Accounting Grade 12 Paper 2 KZN June 2020 Memo

Downloaded from hlayiso.com education Department: Education PROVINCE OF KWAZULU-NATAL NATIONAL SENIOR CERTIFICATE GRADE 12 MARKS: 150 MARKING PRINCIPLES: 1. Penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for that item. No double penalty applied. 2. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks on the figures for that item. 3. Full marks for correct answer. If answer incorrect, mark the workings provided. 4. Ifa pre-adjustment figure is shown as the final figure, award one mark. Not the method mark for the answer. Note: if figures are stipulated in memo for components of workings, these do not carry the method for final answer. 5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark. If no + or — sign or bracket is provided, assume that the figure is positive. 6. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates. 7. This memorandum is not for public distribution, as certain items might imply incorrect treatment. The adjustments made are due to nuances in a certain question. 8. Where penalties are applied, the marks for that section of the question cannot be a final negative. 9. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer before awarding the mark. 10. Operation’ means ‘Check operation’. ‘One part correct’ means ‘Operation & one part correct’. Note: check operation must be +,-,x,+, or per candidates operation. 11. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect, indicate with a Ed. Note: do not award marks for workings if numerator and denominator are swapped-this also applies to ratios. 12. Be aware of candidates who provide valid alternatives beyond the marking guideline. 13. Codes: f=foreign item; p=placement. This memorandum consists of 9 pages

Downloaded from hlayiso.com Acco QUESTION 1 Mid-Year Exam 2020 1.1.1 | CASH RECEIPTS JOURNAL CASH PAYMENT JOURNAL 107 200 121 160 4700 v 960 v 520 v 6 680 v 900 v 1200 Vv or 9840 CRJ 8940 CPJ Both one mark Operation Operation 113 320 MJ 130 000 MI 1.1.2 | Bank reconciliation statement on 29 February 2020. Debit Credit Credit balance as per bank statement 9 520 9 520 v Credit outstanding deposit 25 000 25 000 v Credit outstanding deposit 17 000 17 000 v Credit amount wrongly debited 1200 1200 v Debit outstanding cheques No. 321 (13 000) 13 000 v 531 (6 500) 6 500 v 561 (8 100) 8 100 v Debit balance as per bank account 25 120* 1.1.3 As the internal auditor you are not happy with the manner in which cash is being controlled in this business. Identify ONE problem and provide a figure to support your answer. Give advice on how this problem can be avoided in future. Problem Advice Outstanding deposit of R25 000 on 6 February 2020. v Create a policy for regular or daily depositing. v Copyright reserved Please turn over

Downloaded from hlayiso.com Acco Mid-Year Exam 2020 1.2.1 Creditors ledger Creditors reconciliation statement 38 100 40 800 (i) - 4 100  (ii) + 1 800  (iii) - 22 000  (iv) + 400  (v) -1 800 - 1 800 or – (3 600) (vi) + 21 000 Operation for both totals  36 200 36 200 11 1.2.2 Explain how the creditor’s reconciliation statement can assist the business in terms of their internal control measures. State TWO points. Any TWO relevant answers   Part mark for incomplete / unclear reason • It will assist the business in detecting errors/omissions in their books. • It will show errors/omissions in the statement received. • Detect fraudulent activities and take action against it. 4 1.3 Identification of TWO different problems, Internal control measure to with evidence from the question correct each problem Identify problem  Any valid advice  Mention evidence  Problem Problem: • Do not sell on credit to 1 Certain debtors are exceeding debtors who are likely to their credit limits exceed their limits. Evidence: • Ensure that they settle • Shabalala exceeds by R700 previous month’s debt • Mbuli exceeds by R504 before buying on credit. Problem Problem: • Charge interest on overdue 2 Most of the debtors accounts. are paying over periods longer • Offer discount for early 30 days payment. Evidence: • Consider legal action 61% or R6 400 are taking longer against problem debtors 39% within 30 days Shabalala and sangweni 6 TOTAL MARKS 40 Copyright reserved Please turn over

