77
BACHELOR OF COMMERCE DEGREE (BCOM) ACCOUNTING 1 QUESTION BANK Copyright © 2014 REGENT Business School All rights reserved; no part of this book may be reproduced in any form or by any means, including photocopying machines, without the written permission of the publisher

BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Embed Size (px)

Citation preview

Page 1: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

BACHELOR OF COMMERCE DEGREE

(BCOM)

ACCOUNTING 1 QUESTION BANK

Copyright © 2014

REGENT Business School

All rights reserved; no part of this book may be reproduced in any form or by any means,

including photocopying machines, without the written permission of the publisher

Page 2: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 1

TABLE OF CONTENTS

PAGE

Chapter 1 – Accounting Concepts and Transactions 2

Chapter 2 – Year-end Adjustments and Financial Statements 8

Chapter 3 – Control Accounts and Reconciliations 18

Chapter 4 – Inventory 29

Chapter 5 – Disposals of Property, Plant and Equipment 35

Chapter 6 – Partnerships 38

Chapter 7 – Close Corporation 48

Chapter 8 – Companies 54

Chapter 9 – Cash Flow Statements 62

Chapter 10 – Bank Reconciliations 69

Page 3: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 2

CHAPTER 1

ACCOUNTING CONCEPTS AND TRANSACTIONS

QUESTION 1 [10]

Mr Takkies is the accountant of Bad Luck Limited. He is struggling to classify payables, closing

inventory and purchases in the financial statements.

1.1 With reference to the above accounts define the following to Mr Takkies to help him with

his financial statements:

a) Current Liabilities (2)

b) Expenses (3)

c) Current Assets (2)

1.2 Discuss the objectives of financial statements according to the accounting

framework. (3)

QUESTION 2 [10]

Mr Nat opened a business Puzzler Traders and obtained a loan for R250 000 on the 01 June

2012. The interest charged on the loan is 15% per annum which is payable on 01 March of

every year. The financial year-end for Puzzler Traders is 28 February 2013. It was decided by

Mr Nat that 25% of the loan will be paid by 30 April 2013.

Required:

2.1 Calculate interest on loan for 28 February 2013. (2)

2.2 Indicate how the above interest transaction will affect the accounting equation.

(Present, A = E+L, show increase with “+” sign and decrease with “-“sign). (2)

2.3 Discuss how the above loan transaction will be treated in the financial statements

as at 28 February 2013 (discuss the loan amount as well as the interest). (6)

Page 4: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 3

QUESTION 3 [10]

The accountant of Feet-Fit Shoe wholesalers is busy with recording income and is struggling

with the following transactions:

a) Feet-Fit Shoe sells a motor vehicle for R30 000, the vehicle was purchased for R20 000.

b) Received a deposit of R2 000 from AB Company to manufacture 50 pairs of shoes.

c) Commission income was received but not yet earned, R1 100.

d) Received R350 from a debtor for items sold on credit.

e) Feet –Fit sells inventory for R10 000 cash.

Required:

Explain using the definition of “income” whether each of these transactions results in income for

the period.

QUESTION 4 [10]

Financial statements are prepared and presented at least annually and are directed toward the

common information needs of a wide range of users.

Required:

4.1 List the users of financial statements identified by The Accounting Framework

and briefly discuss their needs for information. (6)

4.2 Briefly discuss the relationship between the information needs of investors and

of other users. (4)

Page 5: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 4

QUESTION 5 [10]

The owner of a small business selling and repairing cars has just received a copy of the

financial statements for the current year. The owner is confused about some of the items in the

financial statements and has asked you to clarify certain points. You have agreed to do this.

The owner’s questions are as follows:

1. What does the term “asset” mean? My knowledge and skill are assets to my

business, but I do not see these in the financial statement statements.

Can you explain this omission to me? (6)

2. Why is the “bank” balance on the statement of financial position different from

the profit amount in the statement of comprehensive income? (4)

Required:

Answer each of the above questions, using the correct accounting terminology

Page 6: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 5

QUESTION 6 [10]

The assets and liabilities of Al Black’s entity, The Black-Shop were as follows as at

31 December 2013:

2013

Land and Buildings 50 000

Payables 6 000

Equipment 15 000

Machinery 12 000

Bank overdraft 4 520

Long term loan 60 000

Receivables 3 000

Inventories 5 500

Investments 15 000

Petty cash 150

The owner did not make any capital contributions or cash withdrawals for the year.

