Accounting Grade 12 Paper 2 GAU June 2023 Question Paper

Downloaded from hlayiso.com JUNE EXAMINATION TIME: 2 hours ACCOUNTING P2 MARKS: 150 15 pages + 1 formula sheet X05 1 1 1 11 1 Please turn 01•er

Downloaded from hlayiso.com Downloaded from Stanmorephysics| INSTRUCTIONS AND INFORMATION EF RECOUNTING (PAPER 2) IGR12 0623 Read the following-instructions carefully and follow them precisely. 1. 2. Answer AL& the questions. A special ANSWER BOOK is provided to answer ALL the questions. Show ALL workings to earn part-marks. You may use a non-programmable calculator. You may use a dark pencil or blue/black ink to answer questions. Where applicable, show ALL calculations to ONE decimal point. If you choose to do so, you may use the Financial Indicator Formula Sheet attached at the end of this question paper. The use of this formula sheet is NOT compulsory. Write neatly and legibly. Use the information in the table below as a guide when answering the question paper. Try NOT to deviate from it. QUESTION TOPIC MARKS _ | MINUTES 1 Reconciliation 55 44 2 Manufacturing 40 32 3 Inventory 40 32 4 Fixed assets 15 12 TOTAL 150 120

Downloaded from hlayiso.com Downloaded from Stanmorephysics[ZeeGuntine 3 (PAPER 2) IGR12 0623 QUESTION 1: RECONCILIATION (55 marks ; 44 minutes) BANK RECONCILIATION 1.1 CONCEPTS! Choose thé, word(s) between the brackets to make the statement true. Write only the correct word(s) in the ANSWER BOOK provided. 1.1.1 Outstanding EFTs must be entered in the (CPJ/Bank Reconciliation Statement). (1) 1.1.2 A (debit order/stop order) is an instruction to a third party that money must be deducted from your bank account. (1) 1.1.3. It is the responsibility of the (internal/external) auditor to follow up on the Bank Reconciliation Statement. (1) 1.2 MOUNTAIN TRADERS The information below relates to April 2023. The official bank statement, used for reconciliation purposes, is e-mailed to the business on 25"" of each month. The business has only one employee, Shaun, in charge of processing and controlling all cash in the business. REQUIRED: 1.2.1. Calculate the correct bank account balance in the General Ledger on 30 April 2023. Indicate whether this is favourable or unfavourable. (18) 1.2.2 Prepare the Bank Reconciliation Statement on 30 April 2023. (8) 1.2.3. The internal auditor is concerned about the management of cash in the business. e Explain TWO different problems to justify his concern. Quote figures and dates. (4) e Give advice on how such problems can be avoided in future. Provide TWO points. (2) INFORMATION: A. Extract from the Bank Reconciliation Statement on 31 March 2023 Balance as per Bank Statement (unfavourable) —7 44 800 Outstanding deposit: 17 March 2023 16 800 20 March 2023 29 800 Outstanding EFTs: No 204 8 750 No 226 18 700 Balance as per bank account 2

Downloaded from hlayiso.com Downloaded from Stanmorephysics| EF RECOUNTING (PAPER 2) IGR12 0623 B. Provisional totals of Cash Journals on 30 Cash Receipts Journal, R112 850 Cash Payment Journal, R125 128 April 2023: C. Information on the April 2023 Bank Statement which did not appear in the April 2023 Cash Journals: é z UPTOWN BANK A <4 Current Account Mountain Traders Statement number 4 45 Avenue South Statement date 25 April 2023 Gauteng Overdraft limit R50 000 ACCOUNT SUMMARY Opening balance on 25 March 2023 -R44 800 Closing balance on 25 April 2023 R46 548 DATE TYPE DETAILS DEBIT CREDIT 28 March | Deposit Cash 16 800 EFT 204 GH Suppliers 8 750 EFT 226 Smooth Traders 15 700 1 April Deposit Cash 24 800 5 April EFT Stuart Properties —rent 22 500 expense 14 April Deposit Cash ? 16 April Debit card | Cash 650 18 April Debit order | Best Insurance 4 800 20 April Stop order | Varsity Education 3 500 22 April Service fees 600 Interest 180 23 April EFT WIFI Express 2 200 24 April EFT Marriot Fund ? e The deposit on 1 April appeared correctly on the Bank Statement. An investigation revealed that the money went missing. The amount must be written off. e EFT 226 appeared correctly on the Bank Statement. Thisawas in favour of Naidoo Enterprises for merchandise purchased cashz e Paid Stuart Properties the monthly rent, R22 500. The:bank incorrectly recorded this transaction and will rectify it. e The deposit on 14 April was in respect of cash sales less 8% trade discount granted to customers. The cost was R24 000. The business uses a mark-up of 80% on cost. e Debit card withdrawal on the 16" was to restore the petty cash.