Downloaded from hlayiso.com Acco Mid-Year Exam 2020 QUESTION 2 2.1.1 Explain the difference between the perpetual stock system and the periodic stock system. Any valid difference with comparison  Part mark incomplete/one- system only explanation Perpetual stock system Periodic stock system Cost of sales calculated at point of Cost of sales calculated at end of sale. financial period. Stock value can be determined at any Stock value determined / identified by time from records. stock count. Cost of sales account used Purchases account used Stock bought regarded as an asset Stock bought regarded as an expense 2 2.1.2 Calculate the value of the stock on hand on 31 May 2020 using the weighted-average method. 949 000 – 37 000  5 000  - 200  operation one part correct R190  X 1 200  operation one part correct 8 R 228 000  Closing stock 2.1.3 Calculate the stock holding period (in days) for calculators using weighted-average method. ½(54 000  + 228 000 ) x 365 684 000  1 5 75 days  operation one part correct Copyright reserved Please turn over

Downloaded from hlayiso.com Acco Mid-Year Exam 2020 2.1.4 Calculate the value of closing stock using the FIFO method. (800 -200) 600 x 185 = 111 000  600 x 170 = 102 000  = 213 000  closing stock (FIFO) operation one part correct 5 Give ONE reason in favour of changing to the FIFO method Any valid reason  Part mark for incomplete / unclear reason • Gross profit will be lower because closing stock would be lower. • Easy to count or identify jackets individually. 2 • Value of jackets is continuously changing and valued at more recent prices. Give ONE reason against changing to the FIFO method. Any valid reason  Part mark for incomplete / unclear reason • No need to change as profit will be the same in the long-term. • Unethical to manipulate the profit by changing the method of stock valuation. • Tax would decreased in first year as result of decreased profit. • The change would affect comparisons across financial years. 2 2.2 Identify ONE different problem in relation to each branch. Quote relevant figures to support your answer. In each case, offer Nozipho advice on how to solve the problem. BRANCH Problem and Figures   Advice    Missing cash, R21 000 (24 cash Regular internal audit for GAMALAKHE sales = R100 800, but only sales and deposits / MALL R79 800 deposited) separation of duties Returns too high, 12 computers. Purchase quality computers / make sure sales assistant MBALI knows product specifications. MALL Only worked 73% of normal time Time sheet for normal time (117/160) and choose to cash in Set targets/ minimise on the overtime 93% (52 hours) overtime. Very low sales volume, 42% Provide Han with sales JOZINI (21/50) computers. assistant/ set sales targets MALL 6 TOTAL MARKS 30 Copyright reserved Please turn over

Downloaded from hlayiso.com Acco Mid-Year Exam 2020 QUESTION 3 3.1 3.1.1 Factory overhead cost 3.1.2 Selling and distribution cost  3.1.3 Direct material cost  3.1.4 Administration cost 4 3.2.1 Calculate the Direct Material Cost Opening stock 180 000  Purchases (400 000 – 7 000 ) 393 000  Carriage on purchases 5 000  Less closing stock (86 000)  Operation one part correct 492 000  7 3.2.2 Calculate the Factory Overhead Cost Depreciation 32 000 Sundry expenses (85 600 – 2 600) x 60/100 49 800 Indirect material (25 000 + 35 000 – 9 000– 18 000) 33 000  One part correct Indirect labour 70 000 + 6300 76 300  One part correct Rent expenses (56 500 + 5 500) 1 200/1 600 46 500  One part correct Water and electricity (98 000) 4/8 49 000  Operation one part correct 286 600  16 3.2.3 Production cost statement for the year ended 29 February 2020. Direct material See 3.2.1 492 000  Direct labour (175 000 + 15 750) 190 750  Prime cost Operation 682 750  Factory overheads See 3.2.2 286 600  Production cost Operation 969 350  Work-in-process at the beginning 150 000  1 119 350 Work-in-process at the end Operation one part correct (1 119 350 – 870 000) (249 350)  Production cost of finished goods 13 (1 200 000 + 170 000 – 500 000) 870 000  Copyright reserved Please turn over

