIPLES: I ACCOUNTING I 1. Unless otherwise stated in the marking guidelines, penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for that item (no penalty for misplaced item). No double penalty applied. 2. Penalties for placement or poor presentation (e.g., details) are applied only if the candidate is earning marks on the figures for that item. 3. Unless otherwise stated, give full marks for correct answer. If answer is incorrect, mark workings. 4. If a pre-adjustment figure is shown as a final figure, allocate the part-mark for the working for that figure (not the method mark for the answer). Note: If figures are stipulated in memo for components of workings, these do not carry the method mark for final answer as well. 5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark. If no + or - sign or bracket is provided, assume that the figure is positive. 6. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates. 7. If candidates provide more that the required number of responses, inspect all responses to give benefit to the candidate. Penalties may be applied for foreign entries if candidates earn full marks on a question (max. -2 per Q). 8. Where penalties are applied, the marks for that section of the question cannot be a final negative. 9. Where method marks are awarded for operation, marker must inspect reasonableness of the answer. 10 Operation means 'check operation'. 'One part correct' means operation and one part correct. Note: check operation must be+,-, x, +, or per memo. 11 In calculations, do not award marks for workings if numerator & denominator ar ·• apped - this also applies to ratios. 12 In awarding method marks, ensure that candidates do not get full marks for a that is incorrect at least in part. Indicate with a IZJ. 13 ' Note that one comment Be aware of candidates who provide valid alternatives beyond the marking guileliae. could contain different aspects. 14 Codes: f = foreign item; p = placement/presentation. Sta 1110 p

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES (PAPER 2) QUESTION 1 1.1 CONCEPTS: 1.1.1 | Bank Reconciliation Statement 1.1.2 | Debit order 1.1.3 _| Internal 3 1.2 MOUNTAIN TRADERS 1.2.1 Calculate the correct bank account balance in the General Ledger on 30 April 2023. CASH RECEIPTS JOURNAL CASH PAYMENT JOURNAL R112 850 R125 128 R3 000 R5 000 (R18 700 — R15 700) (R29 800 — R24 800) R39 744 R4 800 R56 000 R22 500 (R50 000 + R6 000) one mark one mark R3 500 R650 R600 R180 R211 594 “0 R162 358 */f totals include the pre-printed Fins -R25 650 _ + R211 5940 - R162 3580 = R23 5860 18

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING (PAPER 2) MARKING GUIDELINES 1.2.2 Bank Reconciliation Statement on 30 April 2023 DEBIT CREDIT Balance a$-per Bank Statement 46 548 Seana ha ate 29 ‘i 33 9230 Outstanding-EFTs: 301 1.285 309 12 800 Credit amount incorrectly debited 2 200 Debit amount incorrectly credited 45 000 (two marks) 22 500 +22 500 Balance as per Bank account 23 586* 0 * Figure can be dror cr 82 671 82 671 8 1.2.3 | The internal auditor is concerned about the management of cash in the business. Explain TWO different problems to justify his concern. Quote figures and dates. e Rolling/late deposits of cash because of outstanding deposit (R16 800) on 17 March only deposited on 28 March. e Outstanding deposit on 20 March was deposited on 1 April but R5 000 is missing/ Theft of R 5000. e The payment of Shaun’s WIFI account of R2 200/ No authorization of payment/ No division of duties / Fraud. 4 Give advice on how such problems can be avoided in future. Provide TWO points. Any TWO valid responses: e Deposits must be made daily. e Request notification from the bank for all transactions /SMS from the bank e Division of duties/one person serves as a check on another e Verify the deposit slips against receipts (before and after banking)/cash transactions must be reconciled daily e Check bank statements promptly. e Use security companies to collect cash. e Ask customers to pay by EFT/Direct deposits e Background/Police clearance of employee. 7 1.3 CREDITORS' RECONCILIATION

1.3.1 1.3.2(a) Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES (PAPER 2) ' Creditors’ Reconciliation Creditors' Ledger Statement Balance R66 255 R58 200 A (R625) VV B R630/V (R1 870) V c (R10 200) v (R10 200) V D R1 800/V E R2 150/ (R14 300) V/V F (R9 400 + R4 900) One mark = one marks G R4 850V H (R3 470) VV R46 610 #4 R46 610 16 Suggest ONE possible action that the business can take against the employee. Any ONE valid points Award part-mark for unclear/incomplete explanation e@ Open a criminal case/Take legal action. e Deduct the amount from his salary. e Subject the employee to a disciplinary hearing/written warning/suspend the employee. 2 S@2 aii aia 4

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES (PAPER 2) 1.3.2(b) | Suggest ONE internal control procedure to prevent this from happening in the future. Division of duties/ one person check orders, the other receives stock. Proper authorisation of orders. The invoice must be signed by the manager/owner to indicate that permission was given to order goods. Stock records to be updated with every invoice. Regular stock counts to compare to records. 2 TOTAL MARKS 55 oa

