Accounting Grade 11 P2 KwaZulu Natal June 2019 Question Paper

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com

Downloaded from hlayiso.com Accounting Grade 11 Pz 2 PCASINovember 2043 INSTRUCTIONS AND INFORMATION Read the following instructions carefully and follow them precisely. 4. Answer ALL the questions. 2. Aspecial ANSWER BOOK is provided in which to answer ALL the questions. 3. A FORMULA SHEET for financial indicators is attached to this question paper. 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; 28 minutes Topic of the question: This question integrates: Concepts and calculations Reconciliations and VAT Bank Reconciliation Creditors’ Reconciliation Internal control QUESTION 2: 45 marks; 36 minutes Topic of the question: This question integrates: Concepts Manufacturing Ledger Accounts Interpretation of unit costs QUESTION 3: 40 marks; 32 minutes Topic of the question: This question integrates: Concepts Budgets Creditors' Payment Schedule Cash Budget Internal control QUESTION 4: 30 marks; 24 minutes Topic of the question: This question integrates: Analysis and interpretation of cash, stock, debtors and creditors Calculations Control of working capital and Periodic Inventory system Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting Gradet1 P2 3 PCAS/November 2019 QUESTION 1: RECONCILIATIONS AND VAT (36 marks; 28 minutes) 4.1. BANK RECONCILIATION The incomplete Bank Reconciliation Statement of Bazinga Traders for the month end of October 2019 is provided. Use the information and answer the following questions. REQUIRED : 1.1.1 Refer to Additional Information A: How should cheque no. 1006 be treated? Explain your answer. (3) 1.1.2 Provide a reason why cheque no. 1105 appears on the Bank Reconciliation Statement. (1) 1.1.3 Identify whether the balance as per bank statement is favourable or unfavourable. (1) 1.1.4 Prepare the corrected Bank Reconciliation Statement on 31 October 2019. (7) 1.1.5 Itis evident that cash is not being controlled well in the business, Identify TWO problems and give advice on how these problems can be 6 avoided in the future. Provide figures to Support your answer. (6) INFORMATION : A. Cheque no. 1006 issued on 10 April 2019 has been handled incorrectly. B. The outstanding deposit of R 19 000 is in respect of cash received from a debtor. This did not appear on the bank statement. The cashier in charge of .... deposits stated that she was robbed. on.the.way.to.the-bank- The owner -— - authorised that this amount be written off as the business will not recover the money. C. Adebit order of R 1 300 for monthly insurance appeared twice on the Bank Statement for October 2019. The bank will rectify this on the Bank Statement next month. Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting Gradet1 P2 4 PCAS/November 2018 Bazinga Traders Bank Reconciliation Statement on 31 October 2019 Debit balance as per bank statement 16 500 Outstanding | Dated 5 October 2019 19 000 deposits Dated 21 October 2019 20 100 No.1006 (dated 10 April 2019) 5 100 Outstanding | No.1098 (dated 29 October 2019) 9 900 cheques No. 1405 (dated 5 December 2018) [4700 1.2. B. CREDITORS’ RECONCILIATION Mars Traders received a statement of account from a creditor Galaxy Suppliers. The balance on the statement did not agree with that on the account of Galaxy Suppliers in the Creditors’ Ledger. REQUIRED : . Complete the table in the ANSWER BOOK to show how the differences must be treated to reconcile the Creditors’ Ledger Account balance with the Statement balance. Write the amounts in the appropriate column and indicate the increase or decrease with a (+) or (-) with each amount. Total the columns to show the correct balances at the end of November 2019. (8) INFORMATION : Balance of Galaxy Suppliers-in the Creditors’ Ledger-of Mars. Traders....1.R.11.605 Balance on the statement received from Galaxy Traders R 20 120 A comparison between the Creditors’ Ledger Account of Galaxy Traders and the statement of account showed the following differences: A discount of R 165 for early payment was correctly recorded by Mars Traders. This was not reflected on the statement. An invoice for R 2 150 received from Galaxy Suppliers was incorrectly recorded as a debit note in the creditors’ ledger. Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting Grade11 P2 5 PCAS/November 2019 Cc. 1.3. 1.3.4 1.3.2 The statement of account reflects returns valued at R 8 700. The Creditors’ Ledger Account showed R 7 800. It was established that Mars Traders miscalculated the Value of goods returned. The statement of account showed an invoice for goods purchased, R 1950. This was for goods purchased by Mars Distributors. A payment of R 3 000 made on the 29 November 2019 appeared only in the Creditors’ Ledger. The statement of account was dated 25 November 2019. VAT Cape Traders is a VAT registered business. All items subject to VAT at 15%. REQUIRED : Calculate the amount of VAT either Receivable from or Payable to SARS on 31 August 2019. Indicate whether this amount is Receivable or Payable. (7) The owner has told the accountant to change the bac debts from R 800 to R 8 000. Give ONE reason why you disagree with him, (2) INFORMATION : The following transactions relate to Cape Traders for the VAT period ended 31 August 2019. A | Balance owing by SARS on 1 August 2019 34 800 B | Purchases of Trading stock (Vat exclusive) 1 925 000 © | Cash and credit sales (Vat inclusive) 2 649 600 D_ | Vat on discount received from suppliers 1 400 E | Vat on bad debts written off 800 35 Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting Grade11 P2 PCAS/Novernber 201g QUESTION 2: MANUFACTURING (45 marks; 36 minutes) 24 CONCEPTS indicate whether the following statements are TRUE or FALSE. Write only ‘True’ or ‘False’ next to the question number (2.1.1 to 2.1 .3) in the ANSWER BOOK. 2.1.1 Commission on sales will be classified as an administrative cost. 2.1.2 Advertising is part of factory overhead costs. 2.1.3 Carriage on raw materials purchased increases the cost of raw materials issued for production. (3) 2.2 ASH’S CRYSTAL CREATIONS You are provided with information relating to Ash's Crystal Creations for the year ended 31 December 2018. The business manufactures crystal ornaments and glassware and uses a mark-up of 60% on cost. REQUIRED: 2.2.1 Calculate the: oo. » Direct Labour Cost (9) » Factory Overhead Cost (13) 2.2.2 Prepare the following accounts in the general ledger: «Work in progress stock (5) ° Finished goods stock (4) INFORMATION: A. Balances in the stock accounts: ——__.................. | 34 December 2018 4 January 2018 Raw materials stock Work-in-progress stock ? R160 000 Finished goods stock R95 000 R110 000 indirect factory materials R15 100 R13 200 B. Employees in the production process: Number of employees 14 employees Basic monthly salary of each employee R7 000 Total overtime hours per employee for the year 144 hours Overtime rate per hour R6GS Copyright reserved Please turn over

