Gr11 Accounting Teacher Support Document 2020

Downloaded from hlayiso.com CURRICULUM GRADE 10 - 12 DIRECTORATE NCS (CAPS) SUPPORT DOCUMENT GRADE 11 ACCOUNTING 2020

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 PREFACE This document is intended to assist the Accounting learners with the Grade 11 curriculum implementation in the classroom. The document covers the following:  Partnerships  Analysis and Interpretation of a Partnership  Reconciliations  Manufacturing  Budgeting  VAT and inventory  Internal control and ethics The aim of this document is to support teachers so as to enable them to facilitate the content. Exemplar questions will guide teachers on what and how to assess the work covered. Covering all these aspects will empower the teachers in delivering the curriculum to the learners. The Curriculum Grade 10 – 12 Directorate acknowledges the contribution made in conceptualizing and producing this document by the KwaZulu-Natal Department of Education Accounting Subject Advisers. Page 2 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 CONTENTS 1. Financial statements of a Partnership ………………………………..……………..… 2. Analysis and interpretation of a Partnership …..…………………………………..… 3. Reconciliations …………………………………………………………………………….. 4. Manufacturing……………………………………………………………………………… 5. Budgeting ………………………………………………………………………………….. 6. VAT and Inventory ……………………………………………………………………….. Page 3 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 A. PARTNERSHIPS ACTIVITY A1 PARTNERSHIPS (40 Marks; 24 Minutes) 1.1 Read each of the following statements and choose a term/phrase from the table below that best describes the statement. (5) finance cost matching secondary distribution reliability partners’ earnings going concern limited liability materiality primary distribution 1.1.1 Financial statements are prepared on the assumption that a business will continue for the foreseeable future. 1.1.2 The income statement is prepared for a specified period. 1.1.3 Interest on loan is paid on borrowed funds. 1.1.4 In a partnership, net profit is appropriated for salaries, interest on capital, bonus and share in remaining profit. 1.1.5 Financial statements should be available as close as possible to the date of the period for which they are prepared. 1.2 The following information was taken from the financial records of Extreme Traders, a partnership with A Gifford and N Ndlovu as partners. REQUIRED: Use the information provided to complete the following notes to the financial statements. 1.2.1 Capital (6) 1.2.2 Current account (29) INFORMATION: The following balances and totals appeared in the Post-adjustment Trial Balance of Extreme Traders on 29 February 2016. Capital: Gifford 700 000 Capital: Ndlovu 900 000 Current account: Gifford (1 March 2015) 140 000 Current account: Ndlovu (1 March 2015) 90 000(dr) Drawings: Gifford 177 800 Drawings: Ndlovu 215 600 Net profit according to the Profit and Loss account 1 285 500 A Partner Gifford decreased his capital by R180 000 on 31 August 2015. This was properly recorded. No entry has been made for partner Ndlovu’s increase in capital by R250 000 on 1 January 2016. B Trading stock to the value of R10 000 was taken by partner Ndlovu and incorrectly debited to the account of Gifford. D The partnership agreement stipulates the following: Both partners are entitled to interest on capital of 9% per annum. • Partner Gifford withdrew a total of R546 000 as his salary. This includes his salary for March 2016. Partner Ndlovu is awarded a salary of R350 000 per year. • A bonus of R30 000 was awarded to partner Ndlovu during the year. E. Gifford’s share in the remaining profit is R147 390. Profits are shared in the ratio of 3:2 between Gifford and Ndlovu. Page 4 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY A1 1.1 NO. 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.2 Calculation of interest on capital Answer Gifford: 4 Ndlovu: 4 1.2.1 CAPITAL Gifford Ndlovu Total Balance at the beginning of the year Contribution of capital during the year Withdrawal of capital during the year Balance at the end of the year 1.2.2 CURRENT ACCOUNTS Gifford Ndlovu Total Partners’ salaries Partner’s bonus 0 Interest on capital 71 100 Primary distribution of profits 575 100 Final distribution of profits 147 390 Profit as per Income Statement Drawings during the year Retained income for the year Balance at beginning of year Balance at end of year Page 5 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY A2 FINANCIAL STATEMENTS (75 Marks; 45 Minutes) The information provided concerns Flashgordon Traders for the year ended 29 February 2016. REQUIRED: 2.1 Complete the Income Statement for the year ended 29 February 2016. (50) 2.2 The following notes to the financial statements: 2.2.1 Trade and other receivables (8) 2.2.2 Trade and other payables (17) INFORMATION: FLASHGORDON TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2016 BALANCE SHEET ACCOUNTS Fol DR CR Capital B1 790 000 Drawings B2 238 375 Vehicles B3 410 000 Equipment B4 280 000 Accumulated depreciation on vehicles B5 270 000 Accumulated depreciation on equipment B6 95 000 Fixed Deposit: Nedbank B7 400 000 Trading stock B8 246 800 Debtors’ control B9 34 560 Provision for bad debts B10 2 500 Bank B11 620 890 Loan: Nedbank B12 620 000 Creditors’ control B13 32 000 Creditors for salaries B14 18 375 UIF B15 2 000 Pension fund B16 15 000 Page 6 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 NOMINAL ACCOUNT SECTION Sales N1 1 280 000 Cost of sales N2 642 000 Debtors’ allowances N3 6 500 Bad debts recovered N4 700 Water and electricity N5 8 900 Insurance N6 8 800 Bad debts N7 4 300 Donations N8 2 400 Discount received N9 1 600 Discount allowed N10 1 800 Stationery N11 17 300 Rent income N12 79 650 Bank charges N13 8 410 Telephone N14 10 900 Interest on overdraft N15 4 800 Interest on fixed deposit N16 28 000 Salaries and wages N17 288 090 3 234 825 3 234 825 ADDITIONAL INFORMATION AND ADJUSTMENTS A. Before the stock count was done Flashgordon donated stock, bought at a cost price of R1 600, to the primary school no entry has been made. B. A physical stock count on 29 February 2016 revealed the following to be on hand: Trading stock R236 000 Stationery R3 900 C. Depreciation for the year totalled, R124 850. D. The rent income was increased by R550 per month from 1 January 2016. The rent for March 2016 has already been received. E. Commission income due to the business is R15 000. F. The telephone account for February 2016 was received but has not been paid, R1 300. G. The account for water and electricity for February 2016 from the city council, R1 200, was not paid. H. Insurance included a premium of R1 320 paid for the period 1 October 2015 to 30 September 2016. I. Write off further bad debts of R560. J. Provision for bad debts must be adjusted to R1 800. K. Mr Jay, a debtor whose account had previously been written off, deposited R7 200 into the account of the business. L. Services fees for the month amounted to R290 Page 7 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 M. A retired employee was inadvertently included in the salaries journal for February 2016. The details from his payslip were: DEDUCTIONS CONTRIBUTIONS PAYE 4 500 Pension fund 1 875 10 % of gross salary UIF 250 rand-for-rand Net salary 18 375 NOTE: All contributions are debited to the salaries and wages account. N. On 29 February 2016 the Bank Reconciliation Statement reflected post-dated cheques totalling R 7 280 payable in the next financial year. O. A cheque issued to a creditor for R1 800 settling our account of R2 000 was dishonoured and sent back by bank marked R/D. P. The loan statement shows the following information on 28 February 2016 Balance on 1 March 2015 680 000 Interest capitalised ? Repayments during the year including interest 117 600 Balance on 29 February 2016 620 000 The business will make a capital repayment of R60 000 in the next financial year. Page 8 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY A2 NAME OF BUSINESS: FLASHGORDON TRADERS 2.1 INCOME STATEMENT FOR YEAR ENDED 29 February 2016 Sales Cost of sales Gross profit Other operating income Bad debts recovered (700 Discount Received (1 600 Rent Income (79 650 Commission income ? Gross operating income Operating expenses Water and electricity (8 900 Insurance (8 800 Bad debts (4 300 Donations (2400 Discount Allowed Stationery (17 300 Bank charges (8 410 + Telephone (10 900 Salaries & wages (288 090 ? ? Operating profit Interest income Profit before interest expense Interest expense Net profit for the year Page 9 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2.2.1 TRADE AND OTHER RECEIVABLES 5.2.2 TRADE AND OTHER PAYABLES Page 10 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY A3 FINANCIAL STATEMENT (80 marks; 48 minutes) The financial year of RANA Traders ends on 31 December 2017. REQUIRED 3.1 Prepare the Income Statement for the year ended 28 February 2017. (42) INFORMATION 1. PRE-ADJUSTMENT TRIAL BALANCE ON 31 DECEMBER 2017 BALANCE SHEET SECTION Debit Credit Capital 2 122 800 Drawings 569 491 Land and Buildings 120 000 Vehicles 476 000 Equipment (at cost) 230 000 Accumulated depreciation on vehicles 89 600 Accumulated depreciation on equipment 86 000 Loan : Bank of Africa 410 000 Fixed Deposit: Bank of Africa (10% p.a.) 150 000 Trading stock 70 000 Debtors' control 55 500 Provision for bad debts 2 400 Bank 61 048 Petty cash 350 Creditors' control 25 621 NOMINAL ACCOUNTS SECTION Sales 720 000 Cost of sales 400 000 Debtors' allowances 13 800 Rent income 46 400 Salaries and wages 164 000 Employer’s contribution 10 800 Bad debts 3 200 Utilities 8 900 Discount allowed 430 Telephone 7 800 Insurance 8 800 Packing material 8 206 Bank charges 846 Interest on Fixed deposit 13 750 3 439 171 3 439 171 Page 11 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2. ADJUSTMENTS AND ADDITIONAL INFORMATION 1. A debtor, Heyman, returned damaged goods with a selling price of R4 200. The mark-up was 60% on cost. This transaction has not been recorded. 