# Accounting Grade 12 EC June 2017 Memo (English) > Grade 12 Accounting memorandum from the EC June 2017 (English), 13 pages. Read online or get the free PDF download, question paper linked when available. - Page: https://www.hlayiso.com/library/accn-memo-eng-corrected-10-may/da78be45-ac61-4254-9fe7-07dddbd6ace4 - Updated: 2026-09-27 - Subject: Accounting - Grade: Grade 12 - Document type: Memorandum - Year: 2017 - Exam period: EC June - Curriculum: CAPS - Pages: 13 Breadcrumbs: [Home](https://www.hlayiso.com/) › [Library](https://www.hlayiso.com/library) › [Grade 12](https://www.hlayiso.com/library/grade-12) › [Accounting](https://www.hlayiso.com/library/grade-12/accounting) › [Accounting Grade 12 EC June 2017 Memo (English)](https://www.hlayiso.com/library/accn-memo-eng-corrected-10-may/da78be45-ac61-4254-9fe7-07dddbd6ace4) ## About this document Accounting · Grade 12 · EC June · 2017. Memorandum, 13 pages. Read online or download the PDF. Read it free online on the page above; download the PDF from there. ## Document text Text extracted from the PDF. Layout, diagrams and tables may not survive extraction. ### Page 1 Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 12 JUNE 2017 ACCOUNTING MARKING GUIDELINE GENERAL RULES: 1. Award full marks for the correct final answers. If the answer is incorrect, mark the workings provided. If a workings figure/amount is shown as a final answer, allocate the working mark. 2. “Method” marks are denoted by   In calculations and final totals, at least one part of the workings must be correct to earn the mark.  In cases where answers of previous questions must be used, check the transfer.  Ignore brackets on statements, but check the operation before awarding marks. 3. Where penalties are applied, the marks for that section cannot be a negative. (foreign items) 4. For questions requiring explanations and comments, award part-marks. A good explanation will normally mention and explain a point. Beware of alternative wording reflecting the same points. This marking guideline provides some explanations – they are not conclusive. Read the candidates’ responses and give credit for their interpretations. 5. Where appropriate/acceptable, accept recognisable abbreviations. 6. Educators are expected to work through the entire paper and make reasonable adjustments within the framework of the mark allocation. This marking guideline consists of 13 pages. ### Page 2 Downloaded from hlayiso.com 2 ACCOUNTING (EC/JUNE 2017) QUESTION 1 RECONCILIATIONS 1.1 TRUE OR FALSE 1.1.1 True  1.1.2 False  1.1.3 False  1.1.4 True  4 1.2 BANK RECONCILIATION 1.2.1 ENTRIES FOR THE CRJ ENTRIES FOR THE CPJ DETAILS OF SUNDRY AMOUNT DETAILS OF SUNDRY AMOUNT Total b/f 31 790 Total b/f 22 500 Drawings  1 500  Insurance  635  Trading stock  1 260  Debtors control  1 220  Rent income  5 600  Interest on overdraft  170  Bank charges  355  14 1.2.2 BANK RECONCILIATION STATEMENT ON 31 MARCH 2017 Debit Credit Cr balance as per statement 3 700  Cr deposit not yet recorded 14 820  Dr outstanding cheques No. 774 9 820  No. 816 3 180  No. 862 2 750  Cr amount wrongly debited 2 800  Dr balance as per Bank Account 5 570  21 320  21 320 9 *Both totals 1.2.3 As the internal auditor, why would you be concerned about the manner in which Siba performs her duties? Provide TWO points. Any TWO valid points    Siba is responsible for many related tasks with little or no supervision. She may be negligent in performing her duties.  Siba is not depositing money on a regular basis – she is probably rolling over cash.  Siba may be tempted to engage in fraudulent behaviour due to no supervision. 