~e~ Depreciation on factory equipment, R277 2207 ~ eee Downloaded from hlayiso.com Accounting Gradet71 P2 7 POAS/Navembar 2019 Employment benefits: ° All employees in the production process work the same number of overtime hours. ° UIF deductions from the basic salary are 1%. The employer contriputes an additional 1% of the basic salary to UIF. . The factory foreman is entitled to an annual salary of R156 000 (including UIF and pension benefits) . Accounts appearing in the General ledger on 31 December 2018: Water and electricity R104 000 Rent expense R115 200 Insurance R71 400 ° 10% of the water and electricity was used in the administration offices. The factory used the rest. ® Rent is divided between the different departments according to floor space: eo | total *|- Factory Administrative | Sales & Distribution Floor space 4 500 m2 600 m? 400 m2 500 m2 Insurance of R2 800 is still outstanding for December 2019. Insurance is divided in a ratio of 3: 2 : 2 between the factory, administration and sales & distribution departments. . Indirect materials of R38 400 were bought for the factory during the financial year. . The following figures were calculated for the financial year: ® Direct (raw) materials issued for manufacturing, R2 100 000. . Sales for the current year amounted to R6 200 000. Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting Gredet1 P2 2.3 MAGOGO’S MAGWINYAS & POAS November 2019 Magogo's Magwinyas produces and sells delicious magwinyas (doughnuts) to the community. The sole owner is Mama Gogo. The financial year-end is 31 October. REQUIRED: 2.3.1 Calculate the break-even point for the year ended 31 October 2019. (4) 2.3.2 Should the business be satisfied with the number of units that they produced and sold during the current financial year? Explain, quoting figures. (3) 2.3.3 Mama Gogo is concerned about the high cost of producing the magwinyas. She suggested buying used oil at a cheap price from the takeaway down the road which she will use to fry her magwinyas. But she instructed her employees to keep the selling price unchanged. Give TWO points of advice to Mama Gogo why she should not do this. (4) INFORMATION: The following information was taken from the accounting records: co [31 October 2019 | 31 October 2018 Total Per unit Total Per unit Sales R1 792 000 | R28,00 R1794000 | R23,00 Variable costs R1.024 000 | R16,00 R_ 975000 | R12,50 Fixed costs R_ 736000 | R11,50 R_ 630000 [R 8,08 Break-even point ? 60 000 units Number of units 64 000 units 78 000 units produced and sold Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting Gradeii P2 QUESTION 3: CASH BUDGET PCAS/Novermber 2019 (40 marks; 32 minutes) You are provided with an incomplete Cash Budget of Urban Queen Traders for the period 1 October 2019 to 30 November 2019. The business is owned by Z. Ndlovu. REQUIRED: 3.1. Identify TWO items entered incorrectly in the Cash Budget. Refer to information F. (2) 3.2 Complete the Creditors Payment Schedule. (10) 3.3 Identify/Calculate the missing figures A to G. (20) 3.4 The sales assistants are unhappy with the increase they received. Provide ONE possible reason to justify their dissatisfaction. (2) 3.5 On 31 September 2019, Z. Ndlovu identified the figures below. Comment on the control of each item and give ONE point of advice in each case. (6) September 2019 Budgeted Actual Variance Stationery 41.000 2 500 -1 500 Staff training 3.000 900 +2 100 INFORMATION A. Sales and purchases of stock e Total sales Actual Budgeted August 150 000 September 165 000 October 180 000 November 210 000 Copyright reserved ° 60% of the total sales are for cash. e The mark-up is 50% on cost. °_ The business maintains a fixed-base stock by replacing stock on a monthly basis. e 40% of all purchases are on credit. B. Creditors payment It is expected that creditors will be paid as follows: e 60% in the month of purchase to receive a 5% discount e 25% in the month after purchase ° 15% in the second month after purchase C. Salaries and wages e The business has five sales assistants. One sales assistant will be resigning at the end of October 2019. The remaining assistants will receive a 4% increase in their salary on 1 November 2019. Please turn over

