Accounting Grade 11 P2 Eastern Cape November 2020 Memo (Eng)

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 11 NOVEMBER 2020 ACCOUNTING P2 (EXEMPLAR) MARKS: 150 TIME: 2 hours *Iaccne2* This question paper consists of 11 pages, a 1-page formula sheet and a 9-page answer book.

Downloaded from hlayiso.com 2 ACCOUNTING P2 (EC/NOVEMBER 2020) INSTRUCTIONS AND INFORMATION Read the following instructions carefully and follow them precisely. 1. Answer ALL the questions. 2. A special ANSWER BOOK is provided in which to answer ALL the questions. 3. A FORMULA SHEET for financial indicators is attached to this question p aper. You may use it if necessary. 4. Show ALL workings to earn part-marks. 5. You may use a non-programmable calculator. 6. You may use a dark pencil or blue/black ink to answer the questions. 7. Where applicable, show ALL calculations to ONE decimal point. 8. Write neatly and legibly. 9. Use the information in the table below as a guide when answering the question paper. Try NOT to deviate from it. QUESTION 1: 35 marks; 30 minutes Topic of the question: This question integrates: Reconciliations Financial Accounting VAT x Concepts, Bank and Creditors’ Reconciliation Managing resources x VAT Calculations x Internal controls QUESTION 2: 53 marks; 40 minutes Topic of the question: This question integrates: Manufacturing and Cost Managing Resources Accounting x Concepts, calculating and interpreting stock information x Break-even QUESTION 3: 37 marks; 30 minutes Topic of the question: This question integrates: Budgets Managerial Accounting x Debtors’ Collection x Internal Control x Ethics QUESTION 4: 25 marks; 20 minutes Topic of the question: This question integrates: Fixed assets Managerial Accounting Internal control x Asset Disposal x Internal Control Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 3 QUESTION 1: RECONCILIATIONS AND VAT (35 marks; 30 minutes) 1.1 CONCEPTS Indicate whether the following statements are TRUE or FALSE. Write only ‘true’ or ‘false’ next to the question numbers (1.1.1 to 1.1.2) in the ANSWER BOOK. 1.1.1 An external auditor will want to inspect the Bank Reconciliation Statement at the end of each month. (1) 1.1.2 A debit balance on the Bank Statement reflects an unfavourable balance. (1) 1.2 BANK RECONCILIATON The accountant of Russel & Son received the Bank Statement on 31 July 2020 and compared it with the Cash Journals for July 2020. REQUIRED: Use the necessary information to prepare the Bank Reconciliation Statement on 31July 2020 and determine the correct balance as per Bank Account. (8) A. On 31 July 2020 the Bank Statement showed a favourable balance of R3 600. B. Items on the Bank Statement for July 2020 that do not appear in the Cash Journals: x Unpaid cheque originally received from a debtor, L. Red, for R820 in settlement of his debt of R850 was dishonoured due to insufficient funds. x A tenant, N. Bergh, deposited the rent for June 2020 R2 500, directly into the current bank account of the business. x A debit order for the owner’s cellphone account, R1 400. x Credit card levy and service fees, R360. x A deposit of R3 800. It was discovered that the account of Russel & Son was credited in error. The bank will correct it in August 2020. Copyright reserved Please turn over

