Accounting Grade 12 IEB Paper 1 2016 Information Sheet

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE EXAMINATION NOVEMBER 2016 ACCOUNTING: PAPER I Time: 2 hours 200 marks INFORMATION BOOKLET Gross Profit 100 Gross Profit 100 Net Profit 100 × × × Sales 1 Cost of sales 1 Sales 1 Operating expenses 100 Operating profit 100 Operating profit 100 × × × Sales 1 Sales 1 Cost of sales 1 Net profit after tax 100 Net profit before tax + interest expense 100 × × Average shareholders' equity 1 Average capital employed 1 Current assets : Current liabilities (Current assets − inventories) : Current liabilities Average debtors 365 or 12 Average creditors 365 or 12 Cost of sales × × Credit sales 1 Credit purchases 1 Average inventories Average inventories 365 or 12 Closing inventories 365 or 12 × × Current assets − Current liabilities Cost of sales 1 Cost of sales 1 Non-current liabilities : Shareholders' equity Total assets : Total liabilities Profit after tax Ordinary share dividends No. shares in issue No. shares in issue Fixed cost Total ordinary shareholders' equity (Selling price per unit − Variable cost per unit) No. shares in issue IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I – INFORMATION BOOKLET Page ii of ix QUESTION 1 INVENTORY SYSTEMS (32 marks, 19 minutes) Information relating to Weighcomm Scales Weighcomm Scales supplies seafood retailers with specialised electronic scales. They use the periodic inventory system to record their stock, and the FIFO method to value it. The financial year ends on 31 July 2016. 1. Below is the stock record of electronic scales purchases for the year. Prices exclude VAT. Number of units Unit cost Total cost Opening stock (1 August 2015) 200 R2 100 R420 000 Purchases during the year 1 350 R2 942 000 November 2015 320 R2 180 R697 600 February 2016 540 R2 160 R1 166 400 July 2016 490 R2 200 R1 078 000 2. Gross sales for the year were R4 375 320 including VAT. 3. Debtors' returns amounted to R19 000 excluding VAT (5 units). These were all returns of stock. 4. The following credit note for scales returned to a supplier was found in the clerk's desk drawer. It has not been processed and related to stock bought in July 2016. There were no other credit notes during the year. Weighcomm Scales Ltd 17 Beviss Crescent New Germany Tel: (031) 703 2555 Fax: (031) 703 2566 e-mail: enquires@weighcommscales.co.za <www.weighcommscales.com> CREDIT NOTE: 5664/07 DATE: 31 JULY 2016 Address to: CROSSFIT SCALES 210 NORTH COAST ROAD DURBAN QUANTITY ITEM UNIT COST (Excl. VAT) TOTAL 12 Electronic scale ? ? VAT ? 5. According to the physical stock count on 31 July 2016, the business had 510 units on hand. IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I – INFORMATION BOOKLET Page iii of ix QUESTION 2 COMPANY FINANCIAL STATEMENTS (70 marks, 42 minutes) Information relating to Impumelelo Limited Impumelelo Limited Pre-adjustment Trial Balance for the year ended 31 October 2016 R R Balance Sheet Section Ordinary share capital ? Retained income ? Land and buildings 4 064 000 Vehicles 1 850 000 Accumulated depreciation on vehicles 1 729 000 Fixed deposit: Rand Merchant at 10,5% p.a. 135 000 Trading stock 360 870 Debtors control 161 969 Bank 32 740 Loan: Capitec Bank 300 000 Creditors for salaries 25 100 SARS: PAYE 12 050 Unemployment insurance fund (UIF) 979 Creditors control 229 120 Provision for bad debts 7 930 SARS: Income tax 289 000 Nominal Accounts Section Sales 2 435 000 Cost of sales 1 521 875 Debtors' allowances 3 725 Rent income 144 313 Audit fees 25 000 Directors fees 159 600 Sundry expenses 116 649 Bad debts 11 594 Salaries 240 000 Interest on fixed deposit 9 050 Loss on disposal of asset 6 000 Ordinary share dividends 140 000 9 085 282 9 085 282 IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I – INFORMATION BOOKLET Page iv of ix Additional information and adjustments that still need to be taken into account: 1. The following adjustments relate to their debtors: 1.1 A credit note dated 31 October 2016 was issued for defective stock with a selling price of R2 256. The company consistently applies a mark-up of 60% on cost. These goods were returned to the supplier. 1.2 Provision for bad debts needs to be adjusted to R8 200. 2. Rental income for November 2016 was received and recorded on 25 October 2016. The premises were occupied for the entire year. 3. Impumelelo Limited paid a 40% deposit on their audit fees for the year. The balance will be settled on 7 November 2016. 4. According to the physical stock count, trading stock on hand amounted to R358 240. 