Downloaded from hlayiso.com Accounting Grade11 P2 10 PCAS/November 2019 D. Insurance ° The insurance premium is paid at the end of each month. The monthly premium will increase by 10 % on 1 November 2019. E. Purchase of delivery vehicle © Z. Ndlovu intends on purchasing a delivery vehicle on 1 October 2019. She will have to pay a 10 % deposit in October 2019. e Her father has agreed to provide interest-free finance for the balance of the cost. She will have to repay her father R 5 500 per month over 36 months. The first instalment will be paid in November 2079. F. Extract from the Gash Budget for October and November 2019 OCTOBER NOVEMBER RECEIPTS Cash sales 55 000 A Collection from debtors 82 600 92 550 Commission income 7 800 7 800 Rent income 8 000 8 250 PAYMENTS _ ee |S cee Cash purchase of stock B 84 000 Payments to creditors ___ 44 360 Salary : manager __ 20 000 25 000 Salaries : sales assistants 30 000 Cc Insurance D 3 300 Stationery _ 4.000 1.000 Telephone 1 500 1 500 Trading stock deficit 1.000 1.000 Staff training __ _ 3.000 3 000 Advertising 2.200 2 200 Depreciation 7 500} 7 500 Delivery vehicle : deposit E - Delivery vehicle : instalment - 5 500 _Interestonloan 00 000 Sundry expenses 3 000 Cash drawings by owner oe Vehicle expenses 1 300 After finalising the budget, the following was identified. OCTOBER NOVEMBER Cash deficit for the month 23 250 F Cash at the beginning of the i | 7200 Cash at the end of the month G (11 200) 40 Copyright reserved Please turn over