Downloaded from hlayiso.com 4 ACCOUNTING P2 (EC/NOVEMBER 2020) C. Items in the Cash Receipts and Cash Payments Journals that do not appear on the Bank Statement: x Deposit on 29 July 2020, R15 200 x Cheques: No. 231 R2 020 (dated 26 July 2020) No. 235 R1 570 (dated 31 August 2020) D. Unmarked item in the Bank Reconciliation Statement for June 2020: Cheque no. 156, R2 860 (dated 5 January 2020) 1.3 CREDITORS’ RECONCILIATION Lavender Suppliers received a statement of account from a creditor, Bramley Traders. The balance on the statement did not agree with that on the account of Bramley Traders in the Creditors Ledger of Lavender Suppliers. REQUIRED: 1.3.1 Bramley Traders offers credit terms of 60 days. Lavender Suppliers prefers to settle their account within 30 days during certain months. Provide TWO points to indicate that it is not a good decision. (4) 1.3.2 Record the following errors and omissions in the given table in the ANSWER BOOK and calculate the correct balance and total. (10) Write the amounts in the appropriate columns and indicate the increase or decrease with a (+) or (-) with each amount. INFORMATION: Balance of Bramley Traders in the Creditors Ledger of Lavender Suppliers, R21 130. Balance on the statement received from Bramley Traders was R32 600. Errors and omissions discovered: A. An invoice for R13 300 received from Bramley Traders was correctly recorded in the Creditors’ Ledger Account. The amount was incorrectly recorded as R11 200 on the statement. B. Lavender Suppliers entered a 10% discount relating to a payment of R3 000 on 19 February 2020. Bramley Traders did not approve this discount stating that the payment was received late. C. Goods returned, R500, appeared on the statement received. The bookkeeper of Lavender Suppliers forgot to record this transaction. D. Purchases of R3 035 from Bramley Traders were recorded as a debit note in the Creditors’ Ledger account. Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 5 E. A direct transfer of R7 000 by Lavender Suppliers was recorded in the Cash Payment Journal on 27 February 2020. A discount of R700 for early payment was also recorded. The statement of account from Bramley Traders was dated 25 February 2020. 1.4 VAT Battery Specialist is a registered VAT vendor. The standard VAT rate of 15% is applicable where necessary. The information relates to the VAT period ended 31 August 2020. REQUIRED: 1.4.1 Calculate the VAT amount payable/receivable to/from SARS. (9) 1.4.2 The internal auditor discovered that two large credit sales transactions for R598 000 during August 2020 were not recorded in the relevant journal. The owner insists that these should be recorded during September 2020, due to current cash flow problems. Give ONE reason why the auditor would not be satisfied with this explanation. (2) INFORMATION: VAT VAT Details of transactions EXCLUSIVE VAT INCLUSIVE Invoices issued to credit sales R1 415 880 customers Invoices received from suppliers R952 000 Credit notes received from suppliers R9 240 Discount allowed to debtors for R5 520 early payments of accounts Debtors’ accounts written off as R15 600 R17 940 bad debts Trading stock taken by owner for R252 personal use TOTAL: 35 Copyright reserved Please turn over

Downloaded from hlayiso.com 6 ACCOUNTING P2 (EC/NOVEMBER 2020) QUESTION 2: MANUFACTURING AND COST (53 marks; 40 minutes) ACCOUNTING 2.1 MANUFACTURING You are provided with information on Champion Manufacturers for the financial year ended 29 February 2020. REQUIRED: 2.1.1 Prepare the following Ledger Accounts: x Raw Materials stock (14) x Work-in-process Stock (12) x Finished Good Stock (8) 2.1.2 Calculate the gross profit for the year. (3) 2.1.3 Calculate the mark-up percentage. (4) INFORMATION: A. The following indicates the stock on hand: R R 29 Feb 2020 28 Feb 2019 Raw materials stock 85 500 107 000 Work-in-process stock 86 414 25 800 Stock of finished goods 25 400 126 400 Consumables stores on hand (indirect materials) 1 800 9 600 B. Summary of transactions for the year ended 29 February 2020. R Office stationery purchased 4 350 Raw materials purchased for cash 250 000 Raw material purchased on credit 158 000 Indirect materials purchased for cash 19 900 Carriage on purchases of raw materials cash 15 400 Sales of finished goods 1 520 000 Advertising 28 200 Vehicle expenses 14 500 Salaries: Factory Foreman 90 000 Administrative staff 110 000 Sales staff 99 000 Rates 20 040 Insurance 31 200 Water and electricity 30 000 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 7 ADDITIONAL INFORMATION x Raw materials costing R16 000, purchased from Electronic Suppliers, were returned on 29 February 2020. This transaction was not recorded. x Direct labour cost amounted to R214 749 for the year. x The Total Factory Overhead Cost for the year amounted to R216 965. 2.2 COST ACCOUNTING Jellytot Manufacturers manufactures toddlers’ tracksuits. Tracksuits are sold at a mark-up of 50% on cost. REQUIRED: 2.2.1 From the list below, select only the THREE FIXED COSTS. (3) Raw materials cost Direct labour costs Salary Foreman Commission on sales: Salary of Accountant Factory Rent Sales Staff 2.2.2 Calculate the break-even value of Jellytot Manufacturers. (4) 2.2.3 In your opinion, should Jellytot Manufacturers change to a cheaper supplier? Give TWO reasons for your answer. (5) INFORMATION The owner of Jellytot Manufacturers has provided you with the following information: x Selling price per tracksuit: R160 x Variable cost per tracksuit: R115 x Total fixed costs: R945 000 The owner informs you that he has discovered a new supplier for raw material. The material will fade after one wash. However, this will reduce the variable cost to R95. If the business charges the same selling price, it will ensure greater profits. TOTAL 53 Copyright reserved Please turn over