Downloaded from hlayiso.com Downloaded from Stanmorephysics[ZeeGuntine (PAPER 2) IGR12 0623 e The stop order on 20 April 2023 is in favour of Varsity Education for the owner's child's tertiary education. e The EFT payment to WIFI Express on 23 April is not an account of the business but is Shaun’s personal WIFI account. The owner notified the bank-and instructed the bank to cancel this entry. The reversal will be reflected on the next statement. e The -EFT payment from Marriot Fund was an investment that matured, including interest for the year at 12% p.a. The total interest earned was R6 000. D. The following information in the April 2023 Cash Journals did not appear on the Bank Statement for April 2023: ¢ Outstanding deposit dated 29 April 2023, R? e EFT 301 for R1 285 to GNA Stationery for stationery purchased. e EFT 309 for R12 800 to JH traders in settlement of our account of R13 500. 1.3. CREDITORS' RECONCILIATION Mojo Traders render services and sell goods. Their major supplier is Brixton Wholesalers. The statement received from Brixton Wholesalers on 22 May 2023 reflects that Mojo Traders owe them R58 200. The Creditors' Ledger in the books of Mojo Traders reflects that they owe Brixton Wholesalers R66 255. REQUIRED: 1.3.1 Reconcile the Creditors' Ledger Account of Brixton Suppliers in the books of Mojo Traders with the statement received by completing the table provided in the ANSWER BOOK. Indicate the figure as well as a + for increase and a—or()fordecrease. (16)

Downloaded from Stanmorephysics[ZeeGuntine Downloaded from hlayiso.com (PAPER 2) IGR12 0623 1.3.2 The owner gives permission to employees to order goods for personal use which they need to pay for at cost and not at selling price value. Refer-to information G: An investigation revealed that an employee ordered goods for own use but;néver asked for permission from the owner and never paid for the goods; (a) Suggest ONE action that the business can take against the employee. (2) (b) Suggest ONE internal control procedure to prevent this from happening in the future. (2) INFORMATION: The following differences were noted: A. Mojo Traders bought goods on credit from Brixton Wholesalers for R12 500 less 5% trade discount. Mojo Traders omitted the trade discount. Mojo Traders qualified for an early settlement discount of R2 500 and recorded it as such. Brixton Wholesalers granted only R1 870 as discount. This was not reflected on the statement. They promised to show this on their statement next month. An EFT payment of R10 200 made to Brixton Wholesalers was not recorded in the Creditors’ Ledger Account and did not appear on the statement as well. An invoice for R17 500 received from Brixton Wholesalers was recorded correctly in the Creditors’ Ledger Account. The statement of account reflected the invoice as R15 700. Brixton Wholesalers recorded a credit note of R2 150 on the statement of account in error. This was for goods returned by another customer, Moojo Traders. An EFT payment made to Brixton Wholesalers reflected correctly as R4 900 on the statement of account. Mojo Traders incorrectly posted this as an invoice and posted it as R9 400. The statement of account showed an invoice for goods purchased, R4 850. This transaction was not recorded in the books of Mojo/Traders. A debit balance of R3 470 for services rendered was transfetred from the account of Brixton Wholesalers in the Debtors’ Ledger to their account in the Creditors' Ledger. This transaction was not recorded by Brixton Wholesalers.