2. Packing material costing R5 350 was used during the accounting period. 3. On 31 December 2017, physical stock count revealed that trading stock to the value of R64 700 was on hand. 4. The tenant has paid rent until 30 November 2017. The rent was increased by 10% from 1 June 2017. 5. The utilities account for December 2017 has not been paid, R1 100. 6. Received R600 from the insolvent estate of M Hand, 40 cents of every rand must be written off 7. The Bank statement from Tony Bank reflected the following: Bank charges R250 Interest on current account R150 Unpaid cheque of R350 which was received in settlement of R380. 8. Provision for bad debts must be adjusted to R2 200. 9. Insurance includes a premium of R2 400 paid for the period 1 August 2017 to 31 July 2017. 10. One employee is omitted in the Salaries Journal for December 2017 Net Salary Deductions Employers Contributions Gross salary R9 200 R2 400 R350 ? 11. Received the loan statement from the Bank of Africa Balance on 01 January 2017 R 270 000 Capitalised interest ? Repayments during the year including interest 70 000 Balance on 31 December 2017 215 000 12. Depreciation on Tangible assets was R15 000 for the year. 13. Interest on fixed deposit for December 2017 was not recorded. Interest on fixed deposit is not capitalised. Page 12 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3.2 BALANCE SHEET AND ASSET DISPOSAL You are provided with information relating to Nemesis Traders for the year ended 28 February 2017. REQUIRED: 3.2.1 Calculate depreciation on vehicles as follows: (a) On vehicles sold during the year (b) Total depreciation for the year ended 28 February 2017. (4) 3.2.2 Complete the Fixed asset Note on 28 February 2017. (14) 3.2.3 Complete the Balance sheet on 28 February 2017. Show workings in brackets where notes are not required. (20) INFORMATION; 1. LIST OF BALANCE OF NEMESIS TRADERS ON 28 FEBRUARY 2017 Capital 2 426 520 Drawings 460 000 Loan: ABSA Bank 1 800 000 Fixed Deposit: ABSA Bank 350 000 Land and Buildings (1 March 2016) 2 600 000 Equipment (1 March 2016) 900 000 Vehicles (1 March 2016) 1 250 000 Accumulated depreciation on Equipment (1 March 2016) 360 000 Accumulated depreciation on Vehicles (1 March 2016) 800 000 Trading stock 570 000 Debtors' Control 105 000 Provision for bad debts 7 000 Savings account 50 000 Bank overdraft 40 000 Cash float 6 000 Creditors' control 190 000 SARS: PAYE 9 000 Consumable stores on hand 10 700 Accrued Income 12 000 Prepaid expenses 1 320 Accrued expenses 6 500 Income received in advance 18 000 Page 13 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2. ADJUSTMENTS AND ADDITIONAL INFORMATION A No entry have been made for an old vehicle which was sold at book value on 30 November 2016. The fixed asset register reflected the following in respect of the vehicle that Was sold: Asset: Ford Ranger Registration: SN 582 AB GP Cost price R250 000 Accumulated depreciation on 1 March 2016 R170 000 Depreciation: 20% p.a. on cost price B Depreciation on equipment is calculated at 10% on diminished balance method. No new equipment was purchased during the year. C The capital amount of the loan will be reduced by R96 000 in the next financial year. D No entries were made for extensions to the building by MB Construction for R84 000 on credit. E A fixed deposit of R80 000 will mature in the next financial year. Page 14 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWERSHEET 3.1 INCOME STATEMENT OF RANA TRADERS FOR THE YEAR ENDED 31 DECEMBER 2017 Sales (720 000 Cost of sales ( 400 000 Gross Profit Other Operating Income Rent income Gross Operating income Operating Expenses Packing material Utilities Bad debts Bank charges Discount allowed Telephone Insurance Salaries and wages Employers contribution Depreciation Operating Profit Interest income Profit Before Interest Expense Interest expense Net Profit for the year Page 15 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3.2.1 Calculation of depreciation (a) Depreciation on vehicles sold during the year. (b) Total depreciation for the year ended 28 February 2017 3.2.2 FIXED/TANGIBLE Land and Vehicles Equipment ASSETS buildings Carrying value at beginning of 540 000 year Cost 900 000 Accumulated depreciation (800 000) (360 000) Movements Additions at cost Disposals at carrying value 250 000 Carrying value at end of year 2 684 000 Cost 2 684 000 900 000 Accumulated depreciation Page 16 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3.2.3 BALANCE SHEET OF NEMESIS TRADERS ON 28 FEBRUARY 2017 ASSETS Non-current assets Fixed/Tangible assets 3 340 000 Financial assets: Fixed deposit (350 000 Current assets 830 520 Inventory (570 000 Trade and other receivables (105 000 Total assets 4 440 520 EQUITY AND LIABILITIES Capital 2 333 020 Non-current liabilities Long term loan (1 800 000 Current liabilities 403 500 Trade and other payables (190 000 Short term loan Total equity and liabilities 4 440 520 BALANCE SHEET ACTIVITY A4 110 Marks You are provided with the information relating to Twalabanks Computer Shop for the financial year ended 28 February 2017. The business is owned by two partners Thandi Thwala and Bernie Banks. The bookkeeper has processed some of the year-end transactions, but has omitted others. REQUIRED: 1. Balance sheet on 28 February 2019. Where notes are not required, show workings in brackets. (48) 2. Notes for:  Fixed assets (17)  Capital (8)  Current accounts (25) 3. Internal control and ethics: Answer the questions which follow. (12) Page 17 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 INFORMATION: 1. The following balances appeared in the ledger on 28 February 2019 Capital:Twala R 800 000 Capital:Banks 600 000 Current account: Twala (Cr.) 76 000 Current account: Banks (Dr.) 24 000 Drawings:Twala 110 000 Drawings: Banks 200 000 Cash float 12 000 Bank overdraft 102 260 Loan from partner: Twala( to be repaid in 2021) 300 000 Equipment 540 000 Accumulated depreciation on equipment 210 000 Land and buildings 1 147 800 Mortgage loan : Hi-Road Bank 360 000 Fixed deposit : Hi-Road Bank 110 000 Savings account : 70 000 Debtors Control 91 000 Provision for bad debts 14 000 Creditors Control 165 000 Trading stock 780 000 Income receivable (Accrued) 23 000 Expenses payable (Accrued) 7 000 Expenses prepaid 15 000 Deferred income ( received in advance) 9 000 Consumable stores on hand 14 000 2. Adjustments and additional information: (a) The following items are reflected on the bank statement for February 2019 but have not been recorded:  Dishonoured cheque in respect of debtor, R8 000.  Direct transfer of rent from tenant, R11 000.  Bank charges, R780.  Interest on overdraft, R1 360. (b) Interest for February 2019 on the mortgage loan from Hi- Road Bank has not been recorded. This interest is capitalised at a rate of 15 % p. a. The mortgage loan is expected to decrease by R42 000 over the next financial year. (c) 50% of the fixed deposit matures in August 2019. The rest matures in August 2021. (d) The provision for bad debts is to be reduced by R900. (e) Some items of stock, i.e. 20 ‘Vula’ Computers, are now out of date (absolete) and will have to be sold below their cost price of R8 000 each. The partners believe they can sell these items for R3 200 each. (f) The shop premises were extended at a cost of R160 000. This was paid and recorded in July 2018. However ,the bookkeeper has incorrectly debited the repairs account in the ledger (g) The following affects equipment:  Certain unused equipment was scrapped at a book value on 30 November 2018. The cost price was R72 000 and the accumulated depreciation at the beginning of the year was R40 000.No entry has been made.  Depreciation must be written off equipment at 10% p.a. on cost. (h) A post –dated cheque issued to Juno Software for R33 000 was recorded in the CPJ on 15 February 2019. This cheque falls due on 15 April 2019. Page 18 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3. The partnership agreement provides the following:  Salary to Twala , R20 000 per month. Twala’s salary is 20% more than that of Banks.  Bonus to Twala of R80 000 for the year for extra time worked.  Interest on capital at 8% p.a. Note that the ledger reflects that Twala increased her capital by R100 000 on 31 August 2016, while Banks decreased his capital by R200 000 on the first day of the financial year.  Banks’ share of the remaining loss is R51 000. The profit sharing ratio between Twala and Banks is 5:3. 4. INTERNAL CONTROL AND ETHICS Consider the following statements made by partner Twala and express your opinions on each. 4.1. Twala feels that the partners have not been controlling their cash resources well. 4.2 Twala feels that she is bearing an unfair financial burden in this business, especially as she works much longer hours than Banks. 