Downloaded from hlayiso.com 8 ACCOUNTING P2 (EC/NOVEMBER 2020) QUESTION 3: BUDGETING (37 marks; 30 minutes) You are provided with information relating to Peter Pan Stationers. The business is owned by Vuyo Radebe and his wife, Lydia. The shop is managed by Alvin Alberts. However, he has been offered a job by a competitor at an increased salary. REQUIRED: 3.1 Explain the importance of comparing budgeted figures with actual figures achieved for the same period. (2) 3.2 Calculate the missing amounts (indicated by (a), (b) and (c)) in the Debtors' Collection Schedule for the budgeted period March to May 2020. (4) 3.3 Calculate the following budgeted figures: 3.3.1 Total budgeted sales for March 2020 (2) 3.3.2 Amount budgeted for payments to creditors during May 2020 (4) 3.3.3 Budgeted salaries of the shop assistants for April 2020 (4) 3.3.4 The percentage increase in the salary of the manager expected in May 2020 (3) 3.3.5 Amount of the additional loan expected to be obtained on 1 April 2020 (4) 3.4 An official of the local municipality has offered to recommend Peter Pan Stationers to supply stationery to the value of R500 000. However, he will only do this if Vuyo pays him R20 000 in cash. Give Vuyo advice in this regard. State TWO points. (4) 3.5 Vuyo's wife is angry that he has not been adhering to the cash budget. Vuyo says that he deliberately did not keep to the budget because he wanted to improve the overall results of the business. x Identify THREE over-payments in April 2020, apart from vehicle expenses. Provide figures to support your answer. Provide a valid reason for each over- payment to support Vuyo's decisions. (6) x Explain how this difference of opinion with his wife can be avoided in future. (2) x State TWO other strategies that Vuyo and his wife could consider in future to improve the results of the business. (2) Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 9 INFORMATION: A. Sales and debtors' collection: x The TOTAL sales for April 2020 and May 2020 have been estimated as follows: April 2020 70 000 May 2020 78 750 x 80% of all sales are for cash. The rest is on credit. x Debtors are expected to pay as follows: 60% within the same month of sale, subject to a 4% discount 38% in the month following the month of sale 2% of debts are written off in the second month following the month of sale x Debtors' collection schedule: CREDIT 2020 2020 2020 SALES MARCH APRIL MAY R R R R February 31 500 11 970 March 10 500 (a) 3 990 April 14 000 8 064 (b) May (c) 12 054 B. Purchases of merchandise and payment to creditors: x The business works on a fixed-stock base where the stock sold in a month is replaced at the end of that month. x The business uses a mark-up of 75% on cost. x 70% of all merchandise is purchased on credit. x Creditors are paid in full in the month following the month of purchase. C. Salaries: x The business has 12 shop assistants employed on equal pay in March 2020. Nine of the shop assistants are entitled to a bonus equal to 80% of their monthly salary during April 2020. x All shop assistants will receive a general increase during May 2020. x The manager received a bonus in April 2020. D. Loan: An additional loan will be taken from Atlantic Bank on 1 April 2020 at 14% p.a. interest. Copyright reserved Please turn over