5. The creditors for salaries figure of R25 100 in the pre-adjustment trial balance reflected the following 2 situations: 5.1 The salaries clerk had incorrectly processed the October salary of employee Jack Jones who had left the company on 30 September 2016. The details of his October salary are as follows: GROSS R28 000 DEDUCTIONS: CONTRIBUTIONS SALARY PAYE: R7 852 UIF: R148 UIF: R148 (Ignore the maximum for (Ignore the maximum for UIF) UIF) Contributions are debited to the salaries account. 5.2 The remaining salary was for an employee who requested that his October salary only be paid on 1 November 2016. 5.3 Payments to SARS and the various funds will only be made on 1 November 2016. 6. The fixed deposit was increased by R25 000 on 1 July 2016. This has been recorded. Interest is not capitalised. Outstanding interest needs to be accounted for. 7. Only one asset, a vehicle, was sold at the beginning of the year. The book value of this vehicle on the date of sale was R20 000. It was sold for R24 000 cash. All the transactions relating to the transfer of the cost price and accumulated depreciation of the asset were correctly transferred to the asset disposal account, but the bookkeeper recorded the receipt of cash in the CRJ and the asset disposal account as R14 000 instead of R24 000. 8. The remaining vehicles must be depreciated to a book value of R15 000. IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I – INFORMATION BOOKLET Page v of ix 9. Impumelelo Limited took out a loan from Capitec Bank on 1 November 2015 on the agreement that they would pay back a fixed amount of the loan each year as well as any interest expense for that year. The following table shows the transactions related to the loan for the financial year ending 31 October 2016: Opening balance at 1 November 2015 R420 000 Add: Interest capitalised ? Less: Repayments and interest payments made during the year (166 200) Closing balance at 31 October 2016 300 000 Impumelelo Limited has budgeted to repay the same capital portion of the loan next year. 10. The following share transactions took place during the year: • On 31 October 2015 the company had shares in issue with a weighted average of R6,90 per share • On 1 November 2015 the company issued a further 125 000 ordinary shares at R7,30 per share. This transaction has been recorded. • On 30 September 2016 the company repurchased 37 500 shares at R8,50 per share from the estate of a deceased shareholder • On 31 October 2016 director A. Shaw was issued 2 500 ordinary shares at R7,40 each in lieu of his outstanding directors fees. No entry has been made to record this. 11. On completion of the audit for the year it was calculated that Impumelelo Limited owed SARS a further R11 450 for Income Tax. 12. On 31 October 2016, the directors declared a final dividend of 80 cents per share. The shares issued to director A. Shaw DO NOT qualify for this dividend. IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I – INFORMATION BOOKLET Page vi of ix QUESTION 3 CASH FLOW STATEMENTS (50 marks, 30 minutes) Information relating to Claxton LTD. 1. Extract from the Statement of Comprehensive Income (Income Statement) for the year ended 31 July 2016. Loss on sale of equipment R3 250 Depreciation for the year R164 400 Interest on loan R110 000 Income tax R518 000 Net income before taxation R1 223 000 2. Extract from the Statement of Financial Position (Balance Sheet) as at: 31 July 2016 31 July 2015 Fixed Assets: 7 332 850 5 170 000 Land and buildings 6 100 000 4 220 000 Equipment at carrying value 1 232 850 950 000 Equity 5 865 750 5 690 000 Share capital ? 4 655 000 Retained income ? 1 035 000 Long-term liabilities 987 250 900 000 Mortgage loan: RFS Financial Bank (12% p.a.) 987 250 900 000 IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I – INFORMATION BOOKLET Page vii of ix 3. Extract from the notes to the Financial Statements as at 31 July 2016 Note 5: Trade and other receivables 31 July 2016 31 July 2015 SARS – Income tax R22 700 ? Note 6: Cash and cash equivalents 31 July 2016 31 July 2015 Bank R12 500 Petty cash R2 000 R1 500 Note 7: Trade and other payables 31 July 2016 31 July 2015 SARS – Income tax ? Shareholders for dividends R113 000 R162 000 Bank ? 