Accounting Grade 12 P2 Eastern Cape Mock 2022 QP (Eng)

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 12 SEPTEMBER 2022 ACCOUNTING P2 MARKS: 150 TIME: 2 hours This question paper consists of 12 pages, including a formula sheet and a 9-page answer book.

Downloaded from hlayiso.com 2 ACCOUNTING P2 (EC/SEPTEMBER 2022) INSTRUCTIONS AND INFORMATION Read the following instructions carefully and follow them precisely. 1. Answer ALL questions. 2. A special ANSWER BOOK is provided in which to answer ALL questions. 3. Show ALL workings to earn part-marks. 4. You may use a non-programmable calculator. 5. You may use a dark pencil or blue/black ink to answer questions. 6. Where applicable, show ALL calculations to ONE decimal point. 7. If you choose to do so, you may use the Financial Indicator Formula Sheet attached at the end of this question paper. The use of this formula sheet is NOT compulsory. 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 TOPIC MARKS MINUTES 1 Inventory Valuation and VAT 35 30 2 Reconciliations 35 30 3 Cost Accounting 40 30 4 Budgeting 40 30 TOTAL 150 120 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/SEPTEMBER 2022) ACCOUNTING P2 3 QUESTION 1: INVENTORY VALUATION AND VAT (35 marks; 30 minutes) 1.1 INVENTORY VALUATION Debra Traders sells electric fans. The business is owned by Deb Fisher. The information relates to the financial year ended 30 April 2022. The periodic inventory system and the first-in-first-out (FIFO) method are used to value the stock of fans. REQUIRED: 1.1.1 Calculate the following for the financial year ended 30 April 2022: • Value of the closing stock (5) • Cost of sales (6) 1.1.2 Deb is concerned about the sales and profitability. • Calculate the average stockholding period (in days). (5) • Based on your findings, comment on whether she should be concerned or not. (2) 1.1.3 Deb wants to change to the weighted average method to value the electric fans as she feels that this will improve profitability. Comment on this proposal. Provide TWO points. (4) INFORMATION: A. Stock of electric fans: UNITS TOTAL (R) On 1 May 2021 330 79 200 On 30 April 2022 470 ? B. Purchases of electric fans during the year: UNIT COST TOTAL MONTH UNITS (R) (R) July 2021 250 250 62 500 September 2021 350 260 91 000 December 2021 500 275 137 500 February 2022 300 285 85 500 TOTAL 1 400 376 500 C. Six (6) electric fans from the December 2021 batch, with a total cost of R1 650, were used as prizes in an advertising campaign. D. Ten (10) damaged fans from the February 2022 purchases were returned to suppliers. A refund of the total cost was received. E. Sales: Electric fans are sold at a fixed price of R425 each. The total sales amounted to R528 700. Copyright reserved Please turn over

Downloaded from hlayiso.com 4 ACCOUNTING P2 (EC/SEPTEMBER 2022) 1.2 VAT B-Line Suppliers is registered for VAT. The standard rate of 15% is applicable. The business is owned by Brenda Fazile. REQUIRED: 1.2.1 Calculate the amount payable to SARS in respect of VAT for the two- month VAT period ended 30 June 2022. (9) 1.2.2 Brenda has negotiated with a supplier to provide her with a purchase invoice for R120 000, although the actual purchase was for R30 000. As a senior manager, what would you say to Brenda regarding this transaction? Provide TWO points. (4) INFORMATION: A. The balance due by SARS on 1 June 2022 was R3 800. B. VAT amounts extracted from the records for June 2022: VAT AMOUNT R Total sales 142 500 Total purchases of stock 86 100 Discount received from suppliers 3 750 Goods returned by debtors 1 260 Sale of old equipment 6 000 Goods taken by the owner for personal use 1 125 Bad debts recovered 540 35 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/SEPTEMBER 2022) ACCOUNTING P2 5 QUESTION 2: RECONCILIATIONS (35 marks; 30 minutes) BANK RECONCILIATION 2.1 Indicate whether each of the following statements are TRUE or FALSE. Write only ‘true’ or ‘false’ next to each number (2.1.1 to 2.1.3) in the ANSWER BOOK. 2.1.1 Cash withdrawal fee and interest on overdraft on a bank statement are recorded as bank charges in the Cash Payments Journal. 2.1.2 A credit balance on the bank statement represents a favourable balance for the business. 2.1.3 It is not necessary to prepare a bank reconciliation statement because the bank statement will always provide the correct bank balance. (3) 2.2 AMADEV STORES The information relates to July 2022. The official bank statement, used for reconciliation purposes, is e-mailed to the business on 25th of each month. REQUIRED: 2.2.1 Update the CRJ and CPJ totals in the table provided and calculate the correct bank account balance in the General Ledger on 31 July 2022. Show ALL workings. (9) 2.2.2 Prepare the Bank Reconciliation Statement on 31 July 2022. (8) 2.2.3 Refer to INFORMATION D: Deposit of R22 500 on 20 July 2022. Explain why the accountant should be concerned about this deposit. Provide ONE point. (2) INFORMATION: A. The Bank account in the General Ledger reflected a favourable balance of R21 800 on 1 July 2022. B. Before inspecting the July bank statement, the provisional totals in the July journals were: CRJ: R116 400 and CPJ: R132 500. C. Bank charges on July bank statement but not in the journal, R1 150. D. Deposit, dated 20 July was not reflected on the bank statement, R22 500. E Deposit, dated 29 July was not reflected on the bank statement, R12 700. F. EFT received from a debtor was correctly reflected as R5 300 on the bank statement, but incorrectly recorded as R3 500 in the journal. G. The debit order for cellphone data, R1 840, was not recorded in the relevant journal. It was also incorrectly duplicated on the July bank statement. H. EFT 778, dated 31 July, was not reflected on the bank statement, R6 200. Copyright reserved Please turn over