You are provided with information from the records of J. Lo Fashions for the past two financial years ended 28 February. The business sells women's clothing. The owner J. Lo requires your advice regarding the control of her working capital. Refer to the Downloaded from hlayiso.com Accounting Gradei1 P2 11 PCAS/November 2019 QUESTION 4: CONTROL OF WORKING CAPITAL AND PERODIC INVENTORY SYSTEM (30 marks; 25 minutes) questions below and quote figures or financial indicators to support your commenis. REQUIRED: 4.1 4.2 4.3 4.4 Copyright reserved Cash (overdraft) in current bank account: Comment on the cash in the current bank account. What advice would you give to J. Lo? Provide ONE point. Quote figures. (4) Trading stock: 4.21 Calculate the stock turnover rate for 2019. Use average stock in your calculation. (4) 4.2.2. Comment on the stock turnover rate and the stockholding period for 2019. Quote figures or indicators. Explain why she should be concerned about this. What advice would you give to J.Lo? (5) Provide ONE point. Sales strategies: 4.3.1 J. Lo used one deliberate measure to improve cash sales in 2019. Identify the strategy and quote the relevant figures. (4) Debtors and creditors: -Gomment-on- whether-or-notJ-Lo has been—controlling-her-debtors—and creditors appropriately. How would this affect the business? Quote figures. (4) Please turn over

Downloaded from hlayiso.com Accounting Grade11 P2 42 PCAS/November 2019 INFORMATION: A. Figures from the Ledger: 2019 2018 Total sales R582 000 R520 000 Cash sales R222 800 R120 000 Credit sales R360 000 R400 000 Cost of sales R376 000 R325 000 Gross profit R206 800 R195 000 Fixed deposit (10% p.a.) maturing in 2 R300 G00 R300 000 months Cash in the current bank account (R280 000) R140 000 (overdraft) Trading stock R112 170 R138 496 B. | Financial indicators: Mark-up % 60% 60% Discount on cash sales 10% 0% Stock turnover rate ? 2,4 times Average stock holding period 120 days 150 days Average debtors’ collection period 30 days 40 days - -Average-creditors'. payment period ---| ---- -60-days |. -.. 60-days Interest on overdraft 16% 16% 4.5 Periodic inventory system M.M Traders uses the periodic inventory system. Use the following information to calculate the Cost of Sales for the year ended 28 February 2019. (9) Stock (01/03/2018) ar 000 Stock (28/02/2019) 80 000 Total Purchases 200 000 Garriage-on-purchases.-— —--- ~~ 13-000~—-f--- Returns by creditors 4 000 Returns by debtors 15 000 Carriage on sales 4 100 Goods taken by owner at cost for own 4000 Use Copyright reserved 30 TOTAL: Please turn over 150

Downloaded from hlayiso.com Accounting Grade it P2 13 PCAS/November 2019 _ GRADE 11 ACCOUNTING: FINANCIAL INDICATOR FORMULA SHEET Gross profit x 100 Sales 1 Gross profit x 100 Cost of sales 1 Operating expenses x 100 Net profit x 100 Sales 1 Operating profit x 100 Sales 1 Sales 1 Total earnings by partner x 100 Net profit x 100 Partner's average equity 4 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 Credit sales 1 Average creditors x 365 Credit purchases 1 Average-inventories’-x-365-or 12 Cost of sales 4 ~~ Costofsales——- ~~ Average inventories Non-current liabilities : Owners! equity Total assets : Total liabilities

Downloaded from hlayiso.com

Downloaded from hlayiso.com PHOENIX CIRCUIT ACCOUNTING SOCIETY (PCAS) HELPING ACCOUNTING EDUCATORS EXCEL GRADE 414 ACCOUNTING PAPER 2 NOVEMBER 2079 ANSWER BOOK. Name and Surname ! Grade 14: QUESTION Le NARK ariel TOTAL This answer book consists of 12 pages.

