FAC1501 Oct/Nov 2014 exam paper — questions

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  1. Question 1.1 · Accounting equation & classification · 12 marks

    This question relates to Lufano Traders, a business that uses the perpetual inventory system, and is split into Part A and Part B, both of which must be answered. The following transactions were extracted from the records of Lufano Traders for the week ended 7 February 2014 (the business uses the perpetual inventory system): on 3 February the owner, Mr Lufano Sithole, increased his capital contribution from R250 000 to R350 000; on 4 February the water and electricity account of R4 000 was paid using business cheque number 007; on 5 February inventory to the value of R70 000 was purchased on credit from HS Wholesalers; on 6 February Mr T Smith, a customer of Lufano Traders, purchased goods for R2 500 cash (the cost of these sales was R2 000); and on 7 February Mr Lufano Sithole took R500 cash from the cash register for his own personal use. You are required, for each of these transactions, to show the effect on the accounting equation, using a '+' sign for an increase and a '-' sign for a decrease in each element affected, together with the relevant amount of the increase or decrease. Where applicable you should assume that the bank balance is positive. Your answer must be presented in a table with columns for the transaction number, Equity, Assets and Liabilities (in the format: No | Equity | = | Assets | - | Liabilities).Show the full question

  2. Question 1.2 · Accounting equation & classification · 12 marks

    This question relates to Lufano Traders, a business that uses the perpetual inventory system, and is split into Part A and Part B, both of which must be answered. Lufano Traders gives you the following list of selected accounts taken from its General Ledger for February 2014: 1 Telephone expenses; 2 Bank (favourable); 3 Equipment; 4 Services rendered; 5 Cash float; 6 Accrued expenses; 7 Long-term loan BA Bank; 8 Consumables; 9 Machinery; 10 Credit losses recovered; 11 Prepaid expenses; 12 Short-term loan JP Bank. The owner of Lufano Traders, knowing that you are studying FAC1501 at UNISA, asks you to draw up a table and classify each of these twelve general ledger accounts under the appropriate heading. The table should have columns for the account number, Assets, and under Equity separate columns for Income and Expenses, plus a column for Liabilities. As an example, the Inventory account (not part of the numbered list) would be classified as an asset and placed in the Assets column, as shown in the example row of the table.Show the full question

  3. Question 2 Part A · Bank reconciliation · 14 marks

    This question is divided into Part A and Part B, and both parts must be answered, starting the whole question on a new page. Phatudi Boiler's general ledger reflects the following balances for the year ended 30 April 2014: sales R900 900; cost of sales R485 000; bank charges R1 378; interest expenses R948; rental income R30 000; wages and salaries R240 800; water and electricity R9 200; advertising R56 000; stationery R12 000; profit on sale of non-current assets R1 700; telephone expenses R26 000; drawings R14 000; vehicle at cost R198 000; petty cash R3 000; and trading inventory R67 000. You are required to prepare the profit or loss account for Phatudi Boiler for the year ended 30 April 2014, showing all your calculations.Show the full question

  4. Question 2.2(a) Part B · Bank reconciliation · 4 marks

    This question is divided into Part A and Part B, and both parts must be answered, starting the whole question on a new page. Speech Lingo's bookkeeper is inexperienced with the bank reconciliation process and could not complete the accounting work. You are given the adjusted cash receipts journal (CRJ3) and cash payments journal (CPJ3) for March 2014, already compared against the bank statement. The cash receipts journal shows totals of R18 900 plus interest income of R2 500, giving R21 400. The cash payments journal shows totals of R21 200 plus bank charges of R675, interest on overdraft of R465, tracking services (debit order) of R1 200, and an R/D cheque from O L Dubai of R3 000, giving R26 540. Additional information: (1) the bank account in Speech Lingo's records showed a positive balance of R4 895 on 28 February 2014; (2) after comparing the bank statement with the cash journals, further differences were found besides those already recorded in the cash journals: (2.1) a direct deposit of R3 470 for Speed Services was incorrectly credited on Speech Lingo's bank statement; (2.2) a deposit of R4 550 did not appear on Speech Lingo's March 2014 bank statement; (2.3) cheque numbers 114 (R850), 121 (R1 125) and 123 (R560) did not appear in the debit column of the March 2014 bank statement; and (2.4) the bank statement reflected a credit closing balance of R1 210 as at 31 March 2014. Required: prepare the bank account in the general ledger of Speech Lingo for March 2014 and balance the account.Show the full question