Downloaded from hlayiso.com Acco Mid-Year Exam 2020 3.3.1 Calculate the Break-even point for 2017. 97 600  25 – 17  8 two marks) 12 200 units  operation one part correct 4 3.3.2 Explain why the owner should be concerned about the break-even point. Provide TWO points. Any two valid point   Part mark for incomplete / unclear point Number of units produced is 12 200 same as the break-even point of 12 200. Which means the business is making no profit or loss. Although the number of units produced increased from 11 800 to 12 200 still no profits were realised because fixed costs also increased. 4 3.3.3 Provide one reason for the decrease in the Direct Material Cost. Any valid explanation  Part mark for incomplete / unclear explanation • There was less wastage of raw material during production. • More efficiency during the production process. • Sourcing out cheaper suppliers. • Buying in bulk to negotiate discounts. 2 TOTAL MARKS 50 Copyright reserved Please turn over

Downloaded from hlayiso.com Acco Mid-Year Exam 2020 QUESTION 4 4.1.1 CALCULATIONS ANSWER (i) 3 200 000 – 2 500 000 Two or nothing 700 000    (ii) 850 000 x 15/100 x 9/12 = 95 625  177 624  82 000 – 1 = 81 999  Operation one part correct Operation one part correct (iii) 82 000 + 850 000 – 177 624 754 376  11 4.1.2 Asset Disposal 2019 30 Vehicle 30 000 2019 30 Accumulated depreciation 13 872 Sept Sept (12 720 + 1 152) Operation one part correct Bank 6 128 Loss on sale of an asset 10 000 30 000 Operation one part correct 30 000 9 4.2.1 Explain how the Fixed Assets Register will assist you in your duties as internal auditor. Provide ONE point. Any valid point  Part mark for incomplete / unclear point • Physical count should agree with register. • The internal audit has to verify the physical presence of items listed in the fixed assets register. • The internal auditor will be able to follow the lifespan of the item of fixed asset and make recommendations for timeous replacements. • Calculations of depreciation amounts can be checked. 2 4.2.2 The stock of trolleys and baskets is classified as a fixed asset. Give ONE suitable reason for this. Any valid point  Part mark for incomplete / unclear point • A trolley/basket is expected to have a lifespan of more than twelve months • The trolleys/basket are not part of trading stock 2 Copyright reserved Please turn over

Downloaded from hlayiso.com Acco Mid-Year Exam 2020 4.2.3 Identify and explain THREE major problems (with figures) relating to the control of the trolleys and baskets. In EACH case, provide a valid, practical solution to improve the control over these assets. PROBLEM WITH FIGURES PRACTICAL SOLUTION TO IMPROVE INTERNAL CONTROL Problem and a figure    Solution relating to the problem    (Do not accept improvement of control as a solution.) 30 trolleys were stolen (170 + 115 – All trolleys used should be returned to the 25 – 230). / R63 000 lost on this theft business. / Can introduce a fee for the return of (30 x R2 100). a trolley. / Secure trolleys when not in use. A large amount of R10 200 has been Before doing repairs to baskets, consider spent on repairs of baskets. / whether it would be more cost-effective to Instead of repairing baskets, 34 new replace old baskets with newer ones. baskets could have been bought. Number of trolley controllers are too Save salary for two trolley controllers and buy many (3), 230 trolleys can be new trolleys (13 or 14) or buy new baskets controlled by one person and save (98) (2 400x120) 28 800 for salaries. On a busy day there is not enough Buy more baskets as they are easier to control trolleys and baskets. For the 510 and cheaper to replace (R250). customers there are only 230 trolleys and 110 baskets (total 3340/short of 170). 25 damaged trolleys were written Monitor usage of trolleys to ensure that off. (Cost of replacement R27 000). customers do not abuse them. 6 TOTAL MARKS 30 Copyright reserved Please turn over