Downloaded from hlayiso.caMmenaoe Answer Sook Accannting PQ QUESTION 4: RECONCILIATIONS AND VAT 1.4. BANK RECONCILIATION 1.4.1. | Refer to Additional Information A: How should cheque no. 1006 be treated? Explain your answer. — | 3 1.1.2. | Provide a reason why cheque no. 1105 appears on the Bank Reconciliation Statement. 1 4.1.3. {Identify whether the balance as per bank statement is favourable or unfavourable. 4 1.1.4, Bank Reconciliation Statement on 310ctober 2019 Debit Credit

Agcounting P2 14.5. 4.2. . Downloaded from hlayiso.com Answer 200k PCASINOV2949 Kis evident that cash is not being controlled well in the business. Identify TWO problems and give advice on how these problems can be avoided in the future. Provide figures to support your answer. Problem identified with figures Advice CREDITORS’ RECONCILIATION Account of Galaxy Suppliers in Creditors’ Ledger of Mars Traders Statement received from Galaxy Suppliers Balance 11 605 20 120 m Oo) Oo) 6 Final Balance

Downloaded from hlayiso.com Ariswer Book iii | Calculate the amount of VAT either Recaivable from or Payable to SARS on 31 August 2019. indicate whether this amount is Receivable or Payable. Receivable / Payable: 1.3.2. | The owner has told the accountant to change the bad debts from R800 to R& 000. Give ONE reason why you disagree with him. TOTAL MARKS 35

Downloaded from hlayiso.co Answer Book niing PZ QUESTION 2: MANUFACTURING 2.4 CONCEPTS m PCASINGY2ZG 19 Write only True or False next to the question number. 2.1.1 2.4.2 2.1.3 3 2.2. ASH’S CRYSTAL CREATIONS 2.204 Calculate the Direct Labour Cost 9 Calculate the Factory Overhead cost. 13

Accounting PZ Lo m h | ay Iso . COM; SiNowzE4 g S0cd. 7 ___Work in Progress Stock account _ [sors |; )0)!!!!”!;~™ i a a iJan |7 | Balance bid | 160000 i t | _ it ben 5 Finished Goods Stock account 2018 Jan |1 |Batance bid 416 000

Accounting 22 2.3 ib ad os 2.3.2 2.3.3 Downloaded from hlayiso.com Answer Book MAGOGO'S MAGWINYAS Calculate the break-even point for the year ended 31 October 2019. POCASMov20tS Should the business be satisfied with the number of units that they produced and sold during the current financial year. Explain, quoting figures. Mama Gogo is concerned about the high cost of producing the magwinyas. She suggested buying used oil at a cheap price from the takeaway down the road which she will use to fry her magwinyas. But she instructed her employees to keep the selling price unchanged. Give TWO points of advice to Mama Gago why she should not do this. TOTAL MARKS 45

Answer Boak QUESTION 3: CASH BUDGET oh 3.2 Downloaded from hlayiso.com _ identify TWO items incorrectly entered in the Cash Budget. CREDITORS’ PAYMENT SCHEDULE MONTH CREDIT OCTOBER NOVEMBER PURCHASES August R40 000 6 000 September R44 000 44 000 October 27 360 November R56 000 ee 44 360 10

Downloaded from hlayiso.com Anewer Book [ | SALEULATION AMOUNT Cash sales {A) Cash purchases of stock (8) Salaries : sales assistants {C) Insurance (D) .| Delivery vehicle: deposit. (E) Gash deficit for the month (F) Cash at the end of the month (G) 20 3.4 The sales assistants are unhappy with the increase they received. Provide ONE possible reason to justify their dissatisfaction.

Downloaded from hlayiso.com,., Anawel Book gf pee eceeceeme — peoneene eenegggein 7 “ | Comment on the control of each Rem and give one point of advice in each case. | | COMMENT ADVICE Stationery | Siaff training — : ~ TOTAL MARKS ———- 40

QUESTION 4: CONTROL OF WORKING CAPITAL AND PERIODIC INVENTORY Downloaded from hlayiso.com Accounting 22 44 POASNov2ndg Answer Book SYSTEM 4 4.204 4.2.2 Comment on the cash in the current bank account. What advice would you give to J.Lo? Provide ONE point. Quote figures. Calculate the stock turnover rate for 2019. Use average stock in your calculation. Bt teens weve nace Comment on the stock turnover rate and the stockholding period for 2019. Quote figures ¢ or indicators. 3. Explain why she should be concerned about this. -- os a What advice would you give to J.Lo? Provide ONE point.

Downloaded from hlayiso.com Answer Book 4 _ = && Comment on whether or notJ.Lo has been controlling her debtors and creditors appropriately. Quote figures. How would this affect the business? 4 4s Calculate the cost of sales for the year ended 28 February 2019. 9 TOTAL MARKS 30