Accounting Grade 12 IEB Paper 1 2016 Question Paper

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE EXAMINATION NOVEMBER 2016 ACCOUNTING: PAPER I EXAMINATION NUMBER Time: 2 hours 200 marks PLEASE READ THE FOLLOWING INSTRUCTIONS CAREFULLY 1. This question paper consists of 11 pages and an Information Booklet of 9 pages (i–ix) with a ratio sheet on page i. Please check that your question paper is complete. 2. Read the questions carefully. 3. Answer the questions in the space provided. 4. It is in your own interest to write legibly and to present your work neatly. 5. You may not use red or green ink. You may use a pencil, but please use a soft, dark pencil. 6. All calculations should be rounded off to two decimal places. 7. The allocation of marks and appropriate time to be taken for each question are as follows: Possible Actual Marker Moderator marks marks signature signature Question 1: Inventory Systems 32 (19 minutes) Question 2: Company Financial Statements 70 (42 minutes) Question 3: Cash Flow Statements 50 (30 minutes) Question 4: Manufacturing 48 (29 minutes) TOTAL 200 Checker IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 2 of 11 QUESTION 1 INVENTORY SYSTEMS (32 marks, 19 minutes) Refer to the information relating to Weighcomm Scales. 1.1 Calculate the value of the closing stock using the FIFO method on 31 July 2016. (5) 1.2 Calculate the cost of sales for the year ended 31 July. (4) 1.3 Calculate the gross profit made by Weighcomm Scales for the year ended 31 July 2016. (6) 1.4 When doing an internal audit the auditor suspected that stock had been stolen, as all scales sold by Weighcomm Scales during the year ending 31 July 2016 had been sold at R3 800 (excluding VAT) each. Calculate whether or not stock has been stolen. (4) IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 3 of 11 1.5 Mark Epstein, the owner, is very concerned that sales have slowed down tremendously this year and that stock appears to be sitting in the warehouse for longer periods of time. The 2015 rate of stock turnover was 5,6 times. 1.5.1 Calculate the rate of stock turnover for the year for 2016. (4) 1.5.2 Comment on the rate of stock turnover calculated in Question 1.5.1 above explaining why it may pose a problem for the business. (2) 1.6 Calculate the Output VAT that the business would have been required to account for during the year. (3) 1.7 Analyse the transaction reflected in the credit note on 31 July 2016 in the table below. Under the accounting equation use +/– and amount. Owners' Account debit Account credit Assets Liabilities Equity (4) 32 IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 4 of 11 QUESTION 2 COMPANY FINANCIAL STATEMENTS (70 marks; 42 minutes) Refer to the information relating to Impumelelo Limited. 2.1 Complete the Statement of Comprehensive Income (Income Statement) for the year ending 31 October 2016. Impumelelo Limited Statement of Comprehensive Income (Income Statement) for the year ending 31 October 2016 Sales (2 435 000 Cost of Sales (1 521 875 Gross Profit Do not fill in this amount Add: Other income Rent income (144 313 Gross income for the year Do not fill in this amount Less: Operating expenses Do not fill in this amount Audit fees (25 000 Directors fees (159 600 Sundry expenses 116 649 Salaries (240 000 Bad debts 11 594 Loss on sale of asset (6 000 Operating profit for the year Do not fill in this amount Interest income (9 050 Operating profit before interest expense Do not fill in this amount Interest expense Net income before taxation Do not fill in this amount Taxation for the year (289 000 Net income after taxation Do not fill in this amount (33) IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 5 of 11 2.2 Complete the notes to the financial statements as at 31 October 2016. NB: Impumelelo Limited show all their current liabilities under Trade and other payables and not separately in the Balance Sheet. 2.2.1 Trade and other receivables Net trade debtors Debtors Control (161 969 Less: Provision for bad debts (7 930 Do not fill in this amount (5) 2.2.2 Ordinary share capital Ordinary shares at per share 2 587 500 Ordinary shares at per share Ordinary shares at per share Ordinary shares at per share (12) 2.2.3 Trade and other payables Creditors control (229 120 Creditors for salaries (25 100 SARS: PAYE (12 050 Unemployment insurance fund (979 Bank Overdraft (32 740 Do not fill in this amount (20) 70 IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 6 of 11 QUESTION 3 CASH FLOW STATEMENTS (50 marks, 30 minutes) Refer to the information relating to Claxton LTD. 3.1 Calculate the dividends paid as they would have appeared in the cash flow statement on 31 July 2016. Dividends paid (4) 3.2 Calculate the opening balance of the SARS income tax account on 1 August 2015. State whether this amount would reflect a tax asset or tax liability. (5) 3.3 Calculate the book value of the obsolete equipment. (6) 3.4 How much did Claxton LTD pay for the new equipment? (5) IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 7 of 11 3.5 Complete the cash flow from financing activities as it would have appeared in the cash flow statement on 31 July 2016. Cash flow from FINANCING ACTIVITIES 145 250 Repurchase of shares ? Proceeds of new shares ? Proceeds of new loans ? Repayment of existing loans ? (9) 3.6 Complete the cash and cash equivalent note as it would have appeared in the cash flow statement on 31 July 2016. Net change 31 July 2016 31 July 2015 Bank ? 12 500 ? Petty Cash 500 2 000 1 500 ? ? ? (5) 3.7 Calculate the balance on the retained income account on 31 July 2016. R1 035 000 (6) 3.8 Claxton LTD is very interested in buying a small but profitable business in Australia for R3 million. The directors are concerned about the economic situation in South Africa, in particular the increasing cost of finance and instability of the exchange rate. The bank has approved the finance for the purchase at an interest rate of 13,25% p.a. 3.8.1 Calculate the Return on Total Capital Employed (ROTCE) on 31 July 2016. Use average capital employed in your calculation. (5) IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 8 of 11 3.8.2 If Claxton LTD decided to go ahead and take the R3 million finance, its debt to equity ratio will increase from 0,21 : 1 (present value) to 0,9 : 1. With reference to risk and gearing and any other concerns you think are important, advise whether or not Claxton LTD should proceed with the purchase of the business. (5) 50 IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 9 of 11 QUESTION 4 MANUFACTURING (48 marks, 29 minutes) This question consists of 2 parts. PART A (38 marks) Refer to the information relating to Thorndon Manufacturers. 4.1 Calculate the direct materials issued into the production process. (7) 4.2 Calculate the cost of production of finished goods. (4) 4.3 Complete the factory overheads note below in the production cost statement for the year ending 30 September 2016. Thorndon Manufacturers Notes to the production cost statement for the year ending 30 September 2016 Note 3: Factory overheads cost Rent ( Insurance ( (18) IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 10 of 11 Note 5: Selling and distribution costs Rent 171 000 Insurance 59 520 Telephone 12 500 Indirect labour ? Indirect material ? ? ? ? (6) 4.4 With the downturn in the South African economy Thorndon Manufacturers are concerned that they will struggle to make profits in 2017 and so are considering stopping their selling of alarms online as this is not their core/main business. Briefly explain one advantage and one disadvantage that this decision will have on their profitability in 2017 and explain what decision you think they should make. Advantage: Disadvantage: Decision: (3) IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I Page 11 of 11 PART B (10 marks) Refer to the information relating to Bags of Fun. 4.5 Calculate the break-even point for Bags of Fun on 31 October 2016. (6) 4.6 Explain whether you think Maria would or would not be concerned about the profitability and sustainability of her business. Provide two reasons and justify your answer by providing supporting figures. (4) 48 Total: 200 marks IEB Copyright © 2016