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES | (paper 2) GR12 0623 QUESTION 2 2.1 CONCEPTS 2.1.2 ID 2.1.3 pA 3 2.2 CLIP PRODUCERS 2.2.1 Direct material cost Opening stock 90 000 Net purchases (467 800-62000 ) 405800 0 Carriage on purchases (2 500 x 16) 40000 JO Custom duties (467 800 x 15%) 70170 O Carriage and custom can be answered in one line Total 110 170 four marks 605 970 Closing stock Ignore brackets, balancing figure (78360) 0 Direct material cost 527 610 9 2.2.2 Factory overhead cost Depreciation on factory equipment 71 700 Indirect material 105 000 x 85% 89 250 it] (26 730 + 97 000 - 18 730) OR 105 000 - 15 750 Loss due to floods 18 600 a (43 400 x 30/70) or (62 000 see 2.2.1 - 43 400) Indirect labour [(213 200 + 42 640 0) x 3/5] 153 504 it] (2050x2x52) (if GWx 20%) Factory foreman 168 000 3 Water and electricity (54-675 it] (68 900 x 75%) or (68 900 — 17 225) i Rent expense 188 760 O (251 680 x 750/1 000) or (251 680 — 62 920) (228 800 + 22 880) Insurance (48 000 x %) or (48 000-12 000) 36 000 a (48 000 x 6/4 x 2/4) 777 489 it] SOR aii aia 6

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES (PAPER 2) Method mark = one part correct 2.2.3 ~~ Statement for the year ended 28 February 2023. Direopenerial cost 527 610 Direct labour cost 873600 + 115200 988 800 vo (9 100 x 8 x 12) Prime cost 1516410 JO Factory overhead cost 777489 «0 Total manufacturing cost 2293899 JO Work-in-progress — beginning of the year 46 000 2339899 O

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING (PAPER 2) MARKING GUIDELINES 2.3 SPARKLING MANUFACTURES 2.3.1 | Prove thatthe breakeven point is correct. 3 892 000 Sales 5 994 950 2780 x1400 2780 ~x 1400 @BEP 4449 4 220 OR FC (3 892 000) | or | (6500-2251) (6 500 — 2280) vc (2 102 950) @BEP 875 or 874,8 923 or 922,3 0 Incorrect VC/U used 2.3.2 | Lerato is worried about the performance of the business due to increased loadshedding since 2022 and a new competitor and the impact it has on her profit. Do you think Lerato needs to be concerned? Motivate your answer by quoting figures to support your answer. Response for Four marks e Still made a profit although profit decreased from 637 (1 700 — 1 063) units in 2022 to 477 (1 400 — 923) units in 2023/ profit decreased with 160 units/ or profit decreased with 25.12% e The profit decreased from R2 646 735 (R4 155 x 637) in 2022 to R2 012 940 (R4 220 x 477)/by R633 795 (23,95%). e The revenue from sales decreased from R10 540 000 (R6 200 x 1 700) to R9 100 000 (R6 500 x 1 400)/by R1 440 000. Responses for 2 marks max. (If mentioned production only or BEP only, with figures) e The units produced and sold decreased from 1 700 units in 2022 to 1 400 units in 2023 / Decreased with 300 units/ decreased with 17.6%. e The BEP decreased from 1 063 to 923 units in 2023/ decreased with 4 140 units/ decreased with 13.2%. TOTAL MARKS 40 SOR aii aia 8

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES | (paper 2) GR12 0623 QUESTION 3 3.1 CONCEPTS 3.1} True 3.4.2—} False 3.1.3 | True 3 3.2 LEATHER CITY 3.2.1. Calculate the following for the year ended 31 March 2023: Value of closing stock ITEM WORKINGS ANSWER Basic R540000 +R5 265000 —R5 580 000 R225 0000 (372 x R15 000) Or (36+351) - 372 387 one mark =15 units x R15 000 one mark Elite R414 000 +R4 393000 —R161000 -4 117000 R529 0000 (7 x R23 000) (179 x R23 000) Or (18 + 191 -7) 202 - 179 =23 units x R23000 one mark Or alternative if consider display units (18 + 191 - 8) 201 - 179 R506 000 =22units x R23 000 one mark 414 000 + 4 393 000 — 184 000 — 4 117 000 TOTAL 754 0000 Or 731 000 10

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES (PAPER 2) Cost of sales WORKINGS ANSWER 0 954 R9 702 9500 00054=9 658 000 - 155050 - 754000 One part correct (22 150 x 7) Oralternative if display units considered 954 000 + 9 658 000 - 155050 -— 23000 - 731000 (22 150x7) (1x23000) see above OR (Valid for both alternatives) 6 5580000 + 4117000 + 5950 (372 x 15 000) (179 x 23 000) (7 x 850) Gross profit WORKINGS ANSWER R15 124 600 -—R9 702 9500 RS 421 6500 3.2.2 | Calculate the average stock holding period for the Elite range. Closing stock: 20,5 three marks % (18 +23) O x 365 179 = 41,8 days 0 OR 471 500 Ye (414 000 + 529 000) see 3.21 x 365 4 122 950 ) =41,7 days OR Alternative with display units Closing stock: 20 three marks % (18 +22) 0 x 365 179 = 40.8 days 0 OR 460 000 % (414 000 + 506 000)see 3.2.1 4 123 800 40.8 days SOR aan talics 10