4.3 Twala is not happy with the write down of the ‘Vula’ range of stock. See information 2e. You are told that Vula computers were purchases from a business owned by Bernie Banks ’wife. 4.4. Thwala tried to contact a new debtor who owes R32 000, but his phone number appears to be false. Partner Banks has sold computers on credit to the customer when Twala was busy with other customers. Page 19 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWER SHEET 1. TWALABANKS COMPUTER STORE BALANCE SHEET ON 28 FEBRUARY 2019 Note Page 20 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2. NOTES FIXED/TANGIBLE ASSETS Land & Equipment Total Buildings Carrying value at beginning of year Cost Accumulated depreciation Movements Additions Disposal at carrying value Depreciation Carrying value at beginning of year Cost Accumulated depreciation CAPITAL Twala Banks Total Page 21 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 CURRENT ACCOUNTS Twala Banks Total Page 22 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY A5 BALANCE SHEET AND NOTES Nozipho and Nokuthula are partners in the firm trading as NN Traders. Their bookkeeper did not complete the Equity and Liabilities Section in the Balance Sheet and Notes to the Financial Statements because he was on sick leave. The financial period ends on 28 February 2019. REQUIRED: 1 NN Traders request you to assist in completing the EQUITY AND LIABILITIES section of the Balance Sheet on 28 February 2019. Show calculations in brackets for part marks if the note is not required. (18) 2 Complete the following notes to the financial statements  Note 7: Capital accounts of partners (6)  Note 8: Current accounts of partners (30) NB: Some of the amounts have already been entered in the Balance Sheet and notes 3 Nozipho wants you to:  Calculate her total earnings for the year ending 28 February 2019 (4)  Calculate the percentage return earned by Nozipho on her investment in the partnership. Should she be satisfied? (8) INFORMATION: 1. Extract from Appropriation Statement on 28 February 2019: NOZIPHO NOKUTHULA TOTAL Interest on capital ? ? ? Salaries 4 000 per month 25 000 per year ? Bonus to partners - ? ? Share in remaining profit ? 14 000 28 000 2. Details extracted from the financial statements on 28 February 2019: 28 February 2019 28 February 2018 Capital: Nozipho 300 000 200 000 Capital: Nokuthula 300 000 100 000 Current account: Nozipho 10 000 (Cr) 5 000 (Dr) Current account: Nokuthula 14 000 (Cr) 2 000 (Cr) Page 23 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3. Extract: Pre- Adjustment Trial Balance on 28 February 2019. Balance Sheet Section Debit Credit Loan: ABSA Bank 210 000 Creditors Control 95 000 Bank 102 500 Petty cash 240 Nominal Account Section Interest on loan 23 328 ADDITIONAL INFORMATION ON 28 FEBRUARY 2019 1 The net profit for the year was R176 000 2 The partners are entitled to 15% p.a. interest on capital. Both partners increased their capital on 31 October 2018. 3 Nokuthula is entitled to 5% bonus calculated from his capital contribution at the end of the financial year 4 The loan from ABSA Bank was negotiated on 1 September 2015. The loan agreement stipulates that the loan must be repaid in 6 equal annual instalments commencing on 31 August 2016. The interest has been correctly calculated. 5 When reconciling the bank account with the bank statement which was received on 28 February 2019, the following were found:  An outstanding cheque of R4 000, which was issued to a trade creditor and dated 30 March 2019.  Cheque 200 to restore the petty cash imprest amount of R3 000.  Bank charges, R4 400 and interest on overdraft R15 400. 6 An amount of R800 was transferred by EFT from a foreign bank account directly into the bank account of the business. This amount was transferred by A. Tshabangu, who had left the country. His account has previously been written off as irrecoverable. Page 24 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWER SHEET 1 BALANCE SHEET OF NN TRADERS AT 28 FEBRUARY 2019 EQUITY AND LIABILITIES OWNERS’ EQUITY 7 8 NON CURRENT LIABILITIES CURRENT LIABILITIES TOTAL EQUITY AND LIABILITIES 2 NOTES TO THE FINANCIAL STATEMENTS AS AT 28 FEBRUARY 2019 7. CAPITAL NOZIPHO NOKUTHULA TOTAL Balance at the beginning of the year Balance at the end of the year 300 000 300 000 8. CURRENT ACCOUNTS NOZIPHO NOKUTHULA TOTAL Profit per income statement 176 000 Partners salaries Interest on capital 60 000 Bonus to partners Primary distribution of profits 148 000 Final distribution of profits 14 000 28 000 Drawings during the year * Balance for the year * Balance at the beginning of year Balance at the end of year Page 25 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3 Calculate Nozipho’s total earnings for the year ending 28 February 2019. 4 Calculate the percentage return earned by Nozipho on her investment in the partnership. 8 Should she be satisfied? . ACTIVITY A6 FINANCIAL STATEMENTS OF PARTNERSHIPS (75 marks; 45 minutes) You are provided with information relating to So Quick Traders on 29 February 2019. The business is owned by Ms Sonja and Mr Quickfall. The business fixes and sells bicycles. REQUIRED 6.1 Prepare the Income Statement for the year ended 29 February 2019. (50) 6.2 Prepare the Appropriation account (15) 6.3 Prepare the note for Capital. (10) Page 26 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 INFORMATION SO QUICK TRADERS: PRE-ADJUSTMENT TRIAL BALANCE ON 29 FEBRUARY 2019 Balance Sheet Section Debit Credit Capital: Sonja 900 000 Capital: Quickfall 600 000 Current: Sonja (1 March 2018) 63 000 Current: Quickfall (1 March 2018) 76 500 Drawings: Sonja 270 000 Drawings: Quickfall 270 000 Bank 99 243 Vehicles at cost price 999 000 Accumulated depreciation on vehicles 249 550 Equipment at cost price 345 000 Accumulated depreciation on equipment 142 500 Loan: Nippy Financers 315 000 Trading stock 1 015 000 Debtors’ control 382 500 Provision for bad debts 24 000 Cash float 4 500 Petty cash 3 000 Creditors’ control 273 100 SARS (PAYE) 28 950 Medical fund 9 900 Unemployment Insurance Fund 1 200 Nominal accounts section Sales 4 590 000 Cost of sales 2 700 000 Debtors’ allowances 765 000 Fee income 1 327 500 Rent expense 135 600 Salaries and wages 947 500 Employees’ contribution to UIF and medical fund 118 500 Bank charges 42 000 Bad debts 8 100 Electricity and water 25 500 Stationery and printing 26 550 Insurance 42 900 Telephone 28 950 Consumable stores 198 000 Interest income (on current account) 1 650 Sundry expenses 50 007 8 539 850 8 539 850 Page 27 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ADJUSTMENTS AND ADDITIONAL INFORMATION 1. The telephone account for February has not yet been paid, R2 600 2. The rent has been paid till 30 April 2019. The rent was increased by R1 350 on 1 January 2019. 3. During a burglary in February the following were stolen:  Bicycles to the value of R90 000  Consumable stores worth R4 500 The insurance company has undertaken to cover 80% of the loss but the money has not yet been received. 4. A physical stocktaking revealed the following stock on hand:  Trading stock, R880 000  Consumable stores, R21 300 5. A debtor who owes us R6 000 has been declared insolvent. His debt must be written off as irrecoverable. 6. The provision for bad debts must be adjusted to 5% of trade debtors. 7. Vehicles must be depreciated at 20% p.a. on the cost price. 8. New equipment with a cost price of R81 000 was purchased on 1 January 2019. This has been correctly recorded. Depreciation on equipment must be calculated at 10% p.a. on the diminishing balance method. 9. The loan statement received from Nippy Financers reflected the following: Balance on 1 March 2018 R426 000  Interest capitalised ? Repayments during the year including interest R111 000 Balance on 29 February 2019 R359 100 10. One of the employees has erroneously been omitted from the salaries journal. He has not yet been paid and his details are as follows: Gross salary Deductions Net salary PAYE Medical fund UIF R9 300 R1 527 R1 200 R82 R6 491 The business contributes on a Rand-for-Rand basis to the Medical Aid and the UIF 11. The partnership agreement stipulates the following:  Sonja receives a salary of R12 000 per month  Quickfall receives a salary of R10 000 per month  Interest on capital is calculated at 10% p.a. NB: The capital accounts of the partners reflected the following:  Sonja increased her capital contribution mid-way through the year with R120 000  Quickfall decreased his capital with R75 000 on the last day of the financial year. This has been properly recorded.  Quickfall received a bonus of R15 000 during the year  The remaining profits or losses are to be shared equally between the partners. ANSWER SHEET Page 28 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 6.2 SO QUICK TRADERS INCOME STATEMENT FOR THE YEAR ENDED 29 FEBRUARY 2019 Sales Cost of sales Gross profit Other operating income Gross operating income Operating expenses Page 29 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 6.3 Appropriation 3.4 SO QUICK TRADERS: NOTES TO FINANCIAL STATEMENTS ON 29 FEBRUARY 2019 CAPITAL Sonja Quickfall Total Page 30 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 PARTNERSHIPS: INTERPRETATION OF FINACIAL STATEMENTS Key Focus  Understand the need to analyse a partnership financial statement  Understand the various categories of ratios:  Profitability  Solvency  Liquidity  Risk and return  Be able to comment on the financial position of a business  Make informed decisions on whether or not to invest in a partnership X-planation Profitability – determines the ability of a business to make a profit Indicators:  Gross profit on sales  Gross profit on cost of sales (important as this relates to the target mark-up)  Operating profit on sales  Operating expenses on sales  Net profit on sales Liquidity – determines the ability of a business to meet its short-term commitments (=cash flow of the business) Indicators:  Current ratio  Acid-test ratio Solvency – whether or not the business is solvent (= not bankrupt!) Indicators:  Solvency ratio Return – how much the partners are earning from the business Indicators:  Return on equity  Return earned by each partner Risk – the creditworthiness of the business Indicator:  Debt/Equity ratio  Remember that the right hand side of the ratio is always equal to 1!  