Downloaded from hlayiso.com 10 ACCOUNTING P2 (EC/NOVEMBER 2020) E. Extract from the Cash Budget for the three months ending 31 May 2020: MARCH APRIL MAY RECEIPTS Budgeted Budgeted Actual Budgeted Cash sale of stock 42 000 56 000 59 200 63 000 Collection from debtors 18 018 12 054 12 800 ? Rent income 5 600 6 160 6 160 6 160 Additional loan acquired 0 ? ? 0 PAYMENTS Cash purchase of stock 9 000 12 000 28 000 13 500 Payment to creditors 58 500 21 000 21 000 ? Salaries of shop assistants 102 000 ? ? 110 160 Salary of manager 16 000 16 000 40 000 19 200 Interest on loan (14% p.a.) 6 300 7 175 7 175 7 175 Delivery expenses (for deliveries to customers) 9 200 9 200 0 9 200 Insurance (paid annually) 0 27 000 27 000 - Advertising 0 0 0 20 000 Purchase of vehicle 0 0 180 000 0 Vehicle expenses 0 0 4 000 4 000 Sundry expenses 5 300 5 300 5 300 5 800 TOTAL: 37 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 11 QUESTION 4: FIXED ASSETS AND INTERNAL CONTROL (25 marks; 20 minutes) You are provided with information relating to Everest Traders. REQUIRED: 4.1 What is a Fixed Assets Register? (2) 4.2 Calculate the depreciation on equipment for the year. (10) 4.3 Prepare the Asset Disposal account. (10) 4.4 The owner is concerned about the internal control over the fixed assets of the business. Suggest THREE internal control measures that could be implemented. (3) INFORMATION: 1. The following balances appeared in the general ledger on 29 February 2020, the end of the financial year. Fixed Asset Cost price Accumulated 29 Feb 2020 depreciation 1 March 2019 Equipment 645 000 180 000 2. Equipment: x On 1 December 2019 obsolete equipment was traded in. The cost price of the equipment was R60 000 and the accumulated depreciation on 1 March 2019 amounted to R42 000. The trade-in offer of R22 000 was accepted and the cost price of the new equipment was R90 000. This has been properly recorded. x Equipment is depreciated at 20% p.a. on the diminishing balance method. TOTAL 25 TOTAL: 150 Copyright reserved Please turn over

GRADE 11 ACCOUNTING: FINANCIAL INDICATOR FORMULA SHEET Gross profit X 100 Gross profit X 100 Net profit X 100 Sales 1 Cost of sales 1 Sales 1 Operating expenses X 100 Operating profit X 100 Sales 1 Sales 1 Total earnings by partner X 100 Net profit X 100 Partner’s average equity 1 Average owners’ equity 1 Current assets : Current liabilities (Current assets – Inventories) : Current liabilities (Trade and other receivables + Cash and cash equivalents): Current liabilities Average debtors X 365 Average creditors X 365 Credit sales 1 Credit purchases 1 Average inventories X 365 or 12 Cost of sales X 365 Cost of sales 1 Average inventories 1 Downloaded from hlayiso.com Non-current liabilities: Owners’ equity Total assets: Total liabilities

Downloaded from hlayiso.com NAME: NATIONAL SENIOR CERTIFICATE GRADE 11 NOVEMBER 2020 ACCOUNTING P2 ANSWER BOOK (EXEMPLAR) MARKS: 150 *IAcabe2* MARKS MODERATED QUESTION MAX. MARKS OBTAINED MARKS 1 35 2 53 3 37 4 25 150 This answer book consists of 9 pages. Copyright reserved