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES (PAPER 2) 3.2.3. | The CEO is satisfied with the performance of the Basic range compared to the Elite range. Give THREE reasons to justify his satisfaction. Quote figures or calculations to —T = answer. REASON The stock holding period improved from 25,3 days in 2022 to 14,7 Stock holding | days in 2023. Stock is selling faster in 2023 compared to 2022. period Basic stock holding period of 14.7 days, is shorter than the stock holding period of Elite. REASON 2 The Basic range has no/0 returns to the suppliers compared to Returns the Elite range which has 7 in total. This indicates good quality from the suppliers. REASON 3 Although the aimed mark-up was not achieved, 96,1% of the % Gross profit | Basic range were sold compared to only 89,1% of the Elite range. on cost of Offering trade discounts to customers did have a positive effect. sales Basic sold 372 units comparing to 179 units of Elite. The gross profit on the Basic range is R2 957 400 which is more compared to the Elite range at R2 463 400. 3.2.4 | During the physical stock count, it was discovered that 55 pillows are missing. This must be written off. Calculate the value of the pillows that must be written off. 632135 = 403,90 1565 403,9 x 55 units = R22 215,60" accept R22 216 three marks *(if x 55 units) 3.2.5 | The owner is of the opinion that changing the method of valuating the stock from weighted-average method to FIFO will be more beneficial to the business. Provide a reason to support this change if SARS grants permission to shee: e tis more realistic as stock will be valued at the most recent prices. The average price is R403,92 but the most recent purchase price is R430. e Gross profit will increase, because cost of sales will decrease and closing stock balance will be higher. TOTAL MARKS 40 QUESTION 4 41 Identify ONE problem regarding each helicopter/pilot. Quote figures to support your answer. Give ONE point of advice for EACH problem identified. $QQR covrrcrconc 11

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES (PAPER 2) Problem with a Advice Helicopter 1: e The helicopter is the oldest. | e Consider replacing the Blue Island The book value is R300 000. helicopter, it is more The carrying value will be expensive to maintain. R1 in 2024. e Most expensive per km. Petrol cost per km is R3,90, 90c more per km compared to the other two helicopters/ Maintenance high R 2 257 500. e Oldest helicopter and making more trips than Green Island per day. Helicopter 2: | e 3 180 trips made x 50 km e Possible disciplinary Red Island should travel 159 000 km but action against John for actually travelled unauthorised use of 164 300 km. helicopter./Improve e Travelled 5 300 km more. internal control over the e 106 extra trips done use of the helicopter. (3 286 — 3 180). e Spending R15 900 more on fuel (R492 900 — R477 000 and R63 600 (R1 971 600 — R1 908 000) on maintenance. e Loss of income is R890 400 (106 x 3 x R2 800)./Should have 9 858 customers but actually had 9 540 only. Helicopter 3 e Masego is paid the most e Investigate the reason for Green Island (R42 000 per month) but absenteeism./Masego works the least — takes too must take unpaid leave if much time off. Was absent he exceeds 14 days per for 66 days. year without a reason./ e 1480 trips x 50 km = 74 000 pay only for hours or km km but actually travelled worked. 75 000 km. The owner e The personal km travelled travelled 1 000 km for by the owner should be personal use. recorded-as-drawings and e Least number of trips per not as a/business day. On average 8 trips per expense} day compared to 10 and12 |e If Masegols absent, respectively. Susan should use Green Island. _Itis cheaper. 12

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com ACCOUNTING MARKING GUIDELINES (PAPER 2) 4.2 Nixon asked you, as the internal auditor, to keep the personal trips as a business expense and not as a personal expense. 4.2.1. | Explain-to.Nixon which GAAP principle is applied in showing this as drawings and not-as-a business expense. Business-entity principle 1 4.2.2 | What will the consequences be for the company if it is shown as a business expense? e This is regarded as tax evasion. The income tax will be calculated incorrectly. e The profit will be calculated incorrectly/ less profit/bigger loss. 2 4.3 Lerato would like to purchase the Blue Island helicopter at the beginning of 2024 for R270 000. 4.3.1 | Should the company be satisfied with the price offered? Quote figures to support your answer. No R270 000 is below the book value of R300 000, this will be shown as a loss on disposal 2 of asset of R30 000. Or Yes Makes a profit. Accept profit of R232 500 (270 000 — 37500) or R269 999 (270 000 — 1) or R270 000. 4.3.2 | What procedure would you advise them to have in place before any asset of the business can be sold? e Tender procedure should be in place and open to the public to tender. e Asset disposal — must check carrying value before selling price is decided on. TOTAL MARKS 15 TOTAL: 150