Downloaded from hlayiso.com 6 ACCOUNTING P2 (EC/SEPTEMBER 2022) I. Rent received on 30 July, R9 200, was recorded in the journal from a proof of payment received from the tenant. This did not appear on the statement. J. Debit order for advertising appeared on the bank statement but not in the journal, R740. K. The bank statement closed with a balance of R ? on 25 July 2022. 2.3 MOLLY’S DELI Molly buys her fast-food products from Gladys Suppliers. She received a statement from Gladys Suppliers on 26 August 2022. The amount due did not agree with the balance in the Creditors Ledger. Her bookkeeper, Janice, stated that the Creditors ledger balance was R41 800. An analysis of the Creditors Ledger account and the statement received reflected that the statement was correct in all respects. Errors and omissions were noted in the books of the business only. REQUIRED: 2.3.1 Show how the errors and omissions identified must be treated to correct the Creditors Ledger Account of Gladys Suppliers in the books of the business. Use the table provided. Show a “+” for increases or “–” for decreases next to each amount and calculate the final balance. (9) 2.3.2 Refer to information D Molly was disappointed that she did not benefit from the discount. How can Molly improve the internal control process to ensure that this does not happen in the future? Provide TWO points. (4) INFORMATION Errors and omissions identified in the books of the business. A. An invoice for R8 600 was not recorded in the creditors ledger account. B. A credit invoice for R17 800 appeared in the creditor’s ledger account of Gladys Suppliers. This was for goods purchased from Glyn Stores. C. A credit invoice for R12 600 was recorded as R21 600 in the creditors ledger account. D. A discount of R600 was recorded in the creditors ledger when an EFT payment for R12 000 was made on 7 August 2022. Gladys Suppliers indicated that this was not granted, as it did not adhere to the credit terms. E. Returns of damaged goods was recorded as an invoice, R2 240. 35 Copyright reserved Please turn over

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Downloaded from hlayiso.com 8 ACCOUNTING P2 (EC/SEPTEMBER 2022) QUESTION 3: COST ACCOUNTING (40 marks; 30 minutes) 3.1 Match the concepts in COLUMN A with an example provided in COLUMN B. Write only the letters (A–D) next to the question numbers (3.1.1 to 3.1.4) in the ANSWER BOOK. COLUMN A COLUMN B 3.1.1 Indirect labour A Cost of raw materials used in the production process 3.1.2 Administration cost B Manufactured products that are ready for distribution to retailers 3.1.3 Variable cost C Wages paid to the factory maintenance workers 3.1.4 Finished goods D Stationery purchased, for office use (4 x 1) (4) 3.2 ZAZA ACCESSORIES The information relates to the production of water bottles. The financial year ended on 28 February 2022. REQUIRED: 3.2.1 Refer to Information A Calculate the direct labour cost for the production of water bottles. (8) 3.2.2 Refer to Information D Correct the Factory Overhead cost amount by taking into account the errors and omissions. Show (+) for increase and (-) for decrease next to each amount. (9) 3.2.3 Complete the Production Cost Statement on 28 February 2022. (9) INFORMATION: A. Production wages: • The water bottle factory employs 5 workers. • Each worked 1 550 hours normal time at R60 per hour. • A combined total of 225 hours of overtime was reflected on the overtime register. The overtime rate is 1,6 times the normal rate. • All employees pay 1% of total earnings to the UIF, and the business contributed an equal amount to the Fund. B. Stocks balances: 28 February 2022 1 March 2021 Work in progress R? R 18 750 Finished goods R 42 300 R 46 800 C. Prime cost amounted to R812 500. Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/SEPTEMBER 2022) ACCOUNTING P2 9 D. Factory Overhead Costs: The bookkeeper calculated the factory overhead cost as R203 720. The following errors and omissions were noted: (a) The cleaner earns R5 000 per month. 25% of this must be allocated to the water bottles factory. This was not taken into account. (b) The closing stock of factory indirect material, R1 800, was not taken into account. (c) The factory overhead cost included insurance of R19 200 which was shared in the ratio 4 : 2 between the water bottle factory and selling and distribution. This should have been shared in the ratio 5 : 1. (d) The entire water and electricity expense of R47 400 was included in the factory overhead cost. Only 70% of this expense relates to the water bottle factory. E. Sales for the year amounted to R1 305 850 (cost R1 004 500). 3.3 UNIT COSTS AND BREAK-EVEN Cage Traders sells blankets. The information relates to the two years ended June 2022. The owner is Cage Matt. REQUIRED: 3.3.1 Comment on the control over direct material cost per unit and selling and distribution cost per unit. Quote figures. In each case, provide a possible reason for the change. (6) 3.3.2 Explain whether Cage (the owner) should be satisfied with the level of production achieved and the break-even point. Provide TWO points. Quote figures. (4) INFORMATION: 2022 2021 UNIT PRICE UNIT PRICE R R Direct Material Cost 120,00 140,00 Direct Labour Cost 140,00 110,00 Factory Overhead Cost 92,00 90,00 Selling and Distribution Cost 90,00 60,00 Administration Cost 40,00 40,00 Selling price per unit 500,00 470,00 Number of units produced and sold 9 000 units 8 000 units Break-even point 7 920 units 6 500 units 40 Copyright reserved Please turn over