Required:

6.1 Define the term equity. (2)

6.2 Calculate the net profit of The Black-Shop for 31 December 2013. (6)

6.3 Assume a R20 000 capital contribution was made by Al Black; based on this

assumption calculate the net profit for 31 December 2013. (2)

QUESTION 7 [15]

7.1 List the 5 elements of financial statements. (5)

7.2 Discuss the objectives of financial statements according to the accounting

framework. (3)

7.3 Discuss when comparative information for numerical information in the financial

statements should be disclosed. (3)

7.4 Under which circumstances should an entity’s financial statements not be

prepared on the assumption that the entity is a going concern? (4)

Page 7: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 6

QUESTION 8 [20]

Mr Abel, a motor mechanic, has worked for a large motor company for the last eight years.

During the past few years he has been doing private work during his spare time. This has grown

to such an extent that he decided to go into his own business on a full-time basis. On

01 March 2014 he left the motor company and formed his own repair business, Abel Car

Services. The following transactions took place:

Required:

8.1 Show how the above transactions affect the financial position of the business as

represented by A = E + L for the month ended 31 March 2014. (14)

8.2 Explain why the accounting equation should always balance. (2)

8.3 What do you understand by the term “net asset value”? (2)

8.4 Why does the net asset value of a business not change when assets are

purchased on credit? (2)

Date Transactions Amount

2014 R

Mar 01 Mr Abel owned the following assets which he transferred and

used exclusively in his business:

Tools

Electronic equipment

Pressure regulator

Mr Abel acquired the hydraulic press on credit on the 01 March

2014; he still has a balance owing. The business assumed

responsibility for this amount.

5 000

9 500

1 500

1 000

02 Mr Abel opened a bank account in the name of the business and

deposited capital.

8 000

02 An amount owed to Mr Abel by a customer was taken over by the

business.

450

08 A cash repair was done. 12 000

Page 8: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 7

QUESTION 9 [30]

The following information is applicable to ABC Dry-Cleaners:

1. On 1 January 2013 the assets and liabilities of the entity consisted of the following :

Cash R13 000

Receivables R1 600

Cleaning material on hand R800

Payables R20 000

Furniture and Equipment R38 000

2. The following is a summary of the transactions which occurred during January 2013:

a) Paid water and electricity for the month R1 000

b) Received R3 000 cash for dry-cleaning services rendered

c) Paid payables R5 000

d) Debited customers with R6 000 for services rendered

e) The owner withdrew R2 200 cash for private use

f) Paid the following expenses:

Wages R1 400

Rent R 500

Telephone R 75

g) Allowed R200 discount to customer debited in (d) for an item damaged during the dry

cleaning process

h) Cleaning materials on hand amounts to R600 at 31 January 2013.

Required:

9.1 Recognise assets and liabilities on 01 January 2013 and transactions for

January 2013, using the accounting equation with relevant headings (A = E + L). (12)

9.2 Balance the accounting equation at end of the month (2)

9.3 Prepare the Statement of Comprehensive Income and Statement of Financial

Position for the month ended 31 January 2013. (16)

Page 9: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 8

CHAPTER 2

YEAR END ADJUSTMENTS AND FINANCIAL STATEMENTS

QUESTION 1 [20]

Consider the following transactions of Clueless Enterprises for year ended 31 March 2013:

1. Received an amount of R5 000 on 01 February 2013 from a client for consulting services

to be delivered in terms of a contract agreed with the client from the period 01 January

2013 to 30 April 2013.

2. Purchased R30 000 worth of cleaning material on 15 November 2012. Cleaning material

worth R12 000 was still unused at 31 March 2013.

3. Received March electricity account of R800 on 10 April 2013.

4. Monthly rental for the use of the premises amounts to R1 200. The amount in the

general ledger account at 31 March 2013 amounts to R 15 600.

5. One of the company’s major customers went insolvent and will not be able to meet their

short-term commitment of R7 50.

6. Purchased vehicle from Data Motors for R 65 000 credit, on 01 December 2012.

Depreciation must be provided for using the diminishing balance method at 20% pa.

7. Salaries and wages of R500 were outstanding for March 2013 and an overpayment of

R50 was made in respect of water and electricity.

8. The business had taken out a loan of R200 000 on the 01 March 2013. The loan

agreement states that the loan will be repaid annually in equal instalments over ten

years starting on the 01 March 2014. Interest will be paid every month in arrears from 01

April 2013. Interest at 15% has consistently been charged on the loan.