Round off to the number of decimal places indicated in the question  LEARN YOUR FORMULAS! Page 31 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 Activity B1 PARTNERSHIPS – ANALYSIS AND INTERPRETATION ( 30 minutes) You are provided with information relating to Hot & Trendy, a clothing store owned by H. Hot and T. Trendy on 30 June 2012. REQUIRED: 1.1 Below is a list of concepts that answers questions on financial statements. Choose the concept that answers the questions 4.1.1 to 4.1.4. Write only the concept next to the question number. Solvency; Return on equity; Liquidity; Profitability 1.1.1 Can the business comfortably pay off its immediate debts? 1.1.2 Is the business able to make a profit and how well is it controlling its expenses? 1.1.3 Can the business comfortably pay off all its debts? 1.1.4 Is the business a good investment for the owner? (8) 1.2 Calculate the following financial indicators on 30 June 2019. 1.2.1 Operating expenses on turnover (3) 1.2.2 Acid test ratio (4) 1.2.3 % Return on average owners’ equity (8) 1.2.4 Stock turnover rate (5) 1.3 Comment on the liquidity position for 2019. Quote THREE relevant financial indicators (actual ratios or figures) to support your answer. (8) 1.4 The owners are not satisfied with the rate at which the stock is being sold. Explain why they feel this way by quoting a relevant financial indicator to support your explanation. (4) 1.5 Discuss THREE reasons why a business should not have too much stock. (6) 1.6 Will the owners of this business be satisfied with the return on equity? Explain by quoting a financial indicator to support your opinion. (4) Page 32 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 INFORMATION A. Extract from the Post Closing Trial Balance on 30 June 2019 2019 2018 Capital: H. Hot 600 000 700 000 Capital: T Trendy 360 000 360 000 Current account: H. Hot 92 100 72 000 Current account: T Trendy (24 000) (11 400) Trading stock 320 000 300 000 Debtors’ control 84 000 60 000 Bank - 72 000 Creditors control 144 000 114 000 Bank overdraft 240 000 - B. Extract from Income Statements 2019 2018 Sales 1 800 000 1 620 000 Cost of sales 720 000 720 000 Gross profit 1 080 000 900 000 Operating expenses 648 000 480 000 Net profit 432 000 420 000 C. Financial indicators: 2019 2018 Net profit on sales 24% 25,9% Operating expenses on turnover ? 29,6% Current ratio 1,1 : 1 3,4 : 1 Acid test ratio ? 1,2 : 1 Stock turnover rate ? 3,9 times Debtors’ collection period 48,7 days 40 days % Return on average owners’ equity ? 44% Page 33 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACIVITY B1 – ANSWER SHEET 1.1 Choose the concept that answers the questions 1.1.1 to 1.1.4. Write only the concept next to the question number. 1.1.1 1.1.2 1.1.3 1.1.4 1.2.1 Calculate operating expenses on turnover. 1.2.2 Calculate the acid test ratio. 1.2.3 Calculate the % return on average owners’ equity. 1.2.4 Calculate stock turnover rate. Page 34 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 1.3 Comment on the liquidity position for 2019. Quote THREE relevant financial indicators (actual ratios or figures) to support your answer. 1.4 The owners are not satisfied with the rate at which the stock is being sold. Explain why they feel this way by quoting a relevant financial indicator and actual figures, ratios or % to support your explanation. 1.5 Discuss THREE reasons why a business should not have too much stock. 1.6 Will the owners of this business be satisfied with the return on equity? Explain by quoting a financial indicator to support your opinion. ACTIVITY B2 Page 35 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2.3 ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS The following information was extracted from the records of Mona Lisa Traders owned by partners M. Mona and L. Lisa. Their financial year ended on 28 February 2019. 2.3.1 REQUIRED Show what effect each of the given transactions has on the degree of profitability, current ratio and the acid test ratio. Show an increase with a “+”, a decrease with a “-” and no change with a “0”. (5) Note 1. The bank balance is favourable at all times, unless otherwise indicated. 2. Current assets are compared to current liabilities at all times. Example: Received the monthly rental by cheque. No. Degree of profitability Current Ratio Acid Test Ratio e.g. + + + Transactions A Purchased trading stock on account from Sun Ltd for R5 700. B Sold goods costing R870 for R1 250 cash. C The bank debited the business with R150 interest on overdraft. 2.3.2 REQUIRED Calculate the following financial indicators. A Period for which enough stock is on hand [Stock-holding period] (4) B Debtors’ average collection period (4) C Debt-equity ratio (3) D Return on M.Mona’s equity (3) Page 36 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2.3.3 REQUIRED Respond to the following questions. A Comment on the liquidity position of the business. Use TWO financial indicators to support your answer. (6) B Explain the results of the Debt-equity ratio. (2) C Explain whether M.Mona should be satisfied with his returns. (3) INFORMATION A 2019 Cash sales 475 000 Credit sales 680 000 Cost of sales 796 550 Trading stock on hand 227 750 Debtors’ Control 184 440 Partnership equity 875 000 M.Mona’s equity 450 000 Earnings for the year : M.Mona 260 000 Loan: Marine Bank [17% p.a.] 270 000 B 2019 2018 Period for which enough stock is on hand ? 180 days Stock turnover rate 7 times 5 times Debtors’ collection period ? 114 days Creditors’ payment period 60 days 60 days Debt-equity ratio ? 0.53:1 Interest rate on fixed deposit 8 % p.a. 9 % p.a. Interest rate on loan 17 % p.a. 18 % p.a. Page 37 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWERSHEET 2.3.1 No. Degree of profitability Current Ratio Acid Test Ratio e.g. + + + A B + C - 2.3.2 A Period for which enough stock is on hand [Stock-holding period] B Debtors’ average collection period C Debt-equity ratio D Return on M.Mona’s equity Page 38 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2.3.3 Respond to the following questions: A Comment on the liquidity position of the business. Use TWO financial indicators to support your answer. Two financial indicators   figures and trends   Comments  B Explain the results of the debt-equity ratio. C Explain whether M.Mona should be satisfied with his returns. Page 39 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY B3 PARTNERSHIPS – ANALYSIS AND INTERPRETATION You are provided with the incomplete Financial Statements of a partnership, Sunshine Stationers, together with additional information and financial indicators. Round all answers to 1 decimal place. REQUIRED: 3.1 Sunshine Stationers uses a mark up of 50% at all times. 3.1.1 Calculate the actual mark up percentage achieved for the 2019 financial year. (5) 3.1.2 Comment on the mark up achieved in 2019. Mention TWO actions the business can do take to ensure they achieve their desired mark up in the future. (6) 3.2 Calculate the Net Profit for 2019. (6) 3.3 Should the partners be satisfied with the percentage return earned in 2016, compared to the 21.7% earned in 2018. Give TWO reasons for your answer. (5) 3.4 Is this business positively or negatively geared? Give a reason for your answer. (3) 3.5 Calculate the missing amounts in the Balance Sheet labeled A - H. (24) 3.6 Comment on this businesses liquidity position for the year ended 29 February 2019. Identify and quote TWO financial indicators to support your answer. (6) INFORMATION Sunshine Stationers Extract from the Income Statement for the year ended 29 February 2019 2019 2018 Sales 2 181 120 1 715 200 Cost of Sales 1 536 000 1 280 000 Interest Income 12 150 12 150 Net Profit ? 226 000 Page 40 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 Balance Sheet for the year ended 29 February 2016 2019 2018 Assets Non-current Assets 1 111 000 937 900 Fixed Assets ? ? Financial Assets (Fixed Deposit – 9%) F F Current Assets G 421 600 Inventories (all Trading Stock) H D Trade & other Receivables (all Trade Debtors) ? 144 600 Cash & Cash Equivalents 133 000 E Total Assets 1 586 000 1 359 500 Equity and Liabilities Owners Equity 1 160 000 1 040 000 Capital 1 100 000 A Current Accounts 60 000 B Non-current Liabilities 236 000 C Loan: Best Bank (13% p.a.) 236 000 C Current Liabilities 190 000 163 500 Trade & other Payables (all Trade Creditors) 190 000 163 500 Total Assets and Liabilities 1 586 000 1 359 500 ADDITIONAL INFORMATION  The business achieved a 28% return on average equity for 2019.  Both partners contributed additional capital of R50 000 each on 1 March 2018.  An extra R80 000 was borrowed from Best Bank during the 2018 financial year.  The Debt/equity ratio for 2018 was 0.15 : 1.  The stock turnover rate for the year ended 28 February 2018 was 8 times. The stock on hand was constant throughout 2018 financial year.  The fixed deposit was taken out on 1 June 2015 for 3 years. The interest rate is fixed at 9% per annum. Interest is not capitalised.  The Current Ratio for 2019 is 2.5 : 1 and for 2018 it was 2.6 : 1  The Acid Test Ratio for 2019 is 1.2 : 1 and for 2018 it was 1.6 : 1. Page 41 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY B3 – ANSWER SHEET PARTNERSHIPS – ANALYSIS AND INTERPRETATION 3.1 Sunshine Stationers uses a mark up of 50% at all times. 