Downloaded from hlayiso.com 2 ACCOUNTING P2 (ANSWER BOOK) (EC/NOVEMBER 2020) QUESTION 1: RECONCILIATION 1.1 Indicate whether the following statements are TRUE or FALSE. Write only ‘True’ or ‘False’ next to the question number. 1.1.1 1.1.2 2 1.2 Bank Reconciliation Statement on 31 July 2020: Debit Credit 8 1.3.1 Athough Bramley Traders offers credit terms of 60 days, Lavender Suppliers prefers to settle their account within 30 days during certain months. Provide TWO points to indicate that it is not a good decision. 4 1.3.2 CREDITORS’ LEDGER OF STATEMENT FROM LAVENDER BRAMLEY TRADERS SUPPLIERS 21 130 32 600 A B C D E 10 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 (ANSWER BOOK) 3 1.4 VAT 1.4.1 Calculate the VAT amount payable/receivable to/from SARS. 9 1.4.2 The internal auditor discovered that two large credit sales transactions for R598 000 during August 2020 were not recorded in the relevant journal. The owner insists that these will be recorded during September, due to current cash flow problems. Give ONE reason why the auditor would not be satisfied with this explanation. 2 TOTAL MARKS: 35 Copyright reserved Please turn over

Downloaded from hlayiso.com 4 ACCOUNTING P2 (ANSWER BOOK) (EC/NOVEMBER 2020) QUESTION 2: MANUFACTURING AND COST ACCOUNTING 2.1 MANUFACTURING 2.1.1 GENERAL LEDGER OF CHAMPION MANUFACTURERS RAW MATERIALS STOCK 2019 2020 01 29 Mar Feb 2020 29 Feb 14 WORK-IN-PROCESS 2020 2019 01 Feb 29 Mar 2020 29 Feb 12 FINISHED GOODS STOCK 2019 2020 01 29 Mar Feb 2020 29 Feb 8 2.1.2 Calculate the gross profit for the year. 3 2.1.3 Calculate the mark-up percentage. 4 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 (ANSWER BOOK) 5 2.2 COST ACCOUNTING 2.2.1 Three fixed costs 3 2.2.2 Calculate the break-even value of Jellytot Manufacturers. 4 2.2.3 In your opinion, should Jellytot Manufacturers change to a cheaper supplier? Give TWO reasons for your answer. 5 TOTAL MARKS: 53 Copyright reserved Please turn over

Downloaded from hlayiso.com 6 ACCOUNTING P2 (ANSWER BOOK) (EC/NOVEMBER 2020) QUESTION 3: BUDGETING 3.1 Explain the importance of comparing budgeted figures with actual figures achieved for the same period. 2 3.2 Calculate the missing amounts (indicated by a, b and c) in the Debtors' Collection Schedule for the budgeted period March to May 2020. a b c 4 Calculate the budgeted total sales for March 2020. 3.3.1 2 3.3.2 Calculate the amount budgeted for payments to creditors during May 2020. 4 3.3.3 Calculate the budgeted salaries of the shop assistants for April 2020. 4 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 (ANSWER BOOK) 7 3.3.4 Calculate the % increase in the salary of the manager expected in May 2020. 3 3.3.5 Calculate the amount of the additional loan expected to be acquired on 1 April 2020. 4 3.4 An official of the local municipality has offered to recommend Peter Pan Stationers to supply stationery to the value of R500 000. However, he will only do this if Vuyo pays him R20 000 in cash. Give Vuyo advice in this regard. State TWO points. 4 Copyright reserved Please turn over