4 1.2.4 Provide a solution for the concerns you identified. Any ONE solution  Implement division of duties / provide supervision (line managers) to check work done / follow up on transactions with the bank (sms) / use a system of authorising certain important transactions. 2 Copyright reserved Please turn over ### Page 3 Downloaded from hlayiso.com (EC/JUNE 2017) ACCOUNTING 3 1.3 CREDITORS RECONCILIATION CHANGES TO THE CHANGES TO THE CREDITORS STATEMENT LEDGER BALANCE BALANCE 16 200 22 980 A + 420  B + 2 700  C + 1 880  (940 + 940) 1 mark each D - 2 180  E - 5 000  18 500 * 18 500 * One part correct 12 Q1 45 Copyright reserved Please turn over ### Page 4 Downloaded from hlayiso.com 4 ACCOUNTING (EC/JUNE 2017) QUESTION 2 INVENTORY VALUATION 2.1 Calculate the value of the closing stock of Samsun cameras for the six months ended 31 March 2017. (15 – 8) : 7  x 3 200  = 22 400 * (23 – 14) : 9  x 3 680  = 33 120 * TOTAL : 55 520 * one part correct 7 2.2 Calculate the percentage gross profit earned on Nokin cameras. 39 480 four marks 65 800 three marks 105 280  – (44 000  + 67 200  – 45 400 ) x 100 = 60%  one part correct 65 800  see above 6 2.3 Calculate the value of the closing stock of leather bags for the six months ended 31 March 2017. (30 + 65 – 68) = 27  one part correct 25 x 720 = 18 000  2  x 675  = 1 350  Total: 19 350  one part correct 7 2.4 Comment on the stock holding period of leather bags. Quote figures. Comment  figures  The stock holding period increased from 148 days to 157 days. This shows that the leather bags is not selling fast enough. Stock stays in stock for almost ½ the year. Fortunately, leather bags are durable and has a long shelf life. 4 2.5 Tim wants to increase the sales of bags. What advice would you offer him? Provide ONE point. ONE valid point  Advertise together with the cameras and other accessories. Lower the profit mark-up percentage or selling price. Buys stock in smaller quantities and more often (as needed) Base the sales on orders received. 2 Copyright reserved Please turn over ### Page 5 Downloaded from hlayiso.com (EC/JUNE 2017) ACCOUNTING 5 2.6 MANAGEMENT OF INVENTORIES 2.6.1 What decision did Erna take regarding the selling price of the printers? Any ONE decision  Figures   He increased the mark-up from 50% to 75%.  He increased the selling price from R1 875 to R2 625 / by R750 (by 40%). 2 How has this decision affected the business? State TWO points. Any TWO valid points   Figure    Gross profit increased from R288 750 to R337 500 / by R48 750 (by 16,8%).  Stock turnover rate decreased from 7,1 to 6,0 times.  Sales of printers decreased from 462 to 300 units (by 36,1%). 4 2.6.2 Was it a good idea for Erna to change to a cheaper supplier of fax machines? YES/NO: No  Explain ONE point. Any valid point  Figures   The gross profit decreased from R162 800 to R106 760 /by R56 040 (by 34,4%).  The returns increased from 0 to 66 units (indicating that the customers were not satisfied with the quality of the product).  The cheaper price of R476 did not affect the amount of units sold (785) or the stock turnover rate which remained constant at 5,0 (fax machines did not appear to be popular with customers). 3 Q2 35 Copyright reserved Please turn over ### Page 6 Downloaded from hlayiso.com 6 ACCOUNTING (EC/JUNE 2017) QUESTION 3 CONCEPTS AND INCOME STATEMENT 3.1 CONCEPTS 3.1.1 C 3.1.2 A 3.1.3 D 3.1.4 B 4 3.2 INCOME STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2017 Sales 1 560 000  – 1 920  + 2 400  1 560 480 * Cost of sales 975 000  + 1 500  (976 500) * 8 Gross profit 583 980 * Other income 334 500 Fee income 241 520  + 180  241 700  Provision for bad debts-adjustment 7 082 + 4 732 2 350 * Rent income 82 650  + 7 800  90 450  10 Gross income 918 480 * Operating expenses (808 480) Depreciation 24 200  Directors fees 441 