3.3.1 Calculate the actual mark up percentage achieved for the 2019 financial year. (5) 3.3.2 Comment on the mark up achieved in 2019. Mention TWO actions the (6) business can do take to ensure they achieve their desired mark up in the future. Comment Actions 3.2 Calculate the Net Profit for 2019. (6) Page 42 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3.3 Should the partners be satisfied with the percentage return earned in 2019, compared (5) to the 21.7% earned in 2018. Give TWO reasons for your answer 3.4 Is this business positively or negatively geared? Give a reason for your answer. (3) 3.5 Calculate the missing amounts in the Balance Sheet labeled A - H. (24) Number Calculation Amount A B C D E F G H Page 43 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3.6 Comment on this businesses liquidity position for the year ended 29 February 2019. (6) Identify and quote TWO financial indicators to support your answer. ACTIVITY B4 One of the most important aspects in the accounting world that makes a business to be successful or become a failure, is the way in which financial statements are Analysed and interpreted by the owners (partners) in order to make sound financial Decisions. Gadaffi Phakade and Jack Mabaso are partners in a business, trading as GJ Traders selling T -Shirts for young boys and girls. GJ Traders approached you to assist and advice with the analysis and interpretation of the financial statements on 28 February 2019. REQUIRED Briefly explain and/or calculate the following requested by the two partners in order for them to understand the financial statements: 1. What does liquidity mean? 2. Explain the difference between current ratio and the acid test ratio. 3. Identify THREE other liquidity ratios which they may look at to address their cash problems. Do not mention the ratios mentioned in 2. 4. The partners want you to calculate the debt/ equity ratio for 2019. Comment on your findings. 5. Calculate the acid test ratio of the business on 28 February 2019. Comment on you findings. 6. Calculate the stock turnover rate. 7. The business aimed at the mark-up of 70% on cost. Identify the indicator that they will use to check whether they reached their goal. 8 GJ Traders could not achieve a mark-up of 70%. Provide TWO possible reasons why they could not achieve the mark-up percentage. 1. INFORMATION: Page 44 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 Extract from Balance sheet on 28 February 2019 2018 ASSETS Current assets 100 000 82 000 Inventory 60 000 50 000 Accounts receivable (Debtors) 10 000 32 000 EQUITY AND LIABILITIES Owners’ equity 1 246 625 1 100 000 Non-Current Liabilities Mortgage loan 20% p.a. 240 000 300 000 Current liabilities 68 000 124 000 Accounts payable (Creditors) 45 000 32 000 Bank overdraft 23 000 92 000 The following information relates to GJ Traders: 28 February 2019 28 February 2018 Current ratio ? 0,7 : 1 Acid test ratio ? 0,3 : 1 Stock turnover rate ? 73 days Debt equity ratio ? 0,3: 1 Extract from the Income statement on 28 February 2017 28 February 2019 Sales 575 000 Cost of sales 380 000 Page 45 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY B4 – ANSWER SHEET 1. What does liquidity mean? 1 2. Explain the difference between current ratio and the acid test ratio. 4 Current ratio: Acid test ratio: 3. Identify THREE liquidity ratios which they may look at to address their cash problems. Do not 6 mention ratios mentioned in 2. 4 The partners want you to calculate the debt/ equity ratio for 2017. Comment on your findings. 4 Calculation Comment . Page 46 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 5 Calculate the acid test ratio of the business on 28 February 2019. 6 Calculation Comment . 6 Calculate the stock turnover rate. 4 7 The business aimed at the mark up of 70% on cost. Identify the formula that they will use to check 1 whether they have reached their goal. 8 GJ Traders could not achieve a mark-up of 70%. Provide TWO possible reasons why they could 4 not achieve the mark-up percentage. Page 47 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY C1 RECONCILIATIONS AND INTERNAL CONTROL (50 marks; 30 minutes) 1.1 Read the statements given below. In each case, indicate whether the statement is TRUE or FALSE. (4) 1.1.1 A credit note is a document issued by a customer who returns goods to a supplier. 1.1.2 A post-dated cheque received must be recorded in the Post-dated cheques received register until its due date. 1.1.3 Interest on overdraft is not regarded as Bank Charges because it is not regarded as a finance cost. 1.1.4 A debit balance on the Bank Statement means that the balance is unfavourable. 1.2 An inexperienced bookkeeper of Blue Stores closed off the Cash Journals for March 2017 before comparing with the Bank Statement and posted to the general ledger. REQUIRED: 1.2.1 Enter the necessary transactions directly in the Bank account to update the records. Commence the bank account with the provisional balance on 31 March 2017. Contra accounts for the individual ntries must be clearly indicated in the Bank account. (23) 1.2.2 Prepare a Bank reconciliation statement on 31 March 2017. (7) INFORMATION: Bank Reconciliation Statement on 28 February 2017 Debit balance according to the bank statement 25 600 Credit outstanding deposits 13 500 Debit outstanding cheques 61 (15 September 2016) 4 000 118 (6 April 2017) 2 000 650 (18 February 2017) 3 700 Balance according to bank account ? Provisional totals / balance on 31 March 2017 Bank column in Cash Receipt Journal R103 000 Bank column in Cash Payments Journal R97 920 Bank Account in General Ledger on 31 March 2017 ? Page 48 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 A The following items appeared on the Bank statement for March 2017 but not in the Cash Journals:  Service fees, R680; cash handling fees, R200; interest on credit balances, R400.  A cheque from J Maposa for R1 600, in settlement of his account of R1 700 was dishonoured on account of insufficient funds.  A tenant, A Colbyn, had deposited R18 000 directly into the account of Blue Stores.  Cheque no 961 for R6 900 had been entered into the Cash payments journal as R9 900 for merchandise purchased. The bank statement was correct.  Stop order for R15 000 payable to Allsure Insurers. R6 000 of this is for the owner's personal vehicle. B A comparison of the bank statement with the bank reconciliation statement on 28 February 2017 shows the following:  The deposit of R13 500 appears on the Bank statement.  Cheque no. 650 was presented for payment.  Cheque no. 61 issued to J Mudi for goods purchased during September 2016. The cheque must be cancelled and replaced with cheque no. 1294. The supplier has not collected the cheque as yet.  Cheque no. 118 had been issued to Daily News for advertising. The advertisement had not been placed. Blue Stores decided to withdraw the advertisement and cancel the cheque. C The following items appeared in the Cash Receipts Journal and Cash Payments Journal only, but not on the Bank statement:  Cash deposit, R52 980  Cheques: Cheque No. Amount Date 861 R1 400 8 February 2017 1141 R1 500 15 March 2017 1175 R8 000 15 April 2017 D The bank statement shows an unfavourable balance of R48 880 on 31 March 2017. Page 49 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWERSHEET QUESTION 1.1 1.1.1 1.1.2 1.1.3 1.1.4 GENERAL LEDGER OF BLUE STORES Dr BANK Cr 1.2.2 BANK RECONCILIATION STATEMENT ON 31 March 2017 Debit Credit Page 50 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY C2 BANK RECONCILIATION AND INTERNAL CONTROL (60 marks; 36 minutes) 1.1 What is the purpose of bank reconciliation? (2) 1.2 Indicate whether the following statements are TRUE or FALSE. 1.2.1 An internal auditor will want to inspect the Bank Reconciliation Statement at the end of each month. (1) 1.2.2 Service fees and interest on overdraft will be debited to bank charges. (1) 1.2.3 A cheque that is older than six months will not be cashed by the bank. (1) 1.2.4 A post-dated cheque issued in September 2015, but dated February 2016, will only be entered in the Cash Payments Journal in February 2016. (1) 1.3 BANK RECONCILIATION You are provided with information taken from the records of Sabe Traders for March 2016. The business is owned by M. Sabe. REQUIRED: 1.3.1 Prepare the Cash Receipts Journal and Cash Payments Journal for March 2016. Total only the Bank columns. (36) 1.3.2 Prepare the Bank account in the general ledger for March 2016. (8) 1.3.3 Prepare a Bank Reconciliation Statement on 31 March 2016. (10) INFORMATION: Bank Reconciliation Statement on 29 February 2016 Debit balance according to bank statement 22 400 Credit outstanding deposit 10 200 Debit outstanding cheques: No. 88 3 400 No. 160 1 420 No. 163 6 400 No. 165 (dated April 2016) 3 710 Balance according to bank account ? Sabe Traders has a current bank account with Mawali Bank Provisional totals of the bank columns in the Cash Journals on 31 March 2016 Cash Receipts Journal 31 400 Cash Payments Journal 54 800 A comparison of the bank statement with the Bank Reconciliation Statement on 29 February 2016 shows the following: The deposit of R10 200 appears on the bank statement. Cheque no. 163 for R6 400 was presented for payment. Cheque no. 88 was issued on 15 September 2015 to the Health Welfare Organization as a donation. The organization has been disbanded and the cheque must be cancelled. Cheque no. 160 issued to RSA Distributors for stationery appears on the bank statement as R4 120. The amount on the bank statement is correct. Page 51 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 A comparison of the Salary Journal with the bank statement shows the following as outstanding: Employees Gross salary Net salary Cheques issued B.Boom R12 400 R9 800 178 C.Mood R14 200 R11 600 180 A comparison of the Cash Journals with the bank statement shows the following differences:  The following appears in the cash journals, but not on the bank statement.  Deposit, R8 100  Cheque no.176, R8 900 (dated 15 April 2014)  The Cash Payments Journal reflects a total of R30 700 for cheques issued in respect of salaries.  