Downloaded from hlayiso.com 8 ACCOUNTING P2 (ANSWER BOOK) (EC/NOVEMBER 2020) 3.5 Identify THREE over-payments in April 2020, apart from vehicle expenses. Provide figures to support your answer. Provide a valid reason for each over-payment to support Vuyo's decisions. Over-payment with figures Valid reason 1 2 3 6 Explain how this difference of opinion with his wife can be avoided in future. 2 State TWO other strategies that Vuyo and his wife could consider in future to improve the results of the business. . 2 TOTAL MARKS: 37 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 (ANSWER BOOK) 9 QUESTION 4: FIXED ASSETS AND INTERNAL CONTROL 4.1 What is a Fixed Assets Register? 2 4.2 Calculate the depreciation on equipment for the year. 10 4.3 Asset Disposal 10 4.4 The owner is concerned about the internal control over the fixed assets of the business. Suggest THREE internal control measures that could be implemented. 3 TOTAL MARKS: 25 TOTAL: 150 Copyright reserved Please turn over

Downloaded from hlayiso.com

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 11 NOVEMBER 2020 ACCOUNTING P2 MARKING GUIDELINE (EXEMPLAR) MARKS: 150 MARKING PRINCIPLES: 1. Penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for that item (no foreign item penalty for misplaced items). 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. Full marks for correct answer. If the answer is incorrect, mark the workings provided. 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). 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. This memorandum is not for public distribution; as certain items might imply incorrect treatment. The adjustments made are due to nuances in certain questions 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, the marker must inspect the reasonableness of the answer before awarding the mark. 10. 'Operation' means 'Check operation'. 'One part correct' means 'Operation and one part correct'. 11. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at least in part. In such cases, do not award the method mark. Indicate by way of _ 12. Be aware that some candidates provide valid alternatives beyond the memorandum. 13. Codes: f = foreign item; p = placement/presentation. This marking guideline consists of 9 pages. Copyright reserved

Downloaded from hlayiso.com 2 ACCOUNTING P2 (EC/NOVEMBER 2020) QUESTION 1: RECONCILIATION 1.1 Indicate whether the following statements are TRUE or FALSE. Write only ‘true’ or ‘false’ next to the question number. 1.1.1 False 9 1.1.2 True 9 2 1.2 Bank Reconciliation Statement on 31 July 2020: Debit Credit Balance as per Bank Statement 3 600 9 Late deposit 15 200 9 Outstanding cheques: No 231 2 020 9 No 235 1 570 9 Correct error deposit 3 800 99 Balancing figure ; Balance as per Bank Account 11 410 ; for 18 800 both 18 800 totals -1 Foreign item: Max. 2 8 1.3.1 Although Bramley Traders offers credit terms of 60 days, Lavender Suppliers prefers to settle their account within 30 days during certain months. Provide TWO points to indicate that it is not a good decision. Any TWO points 99 33 x Keep money as long as possible in own bank account to earn interest. x First collect money from debtors to pay creditors. x If no early payment discount is offered, there is no benefit x Pay as late as possible, but avoid unnecessary interest charged. 4 1.3.2 CREDITORS’ LEDGER ACCOUNT STATEMENT FROM OF BRAMLEY TRADERS BRAMLEY TRADERS 21 130 32 600 A 13 300 – 11 200 + 2 100 99 B + 300 99 C - 500 9 D (3 035 + 3 035) + 6 070 99 E - 7 000 one mark; -700 one mark- 7 700 99 27 000 ;* 27 000 10 * Operation one part correct. Both figures Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 3 1.4 VAT 1.4.1 Calculate the VAT amount payable/receivable to/from SARS. 142 800 99 184 680 99 5 520 9 9 240 9 2 340 9 252 9 43 512 ; Operation one part correct OR Choose the line 184 680 – 142 800 + 9 240 – 5 520 – 2 340 + 252 = 43 512 – 184 680 + 142 800 – 9 240 + 5 520 + 2 340 – 252 = 43 512 9 1.4.2 The internal auditor discovered that two large credit sales transactions for R598 000 during August 2020 were not recorded in the respective journal. The owner insists that these will be recorded during September, due to current cash flow problems. Give ONE reason why the auditor would not be satisfied with this explanation. Unethical. 9 He should not go along with the owner's request. They make use of the invoice basis to record VAT, so it has to be recorded and paid. 9 2 TOTAL MARKS: 35 Copyright reserved Please turn over