180  + 10 260  451 440 * Salaries and wages 216 000  Insurance 20 200  + 1 800  22 000 * Bank charges 10 820  + 1 280  12 100  Advertising 12 400  – 3 400  9 000 * Consumable stores 32 620  - 3 220  29 400  Trading stock deficit 123 900 – 123 700 200 * Audit fees 21 980  Sundry expenses 22 160  25 Operating profit 110 000 * Interest expense (470  + 39 330 ) (39 800) * Net profit before income tax 70 200  Income tax NPbT x 30% (21 060)  8 Net profit after income tax 49 140 * 51 *operation, one part correct Q3 55 Copyright reserved Please turn over ### Page 7 Downloaded from hlayiso.com (EC/JUNE 2017) ACCOUNTING 7 QUESTION 4 BALANCE SHEET AND NOTES 4.1 CONCEPTS 4.1.1 Return on equity  4.1.2 Gearing  4.1.3 Liquidity  4.1.4 Solvency  4 4.2.1 ORDINARY SHARE CAPITAL 570 000 Opening balance check operation from the bottom 3 412 000 130 000 Shares issued at R6,60 each 858 000 (75 000) Shares re-purchased (ASP: 6,10 ) (457 500)* 625 000* Closing balance 3 812 500 11 *one part correct RETAINED INCOME Opening balance check operation working from bottom 206 720  Net profit after income tax (261 120 x 68/32) 554 880 * Funds used for shares re-purchased (75 000  x 0,90 ) (67 500) * R7,00 – ASP above Ordinary share dividends (256 600) Interim dividends (570 000  x 18 cents ) 102 600 * Final dividends (700 000  x 22 cents ) 154 000 * Closing balance (625 000  x 6,80 ) – 3 812 500  437 500 * 4 250 000 16 *one part correct Copyright reserved Please turn over ### Page 8 Downloaded from hlayiso.com 8 ACCOUNTING (EC/JUNE 2017) 4.2.2 BALANCE SHEET AS AT 28 FEBRUARY 2017 NON CURRENT ASSETS TA - CA 4 857 700   Fixed assets (carrying value) 4 607 700   Fixed deposit balancing figure 250 000  CURRENT ASSETS CL x 1,5 726 900   Inventories balancing figure 489 400   Trade and other receivables 234 000   Cash and cash equivalents 3 500  10 TOTAL ASSETS TE + L 5 584 600  EQUITY AND LIABILITIES SHAREHOLDERS EQUITY 4 250 000 *  Ordinary share capital 3 812 500   Retained income See 4.2.1 437 500  NON-CURRENT LIABILITIES 850 000  Loan: Mani Bank SE x 0,2 850 000  CURRENT LIABILITIES 484 600 *  Trade and other payable 167 000   Shareholders for dividends See 4.2.1 154 000   SARS: Income tax (261 120  – 250 000 ) 11 120 *  Short term loan 90 000   Bank overdraft 62 480  14 TOTAL EQUITY AND LIABILITIES 5 584 600 * 24 *one part correct Q4 55 Copyright reserved Please turn over ### Page 9 Downloaded from hlayiso.com (EC/JUNE 2017) ACCOUNTING 9 QUESTION 5 CASH FLOW STATEMENT AND INTERPRETATION & AUDIT REPORTS 5.1.1 CASH GENERATED FROM OPERATIONS Net profit before tax 995 800 Adjustments for: Depreciation 135 700  Interest expense 76 500  1 208 000 # Cash effects of changes in working capital 11 600 # Change in Stock (174 000 – 112 000) 62 000 * Change in Debtors (100 200 – 131 200) (31 000) * Change in Creditors (221 000 – 201 600) (19 400) * CASH GENERATED FROM OPERATIONS 1 219 600 # 11 *1 mark for the amount and 1 mark for the correct use of the brackets #check operation, one part correct 5.1.2 Income tax paid     one part correct - 9 400 + 298 700 – 17 300 = 272 000 4 Dividends paid     one part correct 86 400 + 239 100 – 138 600 = 186 900 4 Copyright reserved Please turn over ### Page 10 Downloaded from hlayiso.com 10 ACCOUNTING (EC/JUNE 2017) 5.1.3 EXTRACT OF THE CASH FLOW STATEMENT INVESTING ACTIVITIES (942 700) * Purchases of fixed assets 2 688 000  – (3 450 000  + 214 300  + 135 700 ) (1 112 000) * Proceeds on sale of equipment 214 300  9 Change in investment (125 000 – 170 000) (45 000)  FINANCING ACTIVITIES 575 000 * Proceeds from shares issued (2 569 000  + 160 000  – 2 304 000 ) 425 000 * Funds used to re-purchase shares (200 000)  9 Change in loan (800 000 – 450 000) 350 000  NET CHANGE