Cheque no. 173 issued to Neotel for the monthly telephone account appears in the Cash Payments Journal as R3 280. The amount on the bank statement is R3 240. The amount on the bank statement is correct.  Cheque no. 170 for R840 issued to BM Garage for fuel was lost in the mail. The cheque must be cancelled and replaced with cheque no. 181. This cheque is still outstanding.  A stop order for the monthly repayment of a loan with Mawali Bank for R2 000 appears on the bank statement but not in the journal.  A deposit of R35 000 was made directly into the current account of the business by the owner on 15 March 2016, as his capital contribution.  An unpaid cheque for R420, received in settlement of an account of R450, appears on the bank statement. The cheque was received from a debtor, M. Lid.  A deposit of R8 300 for rent was made directly into the current account of the business by the tenant, F. Fun.  Mawali bank debited the bank account of Sabe Traders with the following amounts:  Interest on debit balance, R93  Bank charges, R380  The bank statement shows a favourable balance of R17 367 on 31 March 2016. Page 52 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWERSHEET 1.1 What is the purpose of Bank reconciliation? 1.2 Indicate whether the statements are TRUE or FALSE. 1.2.1 1.2.2 1.2.3 1.2.4 1.3.1 Cash Receipts Journal of Sabe Traders – March 2016 Doc. Day Details Bank Sundry accounts Amount Fol Details 31 Totals 31 400 13 000 Page 53 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 Cash Payments Journal of Sabe Traders – March 2016 Doc. Day Name of payee Bank Debtors’ Sundry accounts Control Amount Fol Details 31 Totals 54 800 240 10 960 1.3.2 General ledger of Sabe Traders Dr. Bank B8 Cr. 1.3.3 Bank Reconciliation statement on 31 March 2016 Debit Credit Page 54 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY D1 CREDITORS’ RECONCILIATION The statement received from creditor, Smile Suppliers, on 28 February 2017 reflects that Like Traders owes them R26 940. The creditor’s ledger in the books of Like Traders reflects that they only owe Smile Suppliers R16 620. REQUIRED: 1.3.1 Show the changes to the balances in the creditors’ ledger and the creditors’ statement. Write only the amounts in the appropriate column and a plus (+) or minus (-) sign to indicate an increase or a decrease. Calculate the correct balance/total at the end. (12) 1.3.2 The owner of Like Traders is concerned that the bookkeeper could be defrauding the business through the credit system. List TWO internal control measures that can be applied in order to maintain control over creditors. (4) INFORMATION On investigation the following was discovered: A. The cheque issued to Smile Suppliers in settlement of the January account was not received by them within the stipulated time. Smile Suppliers did not allow the discount of R500. B. Returns recorded as R2 440 in the Creditors’ Ledger of Like Traders was correctly recorded as R2 620 on the statement received from Smile Suppliers. C. An invoice received from Smile Suppliers was correctly recorded as R10 000 by Like Traders. The statement received from mile Suppliers incorrectly recorded it as R1 000. D. A cheque of R7 000 issued by Like Traders has not yet been recorded on the statement received from Smile Suppliers. E. An invoice for R6 000 received from Smile Suppliers was incorrectly recorded as a credit note by the bookkeeper of Like Traders. ANSWERSHEET 1.3.1 CREDITORS' RECONCILIATION Creditors Ledger of Statement from LIKE Traders SMILE Suppliers Balances 16 620 26940 A B C D E Final balances / total Page 55 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 1.3.2 The owner of LIKE Traders is concerned that the bookkeeper could be defrauding the business through the credit system. List TWO internal control measures that can be applied in order to maintain control over creditors. ACTIVITY D2 CREDITORS’ RECONCILIATION AND INTERNAL CONTROL (25 marks; 15 minutes) 2.1 Why must the balance of the Creditors’ Control Account in the General Ledger be the same as the total of the Creditors’ List in the Creditors’ Ledger? (2) THE CREDITORS’ CONTROL ACCOUNT AND THE CREDITORS’ LIST The bookkeeper of My Worth Stores made some mistakes and omitted certain transactions in preparing the Creditors’ Control Account and the Creditors’ List on 30 June 2016. You are the internal auditor of the store. REQUIRED: 2.2 Calculate the correct balance of the Creditors’ Control Account in the General Ledger. If no entry is applicable, write 'NO ENTRY'. (12) 2.3 Prepare the correct Creditors’ List of balances on 30 June 2016. (11) INFORMATION: Pre-adjustment figures on 30 June 2016 Creditors’ Control Account balance R153 800 Creditors’ List total from the Creditors’ Ledger R168 900 • Stand Traders R29 200 • Walk Wholesalers R95 600 • Run Stores R44 100 ERRORS AND OMISSIONS A. A payment of R42 000 to Run Stores was correctly recorded in the Cash Payments Journal but the bookkeeper neglected to post this payment to the creditor’s account. B. The total of the Creditors’ Journal was inaccurately added as R51 150 instead of R61 250. C. Credit purchases of merchandise to the value of R13 000, from Stand Traders was incorrectly debited to their account. D. A credit balance of R440 from Run Stores’ account in the Debtors’ Ledger must be transferred to their account in the Creditors’ Ledger. E. A cheque for R2 000 issued to Stand Traders in settlement of their debt of R2 200 was correctly recorded in the Cash Payments Journal but inadvertently posted to Walk Wholesalers’ account. Rectify the error. F. The total of the Creditors’ Allowance Journal was undercast by R11 000. G. Credit purchases of merchandise to the value of R36 600 from Walk Wholesalers were wrongly entered as R63 600 in the Creditors’ Journal and posted as such. Page 56 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWERSHEET 2.1 Why must the balance of the Creditors’ Control Account in the General Ledger be the same as the total of the Creditors’ List in the Creditors’ Ledger? 2 2.2 Calculate the correct balance of the Creditors’ Control Account in the General Ledger. Balance R153 800 A B C D E F G Final balance Page 57 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2.3 Prepare the correct Creditors’ List of balances on 30 June 2016. Stand Traders (29 200 Walk Wholesalers (95 600 ) Run Stores (44 100 ACTIVITY E1 MANUFACTURING (45 marks; 27 minutes) 1.1 You are provided with information from the accounting records of Spring Park Production. They specialise in producing footwear exclusively for professional athletes. REQUIRED: 1.1.1 Calculate the amount of raw materials issued for production in 2017. (4) 1.1.2 Calculate the Direct labour cost. (7) 1.1.3 Prepare the following accounts in the General Ledger:  Factory Overheads cost (13)  Work-in-Process stock (6) Note: Balance / close off the accounts properly on 30 June 2017. INFORMATION: 1. The following balances appeared in the books of Spring Park. 30 June 2017 1 July 2016 Direct/Raw material stock 20 000 18 000 Work-in-progress stock ? 35 000 Indirect material stock 7 500 7 200 Page 58 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2. Transactions for the year: Raw materials purchased during the year 650 000 Carriage on purchases 12 300 Factory rent paid 68 500 Advertising paid 23 500 Factory maintenance paid 46 700 Water and electricity paid 80 000 Indirect material purchased 56 000 Sundry expenses paid 21 000 Factory foreman salary 89 050 The office assistant’s salary for the year 130 000 3. ADDITIONAL INFORMATION: A Included in the amount for raw materials are goods that were not ordered therefore returned to the suppliers, R35 000. B Repairs to machinery amounting to R1 300 were completed in June 2017, but will only be paid in July 2017. C Water and electricity is to be split between the factory, 70% and the office 30%. D 80% of the indirect materials were used in the factory and the rest in the office. E Depreciation for the year  Office equipment, R9 500  Factory machinery , R12 800 F Sundry expenses must be allocated to the floor space used. The ratio of the space used by the factory, office and sales department is 4 : 2 : 1. G Wages earned by the cleaner, R46 000. She spends 50% of her time cleaning the factory. H Three factory workers were employed. They each work 1 600 hours normal time during the year at R40 per hour. They each worked 300 hours overtime at a rate of 50% more than the normal rate. I The factory foreman’s salary includes her salary for July 2017 as she went on leave on 30 June 2017. She received an increase of R650 per month with effect 1 January 2017. She has been employed. J Goods to the value of R1 212 000 were produced during the year. Page 59 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWERSHEET 1.1.1 Direct material cost: 18 000 + 650 000 1.1.2 Direct labour cost: Normal time: Overtime: 1.1.3 GENERAL LEDGER OF SPRING PARK Dr FACTORY OVERHEAD COST Cr 2017 2017 Jun 30 Rent 68 500 June 30 Maintenance 46 700 Depreciation 12 800 Page 60 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY E2: MANUFACTURING (45 marks; 27 minutes) 2.1 CONCEPTS Identify THREE variable costs from the list provided. (3) factory overhead cost, selling and distribution cost, administration cost, direct labour cost, salary of factory foreman, direct material cost 2.2 REEVA MANUFACTURERS Reeva Manufacturers is a manufacturing business that produces leather bags. The financial year ended on 30 June 2015. REQUIRED Complete the following: 2.2.1 Calculate the raw material used for production. (04) 2.2.2 Work-in-Process Stock (09) 2.2.3 Finished Goods Stock (07) 2.2.4 Factory overheads Cost (12) INFORMATION Balances 1 July 2014 30 June 2015 Raw material stock 69 400 36 800 Work-in-process stock 15 600 ? Finished goods stock 46 600 ? Indirect material (consumable stores on hand) 11 800 8 400 Transactions for the year ended 30 June 2015 Raw materials purchased for cash 191 000 Carriage on purchases of raw materials (paid cash) 5 800 Raw materials issued for production ? Indirect materials purchased for cash 34 600 Direct wages 184 000 Wages of a cleaner – Admin (Refer to additional information) 3 800 Salaries – sales staff 37 200 Advertising 6 200 Rent expense (Refer to additional information) 23 200 Factory maintenance 13 000 Water and electricity (Refer to additional information) 25 000 Depreciation on factory machinery 13 200 Commission on sales (3% of sales) 20 700 Page 61 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ADDITIONAL INFORMATION (a) Rent must be allocated in proportion to the floor space occupied. The factory area use 600 square meters and the office area uses 400 square meters. (b) The cleaner spends 20% of his time cleaning the Administration Block and the rest in the factory. Cost must be allocated according to the time spent in each department. The factory uses 75% of water and electricity. (c) 7 150 units were produced at the cost of R70 per unit (d) Cost of sales is equal to 70% of sales. 