Downloaded from hlayiso.com Downloaded from Stanmorephysics[ZeeGuntine (PAPER 2) IGR12 0623 QUESTION 2: MANUFACTURING (40 marks ; 32 minutes) 2.1. Match the concepts in COLUMN A with an example provided in COLUMN B. Write only theletters (A — D) next to the question number (2.1.1 to 2.1.3) in the ANSWER BOOK. COLUMN A COLUMN B 2.1.1 Direct labour cost A __ Materials that do not form an integral part of the finished product 2.1.2 Fixed cost B __ The total cost of production divided by the number of items produced 2.1.3. Indirect material cost |C The cost of workers who are directly involved in the manufacturing process D The cost remains constant within a period of time irrespective of the amount of goods produced (1x3) (3) 2.2 CLIP PRODUCERS The information below relates to the production of clipboards. The financial year ends on 28 February 2023. The factory occupies 750 m? and the administration offices and the sales department takes up 125 m? each of the floor space. 2.2.1 Complete the Direct Material Note. (9) 2.2.2 Complete the note for factory overhead cost for the financial year ended 28 February 2023. Use the table provided in the ANSWER BOOK. (13) 2.2.3 Complete the Production Cost Statement on 28 February 2023. (8)

Downloaded from Stanmorephysics| Downloaded from hlayiso.com INFORMATION: A. (PAPER 2) EF RECOUNTING IGR12 0623 The following balances were extracted from their financial records: 2023 2022 Direct (raw) materials R? R90 000 Worksin-progress R? R46 000 Finished goods 3 200 units 5 800 units at R28 per unit Indirect materials R18 730 R26 730 Direct and indirect materials Total net purchases of raw materials amounted to R467 800. The delivery of raw materials is outsourced at a cost of R2 500 per trip. Their services were used 16 times during the year. e Raw materials got damaged during a flood. The insurance company paid out R43 400 which is 70% of the damages, the rest is written off. This loss is deemed as factory overhead cost. e Raw materials are imported from India. The company paid 15% of the total purchase price towards custom duties. e Indirect materials purchased during the year amounted to R97 000. 85% of all indirect materials are used in the factory; the rest is used between the offices and the sales department. e Raw materials issued for manufacturing totalled R527 610. Labour e The factory employs 8 employees in the production process. The details are as follows: employee Basic salary Total overtime hours | Overtime rate worked R9 100 per month per 1 440 R80 per hour e The company employs 2 cleaning staff members. Each worked 52 weeks. Their time is divided in the ratio 3:1:1 between the factory, the office, and the sales department respectively. The details are as follows: Basic wage per week per cleaner Bonus R2 050 20% of basic-annual wage e The factory supervisor and both shop sales assistants earn the same and earn a total of R504 000 per annum in salaries. e The office clerk earns R8 000 per month and is entitled to a bonus.

Downloaded from hlayiso.com Downloaded from Stanmorephysics[ZeeGuntine (PAPER 2) IGR12 0623 D. Other expenses List of-expenses for the year ended 28 February 2023: Water and Electricity R68 900 Rentjexpense R228 800 Depreciation on factory equipment R71 700 Insurance (factory department) R48 000 Advertisement R12 000 The factory uses 75% of the water and electricity. Insurance was calculated in the ratio 4:1:1 between the factory, office and sales department. This should have been shared in the ratio 2:1:1. e Rentis still owed for February 2023. The rent increased by 10% from 1 February 2023. The rent is allocated as per the floor space occupied by each department. E. Unit cost Cost of finished goods produced R34,50 Selling price per unit R50,00 e 68 750 units were sold during the year.