IN CASH AND CASH EQUIVALENT 316 500 * Cash and cash equivalents (opening balance) (48 000) * 51 600 – 3 600 4 Cash and cash equivalents (closing balance) 268 500  22 *operation, one part correct, amount only correct with the correct use of the brackets 5.2 FOXX LTD AND WOLFE LTD 5.2.1 Identify the company that is managing its working capital more effectively. Refer to TWO financial indicators of both companies to support your choice of company. Company : Foxx Ltd  Comparison of TWO financial indicators   1. Acid test ratio (Wolfe 0,7 : 1; Foxx 1,1 : 1) shows that Wolfe’s current assets is high because of excess stock (stock piling) 2. Wolfe’s stock holding period is also high 98 days (Foxx 35 days) which means that their sales is also not effective. Low turnover of stock. Note: Do not accept current ratio 5 5.2.2 Comment on the dividend pay-out policy of each company. Explain the policy used and quote figures for each. Foxx  and Wolfe  Fox pays 95% (494/520) of the EPS to shareholders - DPS. Only 5% is retained by the business. Wolfe pays 50% (325/650) of EPS to shareholders – DPS. 50% of profits is retained by the business for growth. 4 Copyright reserved Please turn over ### Page 11 Downloaded from hlayiso.com (EC/JUNE 2017) ACCOUNTING 11 5.2.3 Comment on the decisions regarding the use of loans for each company. Make reference to TWO financial indicators for each company. Foxx: financial indicators  figures  Wolfe: financial indicators  figures  Wolfe is lowly geared. Debt/equity is 0,1 : 1. Return on capital employed shows negative gearing. (6% compared to interest on loan which is 12%) Therefore it is good that they chose to use more own capital as borrowed capital would be costly for them. Foxx is highly geared. Debt equity is 0,8 : 1. ROTCE (17%) shows that the business experiences positive gearing as the return is higher than the interest rate (12%). 6 5.2.4 Explain how prospective investors would react to the share price of each company. Quote figures to support your answer. Comparing NAV and Market price of each company  Comment on prospective investors  Foxx has a higher NAV than Wolfe (945 cents / 530 cents). Wolfe market price (710 cents) is better than their NAV. Foxx market price (776 cents) is lower than their NAV. Prospective investors will be more interested in Wolfe as the market price is an indicator of investor confidence in a company. 4 5.2.5 AUDIT REPORT  State the type of report received by each company. FOXX: Unqualified  WOLFE: Disclaimer of opinion  2  Explain how the reports above will affect his decision concerning which company to invest his money. Good explanation  satisfactory explanation  weak  Eastward would be concerned about Wolfe as the audit report creates a negative image of the company. The external auditor is not satisfied with the internal controls. This suggests that there are many problems with management and control. Basic process are not being maintained. This will cause the share price to drop. 3 Q5 65 Copyright reserved Please turn over ### Page 12 Downloaded from hlayiso.com 12 ACCOUNTING (EC/JUNE 2017) QUESTION 6 FIXED ASSETS AND VAT 6.1 FIXED ASSETS 6.1.1 Explain how the asset register will assist the internal auditor in the course of him performing his duties. ONE valid explanation   It helps to verify the value of individual assets.  It shows the control of assets in terms of replacements, writing off and depreciation policies.  It gives a breakdown of the total assets as reflected in the general ledger.  It highlights the internal control process in terms of usage, maintenance and upkeep. 