2.3 BREAK-EVEN ANALYSIS AND PROBLEM SOLVING Gauteng Clothing Factory Gauteng Clothing factory produces high quality clothes. The owner M.Simelane is not happy about the drop in the production levels, and the increase in cost of production per unit. The following figures are presented after all the costs have been taken into consideration: TOTAL PER UNIT Sales R738 000 R120 Variable costs R344 400 R56 Fixed costs R357 120 Number of units produced and sold 6 150 Break-even number of units ? REQUIRED 2.3.1 Calculate the break-even point and comment on your findings. (6) 2.3.2 Provide TWO measures that should be applied by Simelane, in order to reduce the cost of production per unit. (4) ANSWERSHEET 2.1 CONCEPTS (a) (b) (c) Page 62 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2.2.1 CALCULATION OF RAW MATERIAL USED FOR PRODUCTION 69 400 2.2.2 Dr Work-in-Process Stock Account B8 Cr 2014 01 Balance b/d 15 600 2015 30 Jul June 2.2.3 Dr Finished Goods Stock Account B8 Cr 2.2.4 Dr Factory Overheads Cost Account C2 Cr 2015 30 Factory 13 000 June maintenance Page 63 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2.3.1 Calculate the break-even point and comment on your findings. Calculation Comment 2.3.2 Provide TWO measures that should be applied by Simelane, in order to reduce the cost of production per unit. Two valid points Page 64 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY F1 BUDGETS (45 marks; 27 minutes) The following information was drawn from the books of Sabie Traders. REQUIRED 1.1.1 Provide TWO items that will not be included in a cash budget. Provide a reason for each item. (4) 1.1.2 Explain the difference between a Projected Income statement and a Cash budget. (2) 1.1.3 Use the information given for the budgeted period. Comment on the debtor’s collection policy in comparison to the creditor’s payment policy. (4) 1.2 Use the information given to prepare the following: 1.2.1 The debtors’ collection schedule for July 2017 and August 2017. (7) 1.2.2 The cash budget for July 2017 and August 2017. (22) 1.2.3 Comment briefly on advertising, maintenance of tangible assets and rent income appearing on the budget. Provide ONE point of advice regarding each item. Refer to Information K. (6) INFORMATION: 1. ACTUAL BUDGETED MAY JUNE JULY AUGUST Sales 450 000 600 000 550 000 650 000 Cost of sales 300 000 400 000 360 000 430 000 Wages 55 000 55 000 ? ? Drawings (cash) 10 000 10 000 10 000 10 000 Rent Income 23 000 20 000 35 000 ? Advertising 18 000 16 500 Maintenance (Tangible assets) R18 500 15 200 20 000 20 000 Page 65 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2. ADDITIONAL INFORMATION: A Unfavourable bank balance on 30 June 2017 was R9 500. B Credit sales are expected to be 50% of total sales. C Expected receipts from debtors are as follows:  60% pay one month after the sale (30 days) and receive a 2% discount.  25% pay two months after the sale (60 days).  10% pay three months after the sale (90 days).  5% will be regarded as irrecoverable in the fourth month after sale. D Trading stock sold each month is replenished in the same month. All goods are purchased on credit and creditors are paid in full one month after the date of purchase. E Rent income increases annually on 1 August 2017 by 10%. F The annual wages increase of 5% is effective from 1 July 2017. G An employee earning R17 750 pm will be traveling abroad during July 2017. He will receive his salary during August 2017. H A fixed deposit of R35 000 is due to mature on 15 August 2017. I A vehicle was sold on 25 June 2017. However, the cheque received for R65 000 was post-dated for 25 July 2017. J A new vehicle costing R450 000 will be bought on 1 August 2017. A cash deposit of 20% of the purchase price will be paid on the date of purchase and thereafter 24 equal instalments will be made commencing on 1 September 2017. K With reference to Question 5.2.3 the following information is provided. ITEMS ACTUAL FIGURES JULY AUGUST Advertising 18 300 17 200 Maintenance (Tangible assets) 30 000 27 000 Rent Income 23 300 18 500 Page 66 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ANSWERSHEET 1.1.1 Provide TWO items that will not be included in a cash budget. Provide a reason for your answer. 1.1.2 Explain the difference between Projected Income statement and a Cash budget. 1.1.3 Use the information given for the budgeted period. Comment on the debtor’s collection policy in comparison to the creditors’ payment policy. Page 67 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 1.2.1 DEBTORS COLLECTION SCHEDULE FOR JULY AND AUGUST 2017 Months Credit sales July August May 225 000 June 300 000 July 275 000 August 325 000 1.2.2 CASH BUDGET FOR JULY AND AUGUST 2017 RECEIPTS JULY AUGUST Cash sales Receipt from Debtors Rent income 35 000 Fixed deposit Asset disposal income Total receipts PAYMENTS 1.2.3Payment Commenttobriefly Creditors on each of the items on the budget. Provide ONE point of advice regarding each item Salaries 75 500 Wages Maintenance (Tangible assets) 20 000 20 000 Advertising 18 000 16 500 Drawings 10 000 10 000 Vehicle Item Comment Advice Advertising Total payments Cash surplus (shortfall) Bank: opening balance (9 500) Bank: closing balance Maintenance Page 68 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 Rent income Page 69 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY F2: BUDGETING (55 marks; 33 minutes) 1.1 CASH BUDGET AND PROJECTED INCOME STATEMENT. The following transactions were taken from the records of AV Stores for the period end June 2015. Complete the table in the answer book by filling in the amounts only in the relevant column(s). (10) Example: The telephone account for June 2015, R2 130 was paid by cheque. Amount in the Cash Budget Amount in the Projected Income No. for June 2015 Statement for June 2015 RECEIPT PAYMENT INCOME EXPENSE Example R2 130 R2 130 Transactions: 1) The expected cash sales for June 2015 were estimated to be R35 200. The profit mark-up is 60% on cost. 2) Total depreciation on fixed assets for the financial year ended 30 June 2015 amounted to R17 040. 3) Cash receipts from debtors for June 2015 are expected to be R62 200. Discounts of R2 150 will be allowed for early payments received. 4) An instalment of R8 460 on the loan is expected to be paid on 25 June 2015. R460 of this amount is the interest on loan. 2.2 CASH BUDGET RCN Transport owned by Sonny Mkize is a small business that offers a delivery service. Their financial year ends on 30 September each year. REQUIRED: 2.2.1 Complete the Debtors Collection schedule for October 2015 and November 2015. (10) 2.2.2 On 31 October 2015, the following figures were extracted from the records of the business. Explain what you would mention to Sonny about each of the items listed. Give ONE point of advice in each case. (6) OCTOBER 2015 BUDGETED ACTUAL (R) (R) Maintenance of vehicles 24 500 21 380 Collection from debtors 147 171 115 620 Telephone 2 300 4 860 Page 70 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 2.2.3 Complete the Cash Budget for October and November 2015. (29) INFORMATION: A. partially completed Cash Budget for October and November 2015 B. Services rendered to customers on credit is as follows: September 2015 142 500 October 2015 176 400 November 2015 174 800 C. Debtors normally pay according to the following pattern: 40% pay their accounts during the transaction month to take advantage of the 2,5% discount. 