Required:

Show how the above events will reflect on the Statement of Financial Position as at

31 March 2013.

Page 10: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 9

QUESTION 2 [30]

The following information relates to T Taylor, a service enterprise:

PRE-ADJUSTED TRIAL BALANCE OF T TAYLOR AT 31 MARCH 2013

DEBIT CREDIT

R R

Rent Income 64 000

Stationery 3 350

Capital 149 000

Drawings 6 084

Accumulated Depreciation - Equipment 15 000

Commission Income 2 700

Provision for bad debt adjustment 1 600

Property at fair value 350 000

Equipment at cost 34 000

Bank 24 208

Debtors control 26 100

Interest on mortgage Loan 23 870

Municipality levy 4 333

Insurance 2 405

Mortgage loan at 10.5% 248 000

Water and electricity 2 750

478 700 478 700

Page 11: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 10

Additional Information:

a) T Taylor had 5 tenants, each paying different rental amounts. Monthly rental of R1 750

for one of the tenants was still due for two months at the end of March 2013.

b) Stationery on hand at 31 March 2013 amounted to R1 150.

c) R750 commission was earned for April and May 2013.

d) Debtor D Persue disappeared, management decided to write his debt of R2 650 off as

irrecoverable.

e) Provision should still be made for depreciation on equipment at 10% per annum on the

diminishing balance method.

f) The water and electricity account for March 2013 of R310, has not yet been paid.

g) The insurance premium for April was paid in advance

h) Interest on the loan for the month of March 2013 is still to be provided for.

Required:

2.1 Briefly explain why it is necessary for a business to process adjusting journal

entries at the end of the financial year. (2)

2.2 Prepare the adjusting journal entries to record points of the additional

information above. (16)

2.3 Draft the Statement of Comprehensive Income for T. Taylor for the year

ended 31 March 2013. (12)

Page 12: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 11

QUESTION 3 [40]

The following Pre-Adjusted Trial Balance was taken from the books of Sunrest Distributors on

31 December 2013:

DEBIT CREDIT

R R

Capital 141 700

Land and buildings at cost 263 240

Vehicles at cost 40 000

Equipment at cost 9 000

Accumulated depreciation: Vehicles

(01/01/2013)

11 200

Accumulated depreciation: Equipment

(01/01/2013)

1 710

Fixed Deposit: SAAB Bank Ltd 50 000

Inventory: Merchandise 8 500

Debtors Control 5 200

Bank 3 100

Petty cash 100

Cash float 500

Creditors Control 9 550

Long term loan: Stranded Bank Ltd 25 000

Provision for bad debts 300

Sales 381 790

Cost of sales 165 400

Debtors allowance 1 200

Wages 2 000

Salaries 25 000

Rates 1 500

Discount allowed 380

License 1 000

Motor vehicle expenses 3 500

Bad debts 550

Page 13: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 12

Packing materials 4 700

Insurance 2 250

Water and electricity 2 100

Telephone 1 400

Advertising 2 000

Rent income 15 600

Discount received 650

Interest on fixed deposit 5 000

Bad debts recovered 120

592 620 592 620

Additional Information:

The following adjustments must still be taken into account:

a) Packing material on hand at 31 December 2013, R980.

b) The long term loan was entered into on 01 October 2013, according to the agreement

interest will be payable bi-annually at a rate of 18% p.a.

c) Advertising includes an amount of R400 paid for January 2014.

d) Rent income includes an amount in respect of January 2014.

e) Interest on fixed deposit has not yet been received for the last two months of the

financial year. Interest is calculated at a rate of 12% p.a.

f) Insurance includes an amount of R750 paid for the period 01 November 2013 to 31

October 2014.

g) The telephone account of R165 for December 2013 was not yet paid.

h) Depreciation must be provided as follows:

Vehicles: 20% p.a. on the diminishing balance method.

Equipment: 10% p.a. on the diminishing balance method.

NOTE: Equipment with a cost of R2 000 was purchased on 01 July 2013

i) The account of Loose-End Ltd, a debtor owing R200, must be written off as

irrecoverable.

j) Adjust the provision for bad debt to 5% of debtors.

Page 14: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 13

Required:

3.1 Define the term ‘net profit’. (2)

3.2 Prepare the Statement of Comprehensive Income for the year 31 December 2013. (20)

3.3 Calculate the Gross Profit Percentage achieved for the year. (2)

3.4 Prepare the Statement of Financial Position as at 31 December 2013. (10)

3.5 Briefly explain if the financial worth of the business increases or decreases, also

explain what caused this change? (2)

3.6 Prepare the Property, Plant and Equipment note for 31 December 2013. (4)

QUESTION 4 [40]

You are provided with the Pre-adjusted Trial Balance of Aneesa Traders for the year ended

30 June 2013:

DEBIT CREDIT

R R

Capital 1 900 000

Mortgage loan: Joy Bank 805 360

Land and buildings 2 000 000

Vehicles at cost 814 000

Equipment at cost 616 000

Accumulated depreciation - Vehicles 294 800

Accumulated depreciation - Equipment 341 000

Inventory 955 000

Cash float 15 000

Bank 313 100

Petty cash 3 300

Debtors control 396 000

Creditors control 487 300

Provision for bad debts 18 000

Fixed deposit: Broad bank (8% pa) 495 000

Sales 10 500 000

Sales returns 145 200

Cost of sales 7 487 000

Page 15: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 14

Rent income 176 880

Interest income on fixed deposit 26 630

Bad debts recovered 2 300

Audit fees 73 800

Salaries and wages 660 000

Packing material 23 100

Marketing expenses 480 000

Sundry expenses 63 770

Bad debts 12 000

14 552 270 14 552 270

Additional information:

a) A physical stock-taking on 30 June 2013 revealed the following inventories on hand:

Inventory: Merchandise R902 150

Packing material R 4 260

b) Audit fees of R15 000 was outstanding at the end of the financial period.

c) Make a provision for outstanding interest on a fixed deposit. This investment has been in

existence for the entire year. Interest is not capitalised.

d) A debtor who originally owed R32 000 has been declared insolvent. His estate paid 40

cents in every rand and this has been correctly recorded. The remaining balance must

be written off as irrecoverable.

e) Provision for bad debts must be adjusted to 5% of debtors.

f) The rent increased by R1 320 on 01 April 2013. The tenant has paid rent until the end

July 2013.

g) A vehicle was sold on credit for R90 000 on 31 December 2012. The fixed asset register

revealed the following regarding this vehicle. This transaction has not been recorded by

the book-keeper.

R

Cost price 235 000

Accumulated depreciation on 01 July 2012 105 750

Page 16: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 15

h) Make provision for depreciation as follows:

Vehicles at 15% p.a. on cost price.

Equipment at 10% p.a. on the diminishing balance method.

NOTE: New equipment to the value of R48 000 was purchased on 01 September 2012.

Initial delivery and handling costs included in the value is R3 000.

i) The loan statement received from Joy Bank on 30 June 2013 reflected the following:

R

Balance at the beginning of the financial year 1 125 000

Repayments during the year 458 000

Interest capitalised ?

Balance at the end of the financial year 804 500

Required:

4.1 Prepare the Property Plant and Equipment Note on 30 June 2013. (15)

4.2 Prepare the Statement of Comprehensive Income for 30 June 2013. (25)

Page 17: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 16

QUESTION 5 [40]

You are provided with information related to Global Traders on 28 February 2013.

DEBIT CREDIT

R R

Capital 855 750

Mortgage loan: Pride bank 288 700

Land and buildings 810 000

Vehicles at cost 513 000

Equipment at cost 235 600

Accumulated depreciation – Vehicles 178 600

Accumulated depreciation – Equipment 73 940

Debtors control 71 820

Creditors control 16 680

Inventory 69 730

Bank 90 000

Cash float 1 000

Provision for bad debts 3 940

Sales 1 330 950

Sales returns 950

Cost of sales 823 450

Stationery 1 630

Discount received 2 090

Bad debts 1 350

Bad debts recovered 550

Insurance 22 800

Interest on loan 32 300

Bank charges 5 700

Rent income 124 030

Salaries and wages 164 430

Accounting fees 31 470

2 875 230 2 875 230

Page 18: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 17

Additional information:

a) Depreciation on vehicles is calculated at 30% p.a. on the diminishing balance method. A

new vehicle with a cost price of R133 000 was bought on 01 November 2012 and was

correctly recorded.

b) Interest is capitalised on the mortgage loan. The annual loan statement from Pride Bank

reflected the following:

PRIDE BANK

LOAN STATEMENT ON 28 FEBRUARY 2013

R

Balance at the beginning of the financial year 304 000

Repayments during the year (6 500*12) 78 000

Interest capitalised ?

Balance at the end of the financial year 288 700

c) The fair value of the Land at 28 February 2013 is R900 000. No entry was made for this.

d) The account of R Kingful, who owes R1 250, must be written off. Adjust the provision for

bad debts to 4% of outstanding debts.

e) A debtor, L Ndlovu, whose account has previously been written off, paid R120. The

bookkeeper incorrectly credited the amount to the bad debts account. Correct the error.

f) Stationery on hand at 28 February 2013 is estimated at R190.

g) A physical stock taking on 28 February 2013 revealed the value of stock on hand

as R67 240.

h) An annual insurance premium of R11 400 was paid on 01 January 2013.

i) The rent received from a tenant included the rent for March 2013. The rent was

increased by R912 per month on 01 October 2012.

