GR11 Accounting Practice exam memorandum June Paper 2

Study & Master Support Pack | Grade 11 CAPS Accounting Memorandum: June exemplar examination (Paper 2) This revision pack for Accounting Grade 11 provides support for learners revising the most important concepts and principles covered in the CAPS curriculum, by providing practice exams. This pack offers a marking memorandum for the June exemplar examination (Paper 2). You have permission to print or photocopy this document, and to distribute it electronically via email or WhatsApp. For more information on our Study & Master CAPS-approved  textbooks and valuable resource materials, visit www.cambridge.org Brighter Thinking | Better Learning i

Grade 11 JUNE Time: 2 hours EXAMINATION PAPER 2 MEMORANDUM Marks: 150 QUESTION 1 [38 marks; 30 minutes] BANK RECONCILIATIONS 1.1 CASH JOURNALS CRJ CPJ Totals R154 890 R139 769 550  4 400  980  266  521 + 322 = 843  651  1 772 – 1 227 = 545  2 360  2 360  Correct totals 162 200 () 145 414 () 17 1.2 BANK RECONCILIATION STATEMENT ON 30 NOVEMBER 2018 Debit Credit Balance according to bank statement  11 105 Outstanding deposit  19 870 Cheques not presented for payment No. 3013  12 348 No. 3102  3 230 No. 3111  890 No. 3132  2 360 Debit incorrect deposit by bank  5 800 Balance according to bank account 15 863 (162 200() – 145 414() – 32 649() 35 733 35 733 13 1

Linge suspects that the cashier is not entering all the cash received for cash 1.3 sales on the receipts, but that she is taking it for herself. Why will this not be picked up by the bank reconciliation and what can Linge do to prevent this from happening? The bank reconciliation will only show entries that were made in the books of the business  Split duties – all cash received should be entered on a receipt and should be checked by a second employee  Any acceptable answer 4 1.4 What should Linge do if the cashier is found guilty of unethical behaviour? Have a disciplinary hearing The employee should pay the money back/he could be dismissed  4 QUESTION 2 [48 marks; 38 minutes] ASSET MANAGEMENT 2.1.1 Dr    Accumulated depreciation on vehicles Cr Date Details Fol. Amount Date Details Fol. Amount 2017 Asset disposal  2017 Dec 01 (45 760 + 11 136)  56 896 Mar 01 Balance b/d  91 520  Balance c/d () 45 760 Dec 01 Depreciation  11 136 102 656 102 656 2018 () Jan 01 Balance b/d 45 760 Depreciation   Feb 28 (14848 + 12500) 27 348 () 73 108 15 2

2.1.2 Dr   Asset disposal Cr Date Details Fol. Amount Date Details Fol. Amount 2017 2017 Accumulated depreciation on () Dec 01 Vehicles   120 000 Dec 01 vehicles  56 896 Creditors control  55 000 () Loss with asset disposal  8 104 120 000 120 000 10 Calculations for depreciation on vehicles: Sold vehicle 1/1/2015 – 28/2/2015 120 000 × 20% × 2 = 4 000 12 1/3/2015 – 28/2/2016 116 000 × 20% = 23 200 R45 760 1/3/2016 – 28/2/2017 92 800 × 20% = 18 560 1/3/2017 – 30/11/2017 74 240 × 20% × 9 = 11 136 12 Old vehicle 1/1/2015 – 28/2/2015 120 000 × 20% × 2 = 4 000 12 1/3/2015 – 28/2/2016 116 000 × 20% = 23 200 R45 760 1/3/2016 – 28/2/2017 92 800 × 20% = 18 560 1/3/2017 – 28/2/2018 74 240 × 20% = 14 848 New vehicle 1/12/2017-28/2/2018 250 000 × 20% × 3 = 12 500 12 2.2 FIXED/TANGIBLE ASSETS Vehicles Equipment Carrying value at the beginning of the year 148 480 31 200 Cost price 240 000 60 000 Accumulated depreciation (91 520) (28 800) Movements Additions at cost price  250 000  18 000 Disposals at carrying value (120 000 – 56 896)   (63 104) Depreciation (11 136 + 27348) (15 000 + 1 875) () (38 484)    (16 875) Carrying value end of current year () 296 892 () 32 325 Cost price  370 000  78 000 Accumulated depreciation () (73 108) () (45 675) 17 3