Downloaded from hlayiso.com 4 ACCOUNTING P2 (EC/NOVEMBER 2020) QUESTION 2: MANUFACTURING AND COST ACCOUNTING 2.1 MANUFACTURING 2.1.1 GENERAL LEDGER OF CHAMPION MANUFACTURERS RAW MATERIALS STOCK 2019 2020 Creditors' control Mar 01 Balance 107 000 9 Feb 29 16 0009 9 Bank 9 428 9009 2020 Raw Material Issued/ 9 Feb 29 (250 000 + 15 400) 265 400999 Work in process 5 1 mark each Balancing figure Creditors’ 158 000 9 Balance 85 5009 control 9 530 400 530 400 2020 01 Balance 85 500 9 14 Mar WORK-IN-PROCESS 2019 2020 Finished Goods 800 000 9 5 Mar 01 Balance 25 800 9 Feb 29 Stock 9 Balancing figure 2020 Direct Labour Feb 29 Cost 9 214 749 9 Balance 86 414 9 Direct Materials Cost /Raw material stock 428 900 5 9 Factory 9 Overhead Cost 216 965 9 886 414 886 414 2020 Balance 86 414 9 12 01 Mar FINISHED GOODS STOCK 2019 2020 Cost of 901 000 9; Mar 01 Balance 126 400 9 Feb 29 sales 9 Balancing figure 2020 Work-in-process Feb 29 stock 9 800 000 ; Balance 25 400 9 926 400 26 400 8 2020 Balance 25 400 9 01 Mar 2.1.2 Calculate the gross profit for the year. R1 520 000 3 – R901 000 5 = R619 000 ; 3 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 5 2.1.3 Calculate the mark-up percentage. 619 000 ; 100 901 000 ; x 1 = 68,7%9; 4 2.2 COST ACCOUNTING 2.2.1 Three fixed costs Salary foreman 9 Factory Rent 9 Salary of the Accountant 9 3 2.2.2 Calculate the break-even value of Jellytot Manufacturers. R945 000 R160 – R 115 R945 000 9 R45 9 9 = 21 000 units ; 4 2.2.3 In your opinion should Jellytot Manufacturers change to a cheaper supplier? Give TWO reasons for your answer. Yes/No 9 Reason 9 9 9 9 No x Lose goodwill x Poor quality of material x Customers will go elsewhere – less profit x Eventually cheaper quality and cheaper price Yes x Emphasis is on profit x A demand can be created; then the business should be able to supply it. 5 TOTAL MARKS 53 Copyright reserved Please turn over