2 6.1.2 GENERAL LEDGER OF ELIJAH TRADERS ASSET DISPOSAL ACCOUNT 2016 Equipment 130 000 2016 Accumulated depreciation 1 1 63 375 Dec 420 000 – 290 000  Dec on equipment   420 000 – 290 000 48 750  + 14 625  50 000 Debtors control   16 625 Loss on sale of asset   130 000 130 000 11 6.1.3 WORKINGS ANSWER (i) 2 165 000 – 625 000 1 540 000  (ii) 825 000 – 528 000 297 000  528 000  x 20%  = 105 600  (iii) 145 600  300 000  x 20% x 8/12  = 40 000  (iv) 528 000  + 300 000  – 145 600  682 400  (v) 130 000  – 63 375  66 625  18 Copyright reserved Please turn over ### Page 13 Downloaded from hlayiso.com (EC/JUNE 2017) ACCOUNTING 13 6.2 VAT 6.2.1 VAT CONTROL DEBIT CREDIT Total due to SARS 5 206  Total sales 20 300  Total purchases 13 160  Bad debts 994  Discount received 882  Returns to suppliers 672  Discount allowed 406  14 560 27 060 RECEIVABLE OR PAYABLE TO SARS: 27 060 – 14 560 = 12 500  PAYABLE  11 6.2.2 M. Booi suggested to Marties that she will supply certain trading goods for cash only and that she will not provide any documentation. Should Marties accept this offer? Explain. No  Explanation  This is an attempt to defraud SARS. It is illegal and if caught will result is severe fines or disciplinary action. It is unethical and dishonest business practice. It will also tarnish the reputation of the business and people will lose confidence in the owner and will not support the business. 3 Q6 45 TOTAL: 300 Copyright reserved Please turn over ## Related documents - [Accn Qp Eng](https://www.hlayiso.com/library/accn-qp-eng/265bc973-172b-49fd-b391-a52424963bfe) — Accounting · QP · 2017 · Eng - [Accounting Feb March 2017 Memo Afr](https://www.hlayiso.com/library/accounting-feb-march-2017-memo-afr/7a152001-7faf-4ef1-b555-2b3684b8b2de) — Accounting · Memo · 2017 · Afr - [Accounting Feb March 2017 Memo Eng](https://www.hlayiso.com/library/accounting-feb-march-2017-memo-eng/f4ca2f8c-4acd-4a6a-a42a-1a6917f73109) — Accounting · Memo · 2017 · Eng - [Grade 12 NSC Accounting Preparatory 2017 Question Paper](https://www.hlayiso.com/library/grade-12-nsc-accounting-preparatory-2017-question-paper/135a4f47-f617-4ff6-a737-9714bac9f481) — Accounting · QP · 2017 - [Accounting May June 2017 Answer Book Eng](https://www.hlayiso.com/library/accounting-may-june-2017-answer-book-eng/80214f65-7758-4efc-a0bf-bfb782a0fb3d) — Accounting · Addendum · 2017 · Eng - [Accounting Nov 2017 Answer Book Afr](https://www.hlayiso.com/library/accounting-nov-2017-answer-book-afr/577edd99-2c35-47d2-a46e-d92c45148ccb) — Accounting · Addendum · 2017 · Afr ## More from Grade 12 Accounting - [Accounting](https://www.hlayiso.com/library/accounting/8f42a6a4-9593-4d36-86b1-d890dd1bb1bf) — Guide - [ACCOUNTING P1 GR12 AB JCT ENG D watermark](https://www.hlayiso.com/library/accounting-p1-gr12-ab-jct-eng-d-watermark/77ae8297-53f7-47b3-8e29-57bd38f30483) — Addendum · 2025 · Eng - [ACCOUNTING P1 GR12 QP JCT 2025 AFR D watermark](https://www.hlayiso.com/library/accounting-p1-gr12-qp-jct-2025-afr-d-watermark/c6a5692b-3cb0-464b-bb82-67d6ce83bfdd) — QP · 2025 · Afr - [ACCOUNTING P1 GR12 QP JCT 2025 ENG D watermark](https://www.hlayiso.com/library/accounting-p1-gr12-qp-jct-2025-eng-d-watermark/84d92eb0-f5bd-4442-bb6d-c55cdc52e25d) — QP · 2025 · Eng - [ACCOUNTING P2 QP GR12 JCT 2025 ENG D watermark](https://www.hlayiso.com/library/accounting-p2-qp-gr12-jct-2025-eng-d-watermark/13425f71-aba6-4328-b084-d9b108884315) — QP · 2025 · Eng - [Accounting P1 (English) June 2025 Answer Book](https://www.hlayiso.com/library/accounting-p1-english-june-2025-answer-book/7e96e433-56f8-43a1-9a38-c68c465746dd) — Addendum · 2025 · Eng ## Collection - [Grade 12 past papers](https://www.hlayiso.com/grade-12/past-papers) --- Hlayiso: free CAPS and IEB past papers, memos, notes and study guides for South African learners. 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