  5. Question 2.2(b) Part B · Bank reconciliation · 7 marks

    This question is divided into Part A and Part B, and both parts must be answered, starting the whole question on a new page. Using the same information about Speech Lingo given for the bank account (the adjusted CRJ3 total of R21 400 including interest income of R2 500, the adjusted CPJ3 total of R26 540 including bank charges of R675, interest on overdraft of R465, tracking services debit order of R1 200 and an R/D cheque from O L Dubai of R3 000; the opening favourable bank balance of R4 895 on 28 February 2014; a direct deposit of R3 470 for Speed Services incorrectly credited on the bank statement; an outstanding deposit of R4 550 not yet on the March 2014 bank statement; outstanding cheques number 114 for R850, number 121 for R1 125 and number 123 for R560; and a bank statement credit closing balance of R1 210 as at 31 March 2014), you are required to prepare the bank reconciliation statement of Speech Lingo as at 31 March 2014.Show the full question

  6. Question 3(a) · Journals & posting to the ledger · 19 marks

    Appliances Stores is a trading entity registered as a VAT vendor, with the applicable VAT rate at 14%. All of the entity's suppliers are also registered VAT vendors, and the amounts in the transactions below include VAT where applicable. The entity uses a periodic inventory system. Appliances Stores entered into the following transactions during August 2014: on 2 August, goods were purchased on credit from Big Appliances for R353 400, with invoice number 457 received; on 5 August, stationery was purchased from Folio Stationers for R1 026 and paid using cheque number 251; on 7 August, Telkom was paid R5 700 for the July telephone account using cheque number 252; on 14 August, the City Council was paid R5 928 for water and electricity using cheque number 253; on 16 August, goods were purchased from Smart Appliances for R228 000 and paid using cheque number 254; on 20 August, goods were purchased on credit from ABC Appliances for R57 000, with invoice number 465 received; on 25 August, Big Appliances was paid R114 000 using cheque number 255 as part payment of the amount owing, and cheque number 256 was drawn for cash to pay salaries of R50 000; and on 26 August, the remaining amount owed to the creditor Big Appliances was settled using cheque number 257, after Appliances Stores received a 20% settlement discount (referring back to the transactions of 2 and 25 August 2014). This question must be started on a new, separate page. Using the transactions of Appliances Stores for August 2014 described in the introduction, record the applicable entries in the cash payments journal. Your journal must include columns for document number, day, details, bank, purchases, VAT input, creditors, settlement discount received (credit), VAT output (credit) and sundry accounts (showing both the amount and details). The journal does not need to be closed off at the end of the month, but all calculations must be shown.Show the full question

  7. Question 3(b) · Journals & posting to the ledger · 5 marks

    Appliances Stores is a trading entity registered as a VAT vendor, with the applicable VAT rate at 14%. All of the entity's suppliers are also registered VAT vendors, and the amounts in the transactions below include VAT where applicable. The entity uses a periodic inventory system. Appliances Stores entered into the following transactions during August 2014: on 2 August, goods were purchased on credit from Big Appliances for R353 400, with invoice number 457 received; on 5 August, stationery was purchased from Folio Stationers for R1 026 and paid using cheque number 251; on 7 August, Telkom was paid R5 700 for the July telephone account using cheque number 252; on 14 August, the City Council was paid R5 928 for water and electricity using cheque number 253; on 16 August, goods were purchased from Smart Appliances for R228 000 and paid using cheque number 254; on 20 August, goods were purchased on credit from ABC Appliances for R57 000, with invoice number 465 received; on 25 August, Big Appliances was paid R114 000 using cheque number 255 as part payment of the amount owing, and cheque number 256 was drawn for cash to pay salaries of R50 000; and on 26 August, the remaining amount owed to the creditor Big Appliances was settled using cheque number 257, after Appliances Stores received a 20% settlement discount (referring back to the transactions of 2 and 25 August 2014). This question must be started on a new, separate page. Using the transactions of Appliances Stores for August 2014 described in the introduction, record the applicable entries in the purchases journal. Your journal must include columns for document number, day, details, VAT input, purchases and creditors. The journal does not need to be closed off at the end of the month, but all calculations must be shown.Show the full question

  8. Question 4 · Financial statements · 27 marks

    Dino's Dealers' bookkeeper has supplied a list of general ledger balances as at 28 February 2014, already adjusted for year-end entries: capital R2 900 000; drawings R15 000; land and buildings R1 700 000; machinery at cost R950 000; accumulated depreciation on machinery R76 000; bank (favourable) R850 000; petty cash R600; cash float R400; inventory R245 000; debtors control R150 000; prepaid expense R3 000; income received in advance R16 000; creditors control R127 000; accrued expense R2 000; mortgage owed to ABS Bank R718 000; and long-term loan from SBL Bank R380 000. Additional information reveals that for the year ended 28 February 2014, sales were R2 200 000 and cost of sales was R1 760 000, while distribution, administration and other expenses totalled R745 000. Using this information, prepare the statement of financial position of Dino's Dealers as at 28 February 2014, commencing the answer on a new separate page and showing all calculations.Show the full question

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