Downloaded from hlayiso.com 6 ACCOUNTING P2 (EC/NOVEMBER 2020) QUESTION 3: BUDGETING 3.1 Explain the importance of comparing budgeted figures with actual figures achieved for the same period. One valid explanation 33 Deviations can be determined and remedial measures will be put in place. Establish whether the budgeting was realistic. Identify trends of mismanagement of cash. 2 3.2 Calculate the missing amounts (indicated by a, b and c) in the Debtors' Collection Schedule for the budgeted period March to May 2020. a 6 048 33 b 5 320 3 c 15 750 3 4 Calculate the budgeted total sales for March 2020. 3.3.1 10 500 x 100/20 = 52 500 33 2 3.3.2 Calculate the amount budgeted for payments to creditors during May 2020. 40 000 70 000 3 x 100/175 3 x 70% 3 = 28 000 5 any one part correct OR 12 000/30 x 70 = 28 000 1 mark 1 mark 1 mark 1 w/w mark 4 3.3.3 Calculate the budgeted salaries of the shop assistants for April 2020. 102 000/12 = 8 500 8 500 x 3 = 25 500 15 300 x 9 = 137 700 25 500 3 + 137 700 35 = 163 200 5 any one part correct OR 102 000 one mark + 61 200 two marks = 163 200 1 w/w mark (102 000 X 80% X 9/12) one mark one mark 4 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 7 3.3.4 Calculate the % increase in the salary of the manager expected in May 2020. 3 200 (1 mark) (19 200 – 16 000) 3/16 000 3 = 20% 5 any one part correct 3 3.3.5 Calculate the amount of the additional loan expected to be acquired on 1 April 2020. 875 3 x (100 x12) 3 /14 3 = 75 000 5 any one part correct OR 7 175 X 100/14 X 12 = 615 000 two marks 6 300 X 100/14 X 12 = 540 000 one mark 75 000 one w/w mark 4 3.4 An official of the local municipality has offered to recommend Peter Pan Stationers to supply stationery to the value of R500 000. However, he will only do this if Vuyo pays him R20 000 in cash. Give Vuyo advice in this regard. State TWO points. Any two suggestions 33 33 x This is a bribe which is unethical and illegal. x If this information is made public, it will have a negative effect on the business in the future. x Vuyo must tender formally to the municipality to secure the contract through the normal processes. 4 Copyright reserved Please turn over

Downloaded from hlayiso.com 8 ACCOUNTING P2 (EC/NOVEMBER 2020) 3.5 Identify THREE over-payments in April 2020, apart from vehicle expenses. Provide figures to support your answer. Provide a valid reason for each over-payment to support Vuyo's decisions. Over-payment with figures Valid reason Item and figure 3 3 3 3 3 3 1 Cash purchase of merchandise (R28 000) was Possibly to take advantage of significantly higher than the bulk discounts on purchases. budgeted figure (R12 000) 2 The bonus of the manager He has retained the services (R24 000) of a valuable employee. 3 Purchase of vehicle The difference between motor (R180 000) vehicle expenses and delivery expenses is R5 200 per month 6 Explain how this difference of opinion with his wife can be avoided in future. As they are jointly running the business, they should have specific meetings to determine the budget jointly. Vuyo should consult his wife before spending on unbudgeted items. 33 2 State TWO other strategies that Vuyo and his wife could consider in future to improve the results of the business. Any two valid points: 3 3 x Advertise monthly x Reduce the number of shop assistants x Reinstate deliveries to customers x Negotiate longer credit terms with creditors 2 TOTAL MARKS: 37 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2020) ACCOUNTING P2 9 QUESTION 4: FIXED ASSETS AND INTERNAL CONTROL 4.1 What is a Fixed Assets Register? Any valid explanation 99 A Fixed Asset Register is a book in which all the assets owned by a business is recorded. 2 4.2 Calculate the depreciation on equipment for the year. New equipment: 90 000 x 20% x 3/12 R4 500 99 Equipment sold: 60 000 9 – 42 000 9 = 18 000 x 20% x 9/12 9 R2 700 ; Old equipment: 555 000 9 – 138 000 9 = 417 000 x 20% R83 400 ; Total: R90 600 9 10 4.3 Asset Disposal 2020 Equipment 9 60 000 9 2020 Acc dep on Dec 1 Dec 1 equipment 9 44 700 ; (42 000 9 + 2 700 ;) see 4.2 Profit on sale 6 700 ; Creditors’ control 9 22 000 of equipment 9 9 66 700 66 700 10 4.4 The owner is concerned about the internal control over the fixed assets of the business. Suggest THREE internal control measures that could be implemented. Three valid suggestions 9 9 9 ƒ Ensure that all fixed assets are safely stored (security) ƒ Ensure that proper authorisation procedures are in place ƒ Do regular physical checks against the fixed asset register 3 TOTAL MARKS: 25 TOTAL: 150 Copyright reserved Please turn over

Downloaded from hlayiso.com