Calculations for depreciation on equipment: Old equipment: 60 000 × 25% = 15 000 New equipment: 18 000 × 25% × 5 = 1 875 12 Name two risks with regard to vehicles and two internal control measures 2.3 to prevent these risks. RISKS INTERNAL CONTROL MEASURE Discuss ethics with regard to use of assets Misuse of assets with drivers Theft Insurance Maintenance cost of vehicles Proper maintenance plan Any acceptable risk  × 2 Any acceptable control  × 2 6 QUESTION 3 [40 marks; 32 minutes] MANUFACTURING AND COST ACCOUNTING Choose a category from COLUMN B that matches a description in 3.1 COLUMN A. 3.1.1 E 3.1.2 D 3.1.3 E  3.1.4 C  4 3.2.1 General Ledger Dr    Raw materials stock Cr Date Details Fol. Amount Date Details Fol. Amount 2017 2018 Mar 01 Balance b/d 21 300 Feb 28 Raw material issued 425 400 2018 Feb 28 Creditors control 321 000 Balance c/d 15 600 Bank 98 700 441 000 441 000 8 4

3.2.2 Calculate the factory overhead cost for the year. Salary – factory foreman  68 000 Motor vehicle expenses  21 000 Water and electricity  28 800 Indirect material (2900 + 17600 - 2 350)  18 150 Sundry expenses  45 200 181 150 9 3.2.3 General Ledger Dr    Work-in-process stock Cr Date Details Fol. Amount Date Details Fol. Amount 2017 2018 Mar 01 Balance b/d 13 100 Feb 28 Finished goods   1 021 450 2018 Feb 28 Direct material cost  () 425 400 Balance c/d 18 200 Direct labour cost  420 000 Factory overheads  () 181 150 1 039 650 1 039 650 2018 Mar 01 Balance b/d 18 200 9 3.2.4 Calculate the cost of sales for the year. 21 100 + 1021 450() – 23 400  = 1 019 150  4 5

3.3.1 Calculate the break-even point Contribution per unit = 24 – 17,60 = 6,40 Break-even point Total fixed cost = Contribution per unit = 77 160 6,40 12 056 = 12 057 units 4 Comment on the number of bags she is producing. Quote figures and 3.3.2 refer to the break-even point. Bella should be producing 12 056 bags – she only produced 10 288 bags in 2018.  She is making a loss/she should produce and sell more bags in order to break even 2 QUESTION 4 [24 marks; 20 minutes] INTERPRETATION OF FINANCIAL STATEMENTS 4.1 Calculate financial indicators 4.1.1 % Gross profit on cost of sales 1 071 000 × 100 2 142 000 = 50% 3 4.1.2 Number of days stock is on hand 1 2  (357 660 + 175 600 357 600 × 365 or 2 142 000 2 142 000 = 61 days = 45 days 4 4.1.3 % Operating expenses on sales 512 640 × 100 3 213 000 = 15,96% 16% 3 6

4.2.1 The business changed their policy with regard to profit mark-up from 2017 to 2018. What was the change in policy? What are the risks with regard to this and what effect did this change have on the business income? Change – They increased the profit mark-up from 40% to 50% on the cost price Risk – they might lose clients due to increase in price Positive effect – cost of sales stayed the same, in other words, they did not lose clients due to price increase. Gross profit increased and therefore net profit increased. Any acceptable answer 6 4.2.2 Discuss two reasons why a business should not have too much stock on hand. Stock can become obsolete  Puts pressure on cash flow  Storage space, etc. 4 4.2.3 Does the business have good control over their expenses? Quote financial indicators to support your answer. Yes  % operating profit on sales decreased from 16,9% in 2017 to 15,9% in 2018 This happened due to the increase in the sales amount, but expenses staying more or less the same Any acceptable reason  4 7