4. Additional information: • The total dividends paid and declared for the year amounted to R338 000. • The cash flow statement on 31 July 2016 reflected taxation paid of R557 050. • The business bought new equipment during the year. • They also disposed of obsolete equipment on 31 March 2016. The following information relating to the disposal of this equipment was taken from the tangible asset register: Cost price of the equipment R180 000 Accumulated depreciation (1 August 2015) R87 500 Depreciation was calculated at 15% p.a. on the diminishing balance method. • The business built an additional warehouse during the year. • Claxton LTD had 931 000 ordinary shares in issue on 1 August 2015. • On 1 August 2015, Claxton LTD decided to repurchase 50 000 ordinary shares from a shareholder at R5,50 per share. The weighted average price per share on this date was R5. • During the financial year ended 31 July 2016, they issued further shares to the public at a price of R5,55 per share. • Claxton LTD took out a new loan of R218 000 during the year. Interest is capitalised and loan repayments (including interest for the year) were made during the year. • The net change in cash and cash equivalents for the year ended 31 July 2016 was R119 000 (positive). IEB Copyright © 2016 PLEASE TURN OVER

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I – INFORMATION BOOKLET Page viii of ix QUESTION 4 MANUFACTURING (48 marks, 29 minutes) This question consists of 2 parts; each is related to a completely different business. PART A Information relating to Thorndon Manufacturers Thorndon Manufacturers are a medium-sized business that specialises in the production of security alarms. They supply their products to various security companies, but also have an online store where they have a call centre selling security alarms directly from the factory. 90% of all the selling and distribution costs are incurred by the online call centre. 1. The following balances were found in the stock accounts: 30 September 2016 1 October 2015 Raw materials stock R70 000 R55 000 Indirect materials stock R2 730 R4 500 Work-in-progress stock ? R65 050 Finished goods stock R80 500 R101 450 2. Raw materials were purchased during the year, R1 135 000. The owner returned raw materials costing R2 500 that he had previously taken for his own personal use. The return of this stock has not been recorded. 3. A credit invoice for R3 500 had not yet been recorded. This was in respect of transporting raw materials from the harbour to the factory. 4. After the creditor's reconciliation had been completed, it was discovered that a bulk purchase discount of R6 000 on raw materials had not been granted. Thornton Manufacturers is entitled to this discount. 5. Sales for the year were R6 282 375. (30% of these sales are through the call centre.) Cost of sales for the year were R2 512 950. 6. Indirect material bought during the year was R260 000. Indirect material used is divided between the factory, administration, and selling and distribution in the ratio of 1 : 1 : 3. 7. At the end of the year it was discovered that indirect material in the factory (packing boxes) costing R1 750 had been stolen. The stock is insured and the insurance will pay out R1 130 in October 2016. No entries have been made to record this theft. 8. Monthly insurance has remained constant for the last two years. Insurance paid for the year amounted to R121 520 and this included insurance paid in advance for October and November 2016. Insurance of R59 520 was allocated to selling and distribution, and R7 440 to administration. 9. R490 000 is the total rent. 60% is for the factory, 5% for administration and the rest is for selling and distribution. IEB Copyright © 2016

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE: ACCOUNTING: PAPER I – INFORMATION BOOKLET Page ix of ix 10. The following salary and wage expenses were incurred: Gross salaries Contributions and wages Indirect labour Medical aid UIF Factory R312 850 R7 002 R2 428 Administration R80 000 R1 650 R1 600 Direct labour, including contributions, amounts to R790 000. 11. Transport costs to deliver alarms to online customers were R35 080. 12. Total selling and distribution costs as a percentage of sales for the year was 16%. PART B Information relating to Bags of Fun Bags of Fun is a small manufacturing business that produces transparent pencil bags. This business supplies these pencil bags to various school shops in the Durban area. Maria Martins, the owner, is concerned about the profitability and sustainability of her business. The following information was taken from the books of Bags of Fun at their year-end, 31 October 2016. Every year they sell all the goods they produced: 31 October 31 October 2016 2015 Total costs Unit cost Fixed/Variable Direct materials costs R607 750 R5,50 Direct labour costs R508 300 R4,60 Selling and distribution costs R182 325 R1,65 All variable Factory overheads cost R548 410 All Fixed Administration costs R247 500 All Fixed Selling price per unit R18,85 R15 31 October 31 October 2016 2015 Units produced and sold ? 98 000 units Break-even point ? 78 000 units IEB Copyright © 2016