Downloaded from hlayiso.com Downloaded from Stanmorephysics[ZeeGuntine 10 (PAPER 2) IGR12 0623 2.3. SPARKLING MANUFACTURERS Sparkling Manufacturers produces and sells household cleaning equipment. The financial yearended on 28 February 2023. The owner is Lerato Ntuli. REQUIRED; 2.3.1 Do/acalculation to prove that the break-even point for 2023 is correct. (3) 2.3.2 Lerato is worried about the performance of the business due to increased loadshedding since 2022, 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. (4) INFORMATION: All costs are per unit 2023 2022 Variable cost R2 280 R2 045 Direct material cost R1 176 R1 050 Direct labour cost R650 R500 Selling and distribution cost R225 R230 Fixed cost R2 780 R2 600 Factory overhead cost R1 946 R1 820 Administration cost R834 R780 Units produced and sold 1 400 1 700 Break-even unit 923 1 063 Selling price R6 500 R6 200 Selling price of competitor R6 700 :

Downloaded from hlayiso.com Downloaded from Stanmorephysics[ZeeGuntine 11 (PAPER 2) IGR12 0623 QUESTION 3: INVENTORIES (40 marks ; 32 minutes) 3.1 CONCEPTS Indicate whether the following statements are TRUE or FALSE. Write only ‘true’ or ‘false’ néxtto the question numbers (3.1.1 to 3.1.3) in the ANSWER BOOK. 3.1.1 Cost of sales is determined at the point of sale in the perpetual inventory system. (1) 3.1.2 In a periodic inventory system, carriage on purchases is recorded as an asset. (1) 3.1.3. A perpetual inventory system is a very expensive system to have in place. (1) 3.2 LEATHER CITY Leather City is a company that sells two different types of leather couches and pillows among other things. The financial year ends on 31 March 2023. The business uses the periodic inventory system. Stock is valued as follows: e Couches: Specific identification method e Pillow: Weighted average method REQUIRED: COUCHES 3.2.1 Calculate the following for the year ended 31 March 2023: e Value of closing stock (10) e Cost of sales (6) ¢ Gross profit (3) 3.2.2 Calculate the average stock holding period for the Elite range. (5) 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 support your answer. (6)

Downloaded from Stanmorephysics[ZeeGuntine Downloaded from hlayiso.com (PAPER 2) IGR12 0623 12 PILLOWS 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. 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 change. Quote figures. INFORMATION: A. COUCHES: (i) Stock balance on 1 April 2022: RANGE COST PRICE UNITS TOTAL (INCLUDING CARRIAGE) Basic R15 000 36 R540 000 Elite R23 000 18 R414 000 54 R954 000 (5) (2) (ii) Total purchases of couches for the year ended 2023. This cost includes the carriage on purchases. RANGES | UNITS COST PER UNIT TOTAL PURCHASE PURCHASE | CARRIAGE Basic 351 R14 150 R850 R5 265 000 Elite 191 R22 150 R850 R4 393 000 542 R9 658 000 Returns to suppliers: e There were no returns for the Basic range. e 7 Elite couches were returned to the supplier. Carriage on purchases: The company uses Speedy Transport for deliveries of goods to the shop. The business does not get a refund on any returns to the suppliers. Display in shop: The owner uses one set of the Elite range as display for customers to see.

Downloaded from hlayiso.com Downloaded from Stanmorephysics[ZeeGuntine (PAPER 2) IGR12 0623 (iii) Sales for the year ended 31 March 2023: RANGES UNITS SOLD TOTAL NET SALES Basic 372 R8 537 400 Elite 179 R6 587 200 551 R15 124 600 e Thebusiness does free deliveries to customers if within 50 km of the shop, thereafter they charge R10,40 per km. Total kilometres charged for deliveries to customers was 29 620 km. (iv) Financial indicators for the year ended March: BASIC RANGE ELITE RANGE 2023 2022 2023 2022 Stock holding period 14,7 days | 25,3 days ? 34,2 days % Gross profit on cost 53% 50% 59,7% 55% of sales e The business aimed to achieve a mark-up percentage of 60% on cost. B. PILLOWS COST PRICE TOTAL RECORDS UNITS PER UNIT VALUE Opening stock 230 R360 R82 800 Purchases 1375 R566 135 June 2022 140 R380 R53 200 August 2022 235 R405 R95 175 October 2022 480 R412 R197 760 January 2023 360 R420 R151 200 March 2023 160 R430 R68 800 Returns: January purchases (40) R420 (R16 800) TOTAL AVAILABLE 1 565 R632 135 Pillows sold during the year 1 200 Closing stock 310 2 Missing stock 55 2

Downloaded from hlayiso.com Downloaded from Stanmorephysics[ZeeGuntine 14 (PAPER 2) IGR12 0623 QUESTION 4: FIXED ASSETS (15 marks ; 12 minutes) Read the case study below and answer the questions that follow. You are the internal auditor of Skyair Tours Limited. The company is situated in the Western Cape. They take tourists on helicopter trips to Robben Island/at/R2 800 per person for a 30-minute trip. Each trip is a maximurm-S0 km round trip. The company has two directors, Nixon Booysen and Lerato Molofe. The financial year ends on 31 May each year. The company has three pilots working for them, Susan, John and Masego. The pilots are expected to work 5 days a week from Wednesday until Sunday due to the nature of the business. Nixon used the third helicopter, Green Island, for personal use during the year. Depreciation is calculated at 15% p.a. using the straight-line method. 4.1. The company appears to deal with several challenges. Identify ONE problem regarding each helicopter/pilot. Quote figures to support your answer. Give ONE point of advice for EACH problem identified. (9) 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. 4.2.2 What will the consequences be for the company if it is shown as a business expense? 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. 4.3.2 What procedure would you advise them to have in place before any asset of the business can be sold? (1) (2) (2) (1)

Downloaded from hlayiso.com Downloaded from Stanmorephysics[KeGbuntinc 45 (PAPER 2) IGR12 0623 INFORMATION: Information from the_accounting records for May 2023. HELICOPTER 1: | HELICOPTER 2: | HELICOPTER 3: BLUE ISLAND RED ISLAND GREEN ISLAND Name of pilot Susan John Masego Cost price R3 000 000 R12 000 000 R8 000 000 Accumulated depreciation R2 700 000 R360 000 R3 600 000 Working days per year 251 days 251 days 251 days Number of days pilot 301 days 265 days 185 days worked per year Salary per pilot R26 800 p.m. R35 000 p.m. R42 000 p.m. Kilometres travelled 150 500 km 164 300 km 75 000 km Number of trips booked 3010 3 180 1 480 per annum Petrol used 39 193 litres 32 860 litres 15 000 litres Fuel consumption 3,84 km per litre 5 km per litre 5 km per litre Petrol costs R587 895 R492 900 R225 000 (R15 per litre) Petrol cost per km R3,90 R3.00 R3,00 Maintenance cost per km R15 per km R12 per km R12 per km Total maintenance cost R2 257 500 R1 971 600 R900 000 Fee income R25 284 000 R26 712 000 R12 432 000 Passengers booked 9 030 9 540 4 440 Lis] TOTAL: 150

Downloaded from hlayiso.com Downloaded from Stanmorephysics[KeGbuntinc 16 (PAPER 2) IGR12 0623 GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET Gross profit x 100 Sa 1 Gross profit x 100, Cost of sales 1 Net profit) before tax x 100 Net profit after tax _ 100 Sales 1 Sales 1 Operating expenses x 100 Operating profit x 100 Sales 1 Sales 1 Total assets : Total liabilities Current assets : Current liabilities (Current assets — Inventories) : Current liabilities Non-current liabilities : Shareholders' equity (Trade and other receivables + Cash and cash equivalents) : Current liabilities Average trading stock x 365 Cost of sales Cost of sales 1 Average trading stock Average debtors x 365 Average creditors | 365 Credit sales 1 Cost of sales 1 Net j fter t 400 Net income after tax 100 et income alter sox - Number of issued shares 1 Average shareholde rs' equity 1 (‘See note below) Net income before tax + interest on loans 100 x Average shareholde rs' equity + Average non-current liabilities 1 Shareholde rs' equity x 100 Dividends of the year x 100 Number of issued shares 1 Number of issued shares 1 Interim dividends x 100 Final dividends x 100 Number of issued shares 1 Number of issued shares 1 Dividends per share x 100 Dividends forthe year | 100 Earnings per shares 1 Net income after tax 1 Total fixed costs Selling price per unit — Variable costs per unit Note: * In this case, if there is a change in the number of issued shares during a financial year, the weighted average number of shares is used in practice.