55% pay in the month following the transaction month. The balance is usually written off as bad debts after the second month. D. The rent income will be increased by 9%, and fuel and oil is expected to go up by 15 cents to the Rand, with effect from 1 November 2015. Page 71 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 E. A fixed deposit is expected to mature on 1 November 2015. Interest on investment is earned at 9% p.a. F. Interest on the loan at 11% p.a. is payable monthly. The loan balance on 1 October 2015 was R300 000. G. Salaries are paid to the five drivers employed by the firm. All drivers are expected to get a 6% inflationary increase during November 2015. H. The business plans to buy an additional vehicle during November 2015. The total cost of the vehicle is R256 000 inclusive of finance charges. A deposit of 10% is payable. The balance will be settled over 60 months. The deposit and the first monthly instalment will be paid during November 2015. I. Commission income is a fixed percentage of the cash fee income for services rendered. J. The owner draws R500 cash and takes R150 worth of consumable stores per month for his personal use. K. Sundry expenses is expected to increase by 2,5% each month. L. All other items on the budget are expected to remain the same over the budget period. Page 72 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 ACTIVITY F3: CASH BUDGET AND CONCEPTS (40 marks; 24 minutes) 3.1 CONCEPTS 3.1.1 What is the main purpose of preparing a Cash Budget? (2) 3.1.2 Identify THREE items that should not be placed in the Cash Budget from the information given below. (3) Cash sales, cash withdrawals, Bad debts, Rent income, depreciation, trading stock on hand, interest on fixed deposit 3.2 You are provided with the information relating to Mayibuye Traders. The owner M.Mothate requests your assistance with her cash budget for the two-month period April to May 2015. REQUIRED 3.2.1 Complete the Debtors’ Collection Schedule. (07) 3.2.2 Complete the Cash Budget. (28) INFORMATION Summary of transactions DETAILS ACTUAL BUDGETED January February March April May Cash sales R 22 000 R 19 600 R 17 200 R 22 000 R 28 800 Credit sales R 22 720 R 23 600 R 26 000 R 22 800 R 27 600 Credit purchases of stock R 13 480 R 13 000 R 12 360 R 11 840 R 14 320 Rent income R 12 000 R 12 000 R 12 000 R15 000 R 15 000 Operating expenses R 5 280 R 5 600 R 6 000 ?? R 6 615 ADDITIONAL INFORMATION 1 Cash in the Bank on 31 March 2015, R 14 720. 2 Credit sales are to be collected as follows: ▪ 20% in the month of sale (subject to a 5% discount) ▪ 60% after 30 days (first month after sale) ▪ 18% after 60 days (second month after sale) ▪ 2% is to be written off after 90 days (third month after sale) Page 73 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3 Creditors are paid one month after purchases. 4 Operating expenses are paid in cash one month after the expense occurred. The operating expenses increase by 5% per month over the budget period. 5 The following withdrawals are made monthly by the owner: ▪ Cash to pay for owner’s personal telephone R 240 ▪ Trading stock R 560 6 Rent income will increase on the 1st of July 2015. 7 Fixed deposit of R 36 000 with an interest of R 3 200 is due to mature on the 15th of May 2015. 8 Depreciation is calculated at R 3 500 per month. 9 A new vehicle costing R160 000 will be purchased in April 2015. A deposit of R45 000 will be paid at the end of April 2015. The balance will be paid in eight equal monthly instalments commencing from June 2015. 10 The two employees who earn the same salary will receive an increase of 5% on their current salaries at the end of May 2015. The increase for both employees will amount to R 350. ANSWERSHEET 3.1 CONCEPTS 3.1.1 What is the main purpose of preparing a Cash Budget? 3.1.2 Identify THREE items that should not be placed in the Cash Budget. Page 74 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 3.2.1 Debtors’ Collection Schedule from 1 April 2015 to May 2015 Credit sales April May February 23 600 4 248 March 26 000 15 600 April 22 800 May 27 600 3.2.2. Cash Budget for the period 1 April 2015 to 31 May 2015 Receipts April May Cash sales Cash from debtors Total Receipts Payments Cash purchases 9 920 11 760 Payments to creditors Total Payments Cash surplus/deficit Balance on 1 April 2015 Balance on 31 May 2015 CTIVITY G 1 Page 75 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 VAT AND INVENTORY You a re p rovid ed with ext ra ct s from the books of Willow Stationers, a registered VAT vendor. Goods are subject to 14% VAT REQUIRED: 1.1.1 Calculate the missing amounts marked A - D on the table given below. (4) 1.1.2 Explain the difference between Tax Avoidance and Tax Evasion. (4) 1.1.3 The owner has 13 cash registers. The cash from sales on the 13th cash register is (4) taken by the owner daily. He does not declare this in his books. Advise him on his actions. INFORMATION Excluding VAT Including VAT VAT 1 R320 000 ? A 2 R2 300 B R322 3 C D R882 1.1.1 C a l c u l a t e the missing amounts A to C in the table below Excluding VAT Including VAT VAT . 1 R320 000 ? A 2 R2 300 B R322 3 C D R882 1.1.2 Explain the difference between Tax Avoidance and Tax Evasion. TAX AVOIDANCE TAX EVASION 1.1.3 The owner has 13 cash registers. The cash from sales on the 13th cash register is taken by the owner daily. He does not declare this in his books. Advise him on his actions. Page 76 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 1.2 INVENTORY SYSTEM The following information was taken from the books of Daly Outfitters on 28 February 2017. The business sells handmade bags and accessories. The owner asked you to help prepare the final accounts as his bookkeeper could not cope. He uses the periodic inventory system and prices his articles at a mark-up of 50% on cost. REQUIRED: 1.2.1 Prepare the purchases account on 28 February 2017. Close it off properly. (14) 1.2.2 Calculate the net sales for the year ending 28 February 2017. (6) 1.2.3 Prepare the Trading Statement for the year ended 28 February 2017. Note: Show the (9) calculation for cost of sales on the answer sheet. 1.2.4 Daly wants your opinion on converting the bookkeeping system to the continuous (4) inventory system. Write a short recommendation to her, listing at least TWO advantages of the continuous inventory system over the periodic inventory system. Page 77 of 83

Downloaded from hlayiso.com KZN Accounting Grade 11 Teacher Support Document 2020 1. INFORMATION Daly Molefe supplied the following information and documents for the year. Trading stock (opening balance) 1 March 2017 214 000 Invoices received for stock purchased on credit from local manufacturers 485 000 Cash purchases for the year including goods imported 105 000 Debit notes issued to manufacturers for goods returned to them 2 560 Total cash sales of merchandise for the year as per cash register 520 000 Total invoices issued for credit sales 200 670 Goods retuned by customers – full credit given 3 480 Customs duty paid for consignment of handbags imported 2 890 Carriage paid for merchandise transported to the store 5 750 Carriage on goods sold 4 200 Page 78 of 83

Downloaded from hlayiso.com 2. ADDITIONAL INFORMATION: 1. Daly informed you that he had donated stock with a selling price of R3 000 to the local school during the year, but this had not yet been recorded. 2. He has also informed you that he had withdrawn stock at cost price to the value of R1 200 during the accounting period. As the bookkeeper did not know how to record this, it was not recorded. 3. An account of R800 was received from Quick Traders for the transport of goods purchased. 4. Daly did stocktaking on 27 February 2017. The value of stock on hand was R312 890. 5. The following transactions took place on 28 February 2017 – after the stocktaking. These entries were not recorded in the books. 5.1 Total cash sales for the day, R5 100 5.2 Total credit sales for the day, R2 400 5.3 Cash purchases R1 500 at cost price 1.2.1 GENERAL LEDGER OF DALY OUTFITTERS Dr PURCHASES ACCOUNT Cr 1.2.2 Calculate the net sales for the year ending 28 February 2017.

Downloaded from hlayiso.com 6.2.3 Prepare the trading Statement for the year ended 28 February 2017. Sales Less Cost of Sales Opening stock Purchase Closing stock (309 390) Gross Profit 1.2.4 Advantages of converting to the continuous inventory system. ACTIVITY G2: VAT AND PERIODIC INVENTORY (30 marks; 18 minutes) 2.1 VAT AND ETHICS You are provided with the information of Stanza Traders, a registered VAT vendor. Goods are subject to 14% VAT. REQUIRED 2.1.1 Calculate the missing amounts from the table given below. (3) 2.1.2 Rexel Wholesalers, one of Stanza’s suppliers, offered Stanza Traders goods valued at R5 400 for R2 700. He stated that Stanza Traders must pay cash and he will not issue an invoice. What advice would you give to Stanza Traders? (2)

Downloaded from hlayiso.com INFORMATION VAT exclusive VAT VAT inclusive 1 140 000 A 2 B 98 3 C 39 900 2.2 PERIODIC INVENTORY You are provided with the information relating to Ekasi Traders for the year ended 30 June 2015. The business uses the periodic inventory system. REQUIRED 2.2.1 Trading Account [Show your calculations.] (21) 2.2.2 Ekasi Traders is concerned about high transport costs. Provide TWO ways to solve this problem. (4) INFORMATION A. Balances 01 July 2014 R46 000 Trading stock 30 June 2015 R52 000 B. Summary of transactions during the year Sales 1 068 000 Debtors’ allowances 30 000 Purchases 672 000 Carriage on purchases 22 800 Carriage on sales 24 000 Advertising 5 400 Other operating expenses 95 000 C. ADJUSTMENTS AND ADDITIONAL INFORMATION 1 Goods costing R15 200 were received on credit from Southern Manufacturers on 30 June 2015.

Downloaded from hlayiso.com 2 Ekasi Traders returned damaged goods to the suppliers, R6 800. 3 Ekasi Traders received an invoice from Zee Transporters for the following: ▪ Transporting stock to customers, R3 200 ▪ Transporting of stock from suppliers, R3 500 A customer, B.Bentley, complained that the trade discount promised to her was not deducted on her last invoice. The goods were sold for R9 000. A credit note for trade discount of 20 % was issued, but no entry has been made. ANSWERSHEET 2.1.1 VAT A B C 2.1.2 Rexel Wholesalers, one of Stanza’s suppliers, offered Stanza Traders goods valued at R5 400 for R2 700. He stated that Stanza Traders must pay cash and he will not issue an invoice. What advice would you give to Stanza Traders?

Downloaded from hlayiso.com 2.2.1 Dr Trading Account F1 Cr 2.2.2 Ekasi Traders is concerned about high transport costs. Provide TWO ways to solve this problem.