Downloaded from hlayiso.com 10 ACCOUNTING P2 (EC/SEPTEMBER 2022) QUESTION 4: BUDGETING (40 marks; 30 minutes) 4.1 Explain why: 4.1.1 Bad debts will not appear in a cash budget. (1) 4.1.2 A cash budget is an effective internal control mechanism. (2) 4.2 MARIE (PTY) LTD The company is registered with an authorised share capital of 800 000 ordinary shares. REQUIRED: 4.2.1 Refer to Information A and B Calculate the collection from debtors during September 2022. (7) 4.2.2 Calculate the missing amounts denoted by (i) to (iv) on the extract Cash Budget provided in Information E. (13) 4.2.3 Calculate the % increase in salaries and wages. (3) 4.2.4 Provide TWO reasons why the company decides to invest in staff training. (2) 4.2.5 Refer to Information J. Marie has decided to change the sales strategy due to low turnover during the Covid-19 pandemic. • Comment on the new approach regarding cash and credit sales. (2) • Explain TWO disadvantages of the approach adopted. (4) • Comment on the actual and budgeted figures for advertising and packing material. Quote figures. (6) INFORMATION: A. JULY AUGUST SEPTEMBER R R R Credit sales 364 000 382 200 354 900 Cost of sales figures: 320 000 336 000 312 000 B. Debtors pay according to the following trend: 50% of debtors pay in the month of sales and receive a 4% discount 30% pay in the month following the sales month 18% pay in the second month after the sales month Bad debts accounts for 2% C. Cash sales is 35% of total sales. D. Purchases and payment to creditors: • Stock sold is replaced in the month of sale. • Cash purchases amounts to 25% of total purchases. • Creditors for stock purchases are paid in the second month following the purchase (60 days). Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/SEPTEMBER 2022) ACCOUNTING P2 11 E. Extract of the Cash Budget for the two months: AUGUST SEPTEMBER Receipts Cash Sales 205 800 191 100 Cash from Debtors Rent Income (i) 13 878 Additional shares 465 000 Payments Cash purchases of stock 84 000 78 000 Payment to creditors 225 000 (ii) Salaries and wages 134 300 142 358 Repayment of loan (iii) Interest on loan 3 300 2 750 Advertising 17 640 16 380 Packing material 35 280 32 760 Delivery expenses 41 160 38 220 Ordinary share dividends (iv) Staff training 70 000 F. The rent will increase by 8% p.a. from 1 September 2022. G. Part of the loan will be re-paid on 1 September 2022. Interest on loan at 11% p.a. is payable on the last day of each month, and is not capitalised. H. On 1 July 2022, there were 480 000 ordinary shares in issue. Additional shares will be issued on 1 August 2022 at R6,20 per share. Interim dividends of 15 cents per share is payable on 30 September 2022, to all shares on the share register. I. Advertising is a fixed percentage of budgeted cash sales. Delivery to customers is outsourced to Victor Reliable. J. Budgeted and Actual figures for July 2022: BUDGETED ACTUAL BUDGET ITEMS R R Cash sales 196 000 50 400 Credit sales 364 000 285 600 Total sales 560 000 336 000 Advertising 16 800 13 440 Packing material 33 600 18 500 40 TOTAL: 150 Copyright reserved Please turn over

Downloaded from hlayiso.com 12 ACCOUNTING P2 (EC/SEPTEMBER 2022) GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET Gross profit x 100 Gross profit x 100 Sales 1 Cost of sales 1 Net profit before tax x 100 Net profit after tax x 100 Sales 1 Sales 1 Operating expenses x 100 Operating profit x 100 Sales 1 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 . Cost of sales 1 Average trading stock Average debtors x 365 Average creditors x 365 Credit sales 1 Credit purchases 1 Net income after tax x 100 Net income after tax x 100 Number of issued shares 1 Average shareholders' equity 1 (*See note below) Net income before tax + Interest on loans x 100 Average shareholders' equity + Average non-current liabilities 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 per share x 100 Dividends for the year x 100 Earnings per share 1 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 Please turn over