Required:

5.1 Prepare the Statement of Comprehensive Income for 28 February 2013. (20)

5.2 Prepare the Statement of Financial Position as at 28 February 2013. (20)

Page 19: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 18

CHAPTER 3

CONTROL ACCOUNTS AND RECONCILIATIONS

QUESTION 1 [25]

The following information relates to Ntuzuma Traders:

1. Balance on the Debtors Control Account on 01 April 2013 R26 000

2. Total of the List of Debtors Balances at 30 April 2013 R23 610

Totals of the Subsidiary Journals for April 2013 are as follows:

Cash Receipts Journal:

R

Bank 15 600

Debtors Control 13 100

Creditors Control 200

Sales 11 000

Discount Allowed (500)

Sundry Accounts 1 800

Cash Payments Journal:

R

Bank 17 200

Debtors Control 100

Creditors Control 6 450

Purchases 8 750

Discount Received (600)

Sundry Accounts 2 500

Page 20: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 19

R

Sales Journal 11 700

Purchases Journal 9 000

Sales returns Journal 1 300

General Journal: Debits in respect of debtors

Credits in respect of debtors

200

300

Additional information:

a) All sales exclude vat. The sales journal was under-cast by R200.

b) Interest of R100, charged to a debtors account during April 2013, was correctly posted to

the relevant debtors account in the debtors’ ledger and to the interest account in the

general ledger but the contra entry was posted to the creditors control account.

c) Sales of R1 190 which has been recorded correctly in the sales journal, was entered in

the account of debtor N. Nel as R1 100.

d) A credit note for R50 was recorded correctly in the sales returns journal, but was

erroneously posted to the wrong side of R. Raja’s account.

e) A cheque for R250 received from B. Bell was entered on the credit side of D. Dell’s

account.

f) Redundant machinery that was sold on credit for R600 to S. Sithole has not yet been

recorded in the books.

g) A cheque for R550 received from L. Long was returned by the bank marked “r/d”. No

entry has been made regarding this “r/d” cheque.

h) Debtor P. Pod who owed R300 was declared insolvent. His estate paid 40 cents in the

rand. All the relevant entries must still be recorded in the books.

Required:

1.1 Prepare the Debtors Control Account for April 2013. (18)

1.2 Prepare the Reconciliation of the total of the list of debtors’ balance with the final

balance of the control account as calculated in 1.1 above. (7)

Page 21: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 20

QUESTION 2 [25]

You are provided with the information relating to SA Traders. The bookkeeper has made a few

errors when reconciling the Debtors’ Control Account to the Debtors’ List.

1. The bookkeeper discovered that he had made a number of errors when preparing the

Debtors’ Ledger Accounts.

2. The Debtors Control Account and the Debtors’ list did not reconcile. The difference is

R 6 470. The following summary was prepared on 31 August 2013:

R

Balance of the Debtors’ Control Account 70 663

Total of the Debtors’ List 77 133

Sunnyside Traders 17 600

Thembisa Traders 55 476

Tildai Traders 3 400

Mondo Stores 660

Difference 6 470

3. Errors on the account of Sunnyside Traders

Interest on the account was calculated incorrectly. Adjust for an additional R165

interest.

VAT at 14% was omitted on Invoice 868 dated 31 July 2013. Total sales,

excluding VAT, amounted to R16 500.

Page 22: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 21

4. Errors on the account of Thembisa Traders

A credit note of R3 080 was incorrectly reflected in the Debtors’ Ledger Account

as a debit entry. The general ledger is incorrect.

Thembisa Traders claimed payment of R13 200 last month,this is not reflected

on their statement. Investigators revealed that Thembisa Traders’ payment was

incorrectly posted to the account of another debtor, Sunnyside Traders.

Thembisa Traders had issued a dishonoured cheque of R2 750 in settlement of

an amount of R3 100. The CRJ and CPJ entries were correctly recorded. The

cancellation of the discount was not reflected in the Debtors’ Ledger Account.

The control account is correct.

5. Additional errors reflected on the Debtors’ Reconciliation Statement:

Mondo Stores’, a debtor, a debt of R660 has been written off as irrecoverable.

The amount was posted to the Debtors’ Control account but not to the Debtors’

personal account.

Tildai Suppliers are reflected in the Debtors’ Ledger and the Creditors’ Ledger.

Their credit balance of R2 124 in the Creditors’ Ledger is to be offset against

their account in the Debtors’ Ledger.

Required:

2.1 SA Traders requires their new customers to provide personal details, including

proof of residence, before opening accounts. Briefly explain why this is necessary.

List 2 points. (4)

2.2 Prepare the correct Debtors’ List on 31 August 2013 and show how you would

adjust the Debtors’ Control Account. (21)

Page 23: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 22

QUESTION 3 [25]

Crystal Traders sells glassware for cash and on credit. Although their credit terms are 60 days,

they budget on the expectation that 80% of debtors will meet these terms.

1. Balance of Debtors’ Control Account on 31 March 2013, R200 000.

2. Balances as per Debtors’ Ledger on 31 March 2013:

M Carey R 64 500

R Jansen R 41 200

S Wonder R 23 000

C Dion R 51 500

P Collins R 7 900

TOTAL R188 100

3. The following errors and omissions were discovered and must be corrected:

a) The Debtors’ Journal has been overcast by R2 600.

b) An invoice issued to S Wonder for R1 800 had not yet been recorded in the books of

Crystal Traders.

c) Stock sold on credit to P. Collins was incorrectly charged to the account of

R. Jansen, R8 300.

d) An invoice issued to P Collins for R6 000 had been posted to the wrong side of his

account.

e) A cheque of R13 500, originally received from R. Jansen in settlement of an invoice

of R15 000, was returned by the bank due to insufficient funds. No entries have yet

been made.

f) Goods sold on credit to S Wonder for R5 800 were correctly recorded in the Debtors’

Journal but incorrectly posted as R8 500 to S Wonder’s account in the Debtors’

Ledger.

Page 24: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 23

Required:

3.1 Explain why the Debtors’ Control Account should correspond with the Debtors’ List. (2)

3.2 Explain TWO processes the bookkeeper should follow if he/she discovers a difference

between the Debtors Control Account and the Debtors’ List from the Debtors’ Ledger. (2)

3.3 Calculate the following:

3.3.1 The correct closing balance of the Debtors Control Account on 31 March 2013. (9)

3.3.2 The correct amounts owing by the following debtors of Crystal Traders: (12)

a) R Jansen

b) S Wonder

c) P Collins

QUESTION 4 [20]

Mr Swart, the owner of Swart Traders, receives a statement from one of his suppliers by the

name of Gerald and Co. for the month ended 28 February 2013. Mr Swart discovers the

following errors while comparing Gerald and Co.’s statement with their account in his payables

ledger:

1. Invoice 1410 for R300 has been recognised twice in Swart’s records.

2. Invoice 1416 for R24 has been entered as purchases returns on Gerald and Co.’s

statement.

3. Invoice 1419 for R140 has been entered twice on Gerald and Co.’s statement.

4. Invoice 1516 is correctly reflected on Gerald and Co.’s statement as R120 (after a trade

discount of 20%) while the amount is shown in Swart’s records before trade discount

(Swart is entitled to the trade discount.)

5. Invoice 1546 for R60 has been recognised in Swart’s records as purchases returns.

6. The “amount due” on their statement of 31 January 2013 was R400. It was paid after the

deduction of 5% cash discount. The amount was received by Gerald and Co. Only on 04

March 2013 and, therefore, they do not allow the discount. The payment and discount

were recognised in Swart’s statement in February 2013.

Page 25: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 24

7. The balance of Gerald and Co.’s account in Swart’s payables ledger on 28 February

2013, before the correction of the above errors, amounts to R860.

8. Swart wishes to pay their account by 15 March 2013 in order to enjoy the benefit of the

30 das, 5% cash discount offered by them.

Required:

4.1 Calculate the amount that will be payable by Swart before 15 March 2013.

Hint: Prepare the creditors account of Gerald and CO. (15)

4.2 Calculate the balance on Gerald and Co.’s statement as at 28 February 2013. (5)

QUESTION 5 [25]

The accountant of Ms Blombos, owner of Blombos Nurseries, prepared the following payable

account on 30 April 2013.

Payable: Impalalelie

2013

April 10 Bank 3 630

11 Sales 1 870

Purchase Returns 342

24 Bank 2 420

30 Bank 4 050

Balance c/d 4 236

16 548

2013

April 01 Balance 2 000

06 Purchases 3 850

10 Discount received 330

15 Purchases 5 200

24 Discount received 363

26 Purchases 4 400

30 Discount received 405

16 548

2013

May 01 Balance b/d 4 236

Page 26: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 25

On 30 April 2013 Ms Blombos received the following statement from Impalalelie:

BLOMBOS NURSERIES

Statement

2013

April

Debit

R

Credit

R

Balance

R

01 Balance 2 300

06 Sales 3 850

10 Bank 3 630

Discount 363

11 Sales returns 300

15 Sales 5 720

19 Sales 2 310

24 Bank 2 420

Discount 121

29 Sales 1 001

The opinion of Ms Blombos is that her entity owes only R14 236 to Impalalelie and she is

therefore upset that, according to the statement, she owes R13 187. She requests that you do

the necessary reconciliation.

The following information is available:

1. During March 2013 there was a debit error of R300 on the statement prepared by

Impalalelie. This error is still not rectified.

2. Ms Blombos has an agreement with Impalalelie that a 10% discount will be received on

each cheque payment.

3. The sales of R1 870 on 11 April in the account of Impalalelie is in respect of another

customer.

4. On 11 April an entry purchase returns of R342 was made in the account of Impalalelie.

5. The sales of R2 310 on 19 April is in respect of another customer.

Page 27: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 26

6. The purchase of R4 400 on 26 April in the account of Impalalelie is an erroneous entry.

7. The sales on 29 April for R1 001 were definitely for Blombos Nurseries.

8. The balance of entries in the account of Impalalelie (except discount received) and the

statement of Blombos are correct.

Required:

5.1 Prepare the correct account for Impalalelie in the ledger of Blombos Nurseries.

Hint: Start with the credit balance of R2 000. (15)

5.2 Reconcile the balance of R13 187 on the statement to Blombos Nurseries so that

it corresponds with the balance of the ledger account. (10)

QUESTION 6 [30]

The following information was obtained from the accounting records of Naidoo Traders on

31 March 2013:

Balances 01 March 2013

R

Debtors Control 17 379

Creditors Control 14 350

Totals on 01 March 2013

R

Debtors List 19 793

Creditors List 16 562

Cash Receipts Journal:

R

Sales column 51 590

Debtors control column 63 462

Sundry column 10 318

Page 28: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 27

Cash Payments Journal:

R

Purchases column 57 820

Creditors control column 56 602

Sundry column 19 275

Totals of subsidiary journals for March 2013

R

Sales journal 66 080

Purchases journal 60 900

Sales returns journal 1 344

Purchases returns journal 1 080

Sundry: Debits in respect of debtors

Credits in respect of debtors

Debits in respect of creditors

Credits in respect of creditors

778

419

34

250

Page 29: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 28

Additional Information:

1. An entry in the sales returns journal of R224 in respect of a receivable, Mr Double

Delight, was posted to the debit side of his account.

2. An amount of R163 in the creditor’s column of the cash payments journal is in respect of

a dishonoured cheque which was received from Mr Oyster Pearl. The amount was

indeed correctly posted to Mr Oyster Pearl’s account.

3. Interest of R85 still has to be charged on the overdue account of Mr Oklahoma.

4. Sundry creditor’s credit includes R50 in respect of interest charged by Mr Satchmo,

which has to be cancelled.

5. The debtor’s column in the cash receipts journal includes R125 received from Mr

Burning Sky, whose account was previously written off as uncollectible. It was not

posted to Mr Burning Sky’s account.

6. The purchases journal was overstated by R400.

7. An amount of R166 in the purchases returns journal was posted as R766 to the

creditors, Mr Potch Pearl’s account.

Required:

6.1 Prepare the debtors and creditors control accounts for March 2013. (20)

Page 30: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 29

CHAPTER 4

INVENTORY

QUESTION 1 [10]

Dow Jones The owner of Jones Cycles took goods with the selling price of R3 000 for his own

personal use. Selling prices are determined by a markup of 25% on cost price. The perpetual

inventory system is used.

Required:

1.1 Prepare the adjusting journal and present the accounting equation for the

above transaction. (6)

1.2 Differentiate between the perpetual inventory system and the periodic

inventory system. (4)

QUESTION 2 [10]

On 31 January 2012 Mr Gold purchased goods on credit from Tulip Traders for R 2 228. The

amount is subject to a discount of R 228 if it is settled within 30 days.

On the 08 February 2012 the account was settled. On the 01 March 2012 the goods were sold

on credit for R 3 500.

Required:

Record the above transaction using:

a) The Perpetual Inventory System. (5)

b) The Periodic Inventory System. (5)

Page 31: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 30

QUESTION 3 [10]

The following transactions pertaining to Inventory of SID TRADERS took place during the year.

Sid Traders uses the PERIODIC inventory system; the year end is the 28 February 2013.

1. Sid purchased goods on credit from the following wholesalers:

AA Wholesalers R 15 000

AD Wholesalers R 10 000

XX Wholesalers R 12 000

2. Railage on purchases amounted to R3 000.

3. Returned R4 500 worth of goods to AA Wholesalers.

4. Issued invoices to the following customers for goods sold:

J Joy R25 000

T Tan R14 500

B Brown R 5 000

B Blue R 2 000

5. Carriage on sales was R3 500.

6. Inventory at 01 March 2012 was R10 000 and at 28 February 2013 was R4 000.

Required:

3.1 Prepare the Trading Account for the 28 February 2013. (8)

3.2 Calculate Gross Profit Percentage for the year using information above. (2)

Page 32: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 31

QUESTION 4 [15]

The following information was obtained from the accounting records of Wood Traders for year

ended 31 December 2013:

2013

R

2012

R

Sales 250 000 200 000

Purchases 210 000 125 000

Opening stock 30 000 5 000

Purchase returns 5 000 3 500

Carriage on sales 4 000 5 000

Import duty 10 000 9 000

Required:

If the same gross profit percentage on sales applies to 2013 as that which was applicable to

2012, calculate the inventories on hand as at 31 December 2013.

Page 33: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 32

QUESTION 5 [20]

The following balances were obtained from the records of Very Easy Bazaar on 31 December

2013:

2013

R

Cash Sales 9 000

Credit Sales 20 000

Purchase returns 1 300

Sales returns 1 800

Carriage on sales 1 200

Carriage on purchases 500

Credit purchases 15 000

Cash purchases 6 200

Inventory 01/01/2013 3 500

Inventory 31/12/2013 4 000

Required:

5.1 Close the relevant accounts with journal entries and set off the relevant accounts

against the cost of sales account. (16)

5.2 Calculate the Gross Profit in the trading account. (4)

Page 34: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 33

QUESTION 6 [20]

The following balances of Taz traders are given to you:

2013

R

2012

R

Sales 400 000 500 000

Purchases 260 000 360 000

Opening stock 120 000

Closing stock 130 000

Sales returns 40 000

Purchase returns 10 000

Required:

Calculate the closing inventories on 31 December 2013, assume gross profit is stays the same

for both years.

Hint: to be able to do this, you should first do the trading statement for the year ended

31 December 2012 and calculate the gross profit.

Page 35: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 34

QUESTION 7 [20]

During the night of 11 May 2013, a fire broke out in the buildings of Sithole Retailers. Inventories

with a selling price of R570 were stored on other premises and, therefore, not destroyed. All

other inventories were destroyed.

The investigation shows the following:

R

Inventories 01 January 2013 33 000

Transactions for the period 01 January 2013 to 11 May 2013:

Sales journal 501 600

Sales column in cash receipts journal 239 400

Purchases journal 285 342

Purchases column in cash payments journal 98 040

Purchase returns journal 18 240

Additional Information:

1. Merchandise invoiced at R399 to Sithole Retailers was recognised in the purchases

journal on 11 May. Sithole Retailers received this merchandise only on 13 May.

2. Sithole Retailers sold merchandise amounting to R1 140 on 11 May 2013 and

recognised it in the sales journals on the same date. This merchandise should, however,

be delivered on 13 May 2013.

3. The policy of Sithole Retailers is to maintain a profit of 50% on sales.

Required:

Determine the cost of the inventories destroyed by the fire.

Page 36: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 35

CHAPTER 5

DISPOSAL OF PROPERTY PLANT AND EQUIPMENT

QUESTION 1 [20]

An item of machinery was purchased on 1 April 2010 for R100 000. The same item of

machinery was traded in on a new model on 30 June 2013 and R60 000 was received as a

trade in. The depreciation policy on machinery is 20% per annum, based on the diminishing

balance method. The financial year-end is 31 December.

1.1 Calculate the depreciation for years 2011, 2012 and 2013 respectively. (18)

1.2 Determine whether upon disposal of the asset, if a profit or loss exist. (2)

QUESTION 2 [20]

The following balances were extracted from the books of DCC Manufacturers at 30 June 2013

Machine A at cost R500 000

Machine B at cost R450 000

Accumulated depreciation: Machine A ?

Accumulated depreciation: Machine B R100 000

Additional Information:

1) Machine A and Machine B were acquired on 1 November 2011.

2) Depreciation on machinery is provided for at 20% p.a. according to the diminishing

balance method.

3) On 30 November 2012 DCC Manufacturers traded in Machine A at R200 000 for a

new improved machine with a cost price of R600 000. The balance is interest free and

will be paid in three equal instalments. Installation costs of R200 000 was paid in cash

and production with the new machine started on 1 December 2012.

Page 37: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 36

Required:

Prepare the following accounts in the General Ledger of DCC Manufacturers:

a) Machinery (5)

b) Accumulated Depreciation (5)

c) Depreciation (5)

d) Asset Disposal (5)

NB: All workings must be shown

QUESTION 3 [10]

Beta Foil Manufacturers is a firm specializing in the manufacturing of foil chocolate wrappers

and chip packets. The accounting department personnel of Beta Foil Manufacturers provided

the following financial information on 31 December 2013:

Type of

asset

Cost Date of

purchase

Residual

value

Depreciation

method

Rate of

depreciation

Machine A R1 200 000 01 January

2010

R50 000 Straight line 20% p.a.

On 01 January 2013, without disrupting operations, Machine A was improved. After the

improvements had been made the firm decided to re-estimate the depreciation rate for Machine

A as follows:

Type of

asset

Improvement

Cost

New useful

life from 01

Jan 2013

Residual

value

Depreciation

method

Rate of

depreciation

Machine A R490 000 5 years R80 000 Straight line 20% p.a.

On 01 October 2013, Machine A broke down and was damaged beyond repair. The insurance

company was prepared to pay only R55 000.

Page 38: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 37

Required:

Prepare the Asset Disposal Account as it would appear in the general ledger after necessary

general journal entries have been recorded and posted. (Show all workings).

QUESTION 4 [15]

Lumber Ltd commenced with the manufacturing of furniture products in 2013 at a new plant.

The plant was purchased on the 1 January 2013 for R700 000. During January 2013, some

equipment was installed and other equipment was modified. Installation and modification costs

incurred amounted to R130 000. For security reasons a fