Accounting Grade 12 Paper 2 KZN Prelim 2023 Question Paper

Downloaded from hlayiso.com KWAZULU-NATAL PROVINCE EDUCATION REPUBLIC OF SOUTH AFRICA NATIONAL SENIOR CERTIFICATE �---------------------- '* ------------..- 11 PREPARAT ,��------------------ ------------� II � MARKS: 150 TIME: 2 Hours consists o , a formula sheet and .9lnswarrftcm�ms Co ri ht Reserved Please Turn Over

Accoun INSTRUCTIO! Downloaded from hlayiso.com September 2023 Preparatory Examination wnloaded from Stanmorepaysics.com NS AND INFORMATION Read the following instructions carefully and follow them precisely. 1. Answer ALIpithe questions. 2. Aspecial ANSWER BOOK is provided in which to answer ALL the questions. 3. | Show ALL workings in order to achieve part-marks. 4. You may use a non-programmable calculator. 5. You may use a dark pencil or blue/black ink to answer the questions. 6. | Where applicable, show all calculations to ONE decimal point. 7. A Financial Indicator Formula Sheet is attached at the end of this question paper. 8. Write ne atly and legibly. 9. Use the information and table below as a guide when answering the question paper. Try NOT to deviate from it. QUESTION | TOPIC MARKS MINUTES 1 Cost Accounting 40 30 2 Stock Valuation and internal control 30 25 3 Cash Budget and internal control 45 35 4 Bank and Creditors Reconciliation 35 30 TOTAL 150 120 Copyright Reserved Please Turn Over

Accoun Downloaded from hlayiso.com wnloaded from Stanmorephysics.come"" Preparatory Examination QUESTION 1: COST ACCOUNTING (40 marks, 30 minutes) 11 1.2 Choose an example from COLUMN B that matches a cost category in COLUMN A. Write only_the letter (A-D) next to the question numbers (1.1.1 to 1.1.3) in the ANSWER BOOK, e.g 1.1.4 E. COLUMN A COLUMN B 1.1.1 Selling and distribution cost Raw materials used in the factory 1.1.2 Factory overheads cost Advertising expenses 1.1.3. Direct material cost Office telephone account 0 0O0 WD PY Salary of the factory foreman (3x1) (3) SUPER CALCULATORS Super Calculators, owned by Cebile Sibiya, manufactures calculators. Cebile buys material from local suppliers. The information relates to the financial year ended 30 June 2023. REQUIRED: 1.2.1 Complete the Production Cost Statement for the year ended 30 June 2023. (10) 1.2.2 Complete the Abridged Statement of Comprehensive Income for the year ended 30 June 2023. (11) INFORMATION: A. The business uses the FIFO method of valuing stock. B. The following balances appeared in the books: 30 June 2023 1 July 2022 Raw materials R400 000 R150 000 Work-in-progress R110 000 R250 000 Finished goods 6 100 units R900_000 (5 000 unitsat;R180 each) Cc. Raw material issued to production is the missing figure. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accountigg P2 September 2023 Preparatory Examination Wnloaded from Stanmorephysics.com D. Salaries and wages amounted to R1 500 000 for the financial year. 60% of the figure is attributed to wages of the employees who work directly on the production. E. Factoryioverheads cost: The-bookkeeper calculated the factory overhead cost as R700 000. However, he made the following errors: e He included the entire amount for water and electricity, R160 000 to the factory overheads cost, instead of allocating it in the ratio 4: 3:3 for factory, sales and office respectively. e The factory insurance expense, 40% of R125 000, was not taken into account. F. 18 000 calculators were manufactured during the financial year at a cost of R200 each. G. The following cost items were correctly calculated after taking into account the above information: e Selling and distribution costs R470 000 e Administration costs R380 000 H. The selling price per calculator was R270 Copyright Reserved Please Turn Over

Account) Wwnloaded from Stanmorepkysics.com Downloaded from hlayiso.com 1.3 CATO RIDGE MANUFACTURERS Cato Ridge Manufacturers produces and sells one type of kettle. The business is owned by Mandy James. REQUIRED: 1.3.1 Explain{why it is important to calculate the expected break-even point for a business at the beginning of a financial year. 1.3.2 Mandy feels that she can improve the sales of kettles. Provide TWO suggestions on how this can be achieved. 1.3.3. Mandy was concerned about the increase in the fixed cost per unit of kettles. What would you say to her? Provide ONE point and quote figures to support your answer. 1.3.4 Except for a general increase in wages due to inflation, give TWO other reasons for the increase in direct labour costs per unit. In each case, provide a practical solution to address this. 1.3.5 Mandy wants to increase production by 700 units during the next financial year while maintaining costs. Calculate the additional profit that she will achieve. INFORMATION: 30 June 2023 | 30 June 2022 UNIT COST UNIT COST Variable costs: 337 277 Direct material 142 140 Direct labour 160 102 Selling and distribution 35 35 Fixed costs: 175 120 Factory overheads 125 75 Administration 50 45 Selling price per unit 540 450 Number of units produced and sold 1 200 2 000 Break-even point 1 035 units 1 388 units Copyright Reserved September 2023 Preparatory Examination (2) (4) (2) (4) (4) 40 Please Turn Over

Downloaded from hlayiso.com Accoun September 2023 Preparatory Examination Wnloaded from Stanmorepkysics.com QUESTION 2 INVENTORY VALUATION (30 marks, 25 minutes) The information relates to Newcastle Traders for the year ended 30 April 2023. The business is owned by Ganesha Pillay. The business sells one type of running shoes as well as soccer boots. NOTE: All units afe+egarded as PAIRS of shoes. 2.1. RUNNING-SHOES REQUIRED: 2.1.1. Calculate the selling price per unit for running shoes. (2) 2.1.2 Calculate the value of the closing stock on 30 April 2023 using the weighted average method. (8) 2.1.3 It was discovered that a number of running shoes were shoplifted. Calculate the number of the missing shoes. (4) 2.1.4 Provide TWO strategies that Ganesha should implement to prevent the loss of stock in future. (2) INFORMATION: A. Balances: UNIT AMOUNT UNITS PRICE (R) Opening stock 200 377 75 400 Closing stock 430 ? 2 B. Purchases: NUMBER UNIT PRICE TOTAL OF UNITS R R May 2022 600 520 312 000 November 2022 800 750 600 000 March 2023 300 650 195 000 TOTAL 1700 ly 1 107 000 c. Sales: ¢ 1465 units sold. e Sales amounts to R1 758 000 for the year ended 30 Apfit2023. D. Carriage on purchases: The business contracted with MGM transport at a fixed rate-of R10 per unit delivered to the store. E. Returns to suppliers 20 damaged pairs from the November 2022 purchases were returned to the supplier. The supplier agreed to reverse the total cost price paid, excluding carriage on purchases. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Account) 2.2. SOCCER BOOTS Wwnloaded from Stanmorephysics.com September 2023 Preparatory Examination REQUIRED: 2.2.1 Calculate the stock turnover rate of soccer boots for 2023. (Usethe average stock). (5) 2.2.2 Explain-whether Ganesha should be concerned about the stock turnover rate. Note: It was 5 times in 2022. (3) 2.2.3 Ganesha is not satisfied with the performance of soccer boots section. Identify TWO problems, quoting figures and trends. Provide a solution to each problem. (6) INFORMATION: 2023 2022 Working days per year 264 264 Days worked 172 263 Cost of sale R168 380 R390 000 Units on hand 296 94 Value of closing stock R105 000 R63 380 Stock turnover rate ? 5 times Units returned to supplier 45 21 Units sold 515 820 Advertising R20 000 R12 000 30 Copyright Reserved Please Turn Over

Downloaded from hlayiso.com . s ee Accoun wnloaded from Stanmore i sics.com eptember 2023 Preparatory Examination QUESTION 3 BUDGETING AND INTERNAL CONTROL (45 marks, 35 minutes) 3.1. JOZINI STORES You are providediwith information relating to Jozini Stores for the two months ended 30 October 2023, REQUIRED: 3.1.1. Complete the Debtors’ Collection Schedule for the two months ending 30 October 2023. 3.1.2 Calculate the figures indicated by (i)-(vi) on the incomplete Cash Budget provided. 3.1.3. Calculate the Average Debtors’ Collection period (in days). 3.1.4 The owner wants to purchase the business premises rather than renting. Provide ONE advantage and ONE disadvantage of this option. 3.1.5 You are provided with figures for September 2023, for the items listed below. Comment and provide ONE point of advice on each expense item. Quote figures and trends. SEPTEMBER 2023 BUDGETED ACTUAL Water and electricity R36 000 R42 800 Advertising R13 000 R9 500 INFORMATION: A. Monthly total sales Actual Expected August 2023 740 000 September 2023 660 000 October 2023 700 000 e 70% of all sales are cash sales. . The business sells goods at cost price plus 25% mark-up. B. Purchases: Stock is replaced on a monthly basis. 60% of all purchases are for cash. e Creditors are paid in full one month after date of purchase less 3% discount. (10) (13) (6) (2) (6) Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accoun September 2023 Preparatory Examination wnloaded from Stanmorepaysics.com Cc. Debtors pay according to the following trend: e 30% pay in the month of sale and receive a 5% discount. 40% pay in the first month after the date of sale. 25% pay in the second month after the date of sale. e S%lis irrecoverable. D. Debtors’ Collection Schedule for the two months ending 31 October 2023 Month Credit sales | September | October | Bad debts July 2023 2? 2? 0 10 200 August 2023 222 000 88 800 55 500 11 100 September 2023 2 56 430 2? October 2023 210 000 2 Total E. Balances and totals Debtors Control Account e 1 July 2022, R104 600 e 30 June 2023, R128 400 e Total credit sales for the year ended 30 June 2023, R2 100 000. F. Cash Budget for the two months ending 31 October 2023 RECEIPTS SEPTEMBER OCTOBER Cash sales 462 000 (i) Collection from debtors 2 2 Fixed deposit: Trinity Bank 9% p.a. 150 000 Loan: Trinity Micro lenders 540 000 PAYMENTS SEPTEMBER OCTOBER Cash purchase of trading stock (ii) 336 000 Payment to creditors 229 696 (iii) Repayment of loan 9 000 Interest on loan (iv) Rent expense (v) 48 600 Water and electricity 36 000 36 000 Advertising 13 000 15 000 Sundry expenses 94 800 107 300 e _Jozini Stores successfully negotiated a R540 000 dean: with Pinetown Micro Lenders at 12% p.a. interest. Interest is not capitalised. The loan will be received on 1 October 2023 and is repayable in 60 equal monthly installments commencing on the 31 October 2023. ° Rent expense is expected to increase by 8% from 1 October 2023. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Swnloaded from Stanmorepitysics.come" Preparatory Examination Account) 3.2 ZULU JACKETS Khumalo Msizi is the owner of Zulu Jackets, specializing in leather jackets. He has three different branches that are managed by Phumzile, Peggy and Parvati. He is concerned that the branches are not running effectively and gave you the following ifformation to analyse for June 2023. REQUIRED: Identify ONE problem at each branch. Quote figures to support the problem identified and give Msizi advice on how to solve the problem in each case. (9) INFORMATION: Branch 1 Branch 2 Branch 3 Phumzile Peggy Parvati Number of items sold 400 310 170 Returns from customers for 8 3 15 the month Stock holding period 120 days 30 days 60 days Days worked per week Monday to Monday to Monday to Sunday Friday Saturday Stock stolen/lost in the 20 Jackets 0 1 Jacket month Advertising R750 R600 R500 Cash deposited R470 400 R308 400 R186 000 Price per jacket is R1 200 45 Copyright Reserved Please Turn Over

Accoun Wwnloaded from Stanmorepaysics.com Downloaded from hlayiso.com September 2023 Preparatory Examination QUESTION 4: RECONCILIATIONS (35 marks, 30 minutes) 44 BANK RECONCILIATION The information relates to Bingoma Traders for July 2023. The Bank statement shows transactions up to the 25" of July 2023 and the business prepares a bank reconciliation-after receiving the statement. REQUIRED: 4.1.1. Calculate the correct totals for the Cash Journals on 31 July 2023 in the table provided in the ANSWER BOOK. (7) 4.1.2 Prepare the Bank Reconciliation Statement on 31 July 2023. (7) 4.1.3. Refer to Information C: Explain whether the business made the right decision in alerting the bank about the deposit of R9 800 on 25 July 2023. (2) INFORMATION: A. Bank Reconciliation Statement on 30 June 2023: Favourable balance as per Bank Statement R18 400 Outstanding deposit: Dated 28 June 2023 12 730 Outstanding EFT’s No. 632 13 200 No. 633 2 630 Favourable balance as per Bank Account 15 300 B. On 31 July 2023, the provisional totals in the Cash Journals were: e Cash Receipts Journal, R510 600 e Cash Payments Journal, R487 300 Copyright Reserved Please Turn Over

Downloaded from hlayiso.com wnloaded from Stanmorepitysics.comer" Preparatory Examination Accoun Cc. Information on the July 2023 Bank Statement which did not appear in the July 2023 Cash Journals: DATE DETAILS DEBIT CREDIT June 29 Deposit R12 730 29 EFT — 632 R13 200 30 Deposit R6 250 July 01 EFT — 633 R6 230 05 Petty Insurers R1 850 05 Petty Insurers R1 850 15 Debit card withdrawal R1.000 20 Transaction fees R425 24 Interest on current account R290 25 Voda Administrators R9 800 The deposit on the 30'June was for a rent income from a tenant, Kelly Ngubane. EFT No. 633 on the 1°July appeared correctly on the Bank Statement. A debit order on the 5 July, R1 850 for the monthly insurance appeared twice on the Bank Statement, but no entry has been made in the Journals.The bank will rectify this on the Bank Statement next month. Debit card withdrawal on the 15" was for petrol to the business vehicle. The driver did not submit the slip to the bookkeeper. The deposit on the 25" was incorrectly deposited to Bingoma Traders. The bank was notified. D. The following entries only appeared in the Cash Journals for July 2023: A deposit of R10 000 (dated 29 July 2023) EFT No. 655, R7 095 E. Bank Statement balance on 31 July 2023, R43 310 (favourable). Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Account} September 2023 Preparatory Examination jwnloaded from Stanmorepkysics.com 4.2. CREDITORS RECONCILIATION The Creditors’ Control account and Creditors’ List of Titanic Traders were prepared by an inexperienced bookkeeper. He identified the following figures at the end-of the month: e Creditors’ Control balance R74 720 e° Creditors’ list total R32 600 REQUIRED: 4.2.1 Briefly explain how the preparation of a creditars’ reconciliation as an internal control measure can assist the business in managing creditors effectively. Provide TWO points. (4) 4.2.2 Use the table provided to indicate the changes that must be made in the Creditors’ Control account and Creditors’ List to take into account the errors and omissions noted. Indicate the increase or decrease with a (+) or (-) with each amount. (9) 4.2.3 Refer to information B. An investigation into the transaction relating to the credit purchase from Ngwelezane Ltd revealed that Philani Luthuli (purchasing manager) ordered goods for himself. These goods were not taken into stock. State THREE internal control measures that the business can use to prevent similar incidents from happening in future. (6) INFORMATION: Errors and omissions noted: A. The total of the Creditors’ List was undercast by R900. B. A credit purchase from Ngwelezane Ltd for R3 720 was not recorded in the books of the business. Cc. Trading stock returned to Osizweni Ltd, R720, was entered correctly in the Creditors Allowances Journal (CAJ), but was posted as R270 to the Creditors’ account of Osizweni Ltd. D. The Creditors Control total in the Cash Payments Journakis-R16 400. The bookkeeper credited this to the Creditors Control account by mistake. E. An invoice for R8 870 for stock purchased from Mini Market on account has been correctly recorded in the Creditors Journal, but-has not been posted to their account in the Creditors Ledger. 35 TOTAL MARKS: 150 Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accountigg P2 Wnloaded from Stanmorepkysics.com September 2023 Preparatory Examination GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET Gross profit X 100 Sales 1 Gross profit X 100 Cost of sales 1 Net profit after tax X 100 Sales 1 Net profitibefore tax X 100 Sales 1 Sales 1 Operating-expenses X 100 Operating profit X 100 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 1 Cost of sales Average trading stock Average debtors X 365 Credit sales 4 Average creditors X 365 Cost of sales 1 Net income after tax X 100 Average shareholders’ equity 1 Net profit after tax X 100 Number of issued shares 1 (*See note below) x 100 Net income before tax + Interest on loans. 1 Average Shareholders’ equity + Average non-current liabilities Earnings per share 1 Shareholders’ equity X 100 Dividends for 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 pershare X 100 Dividends for the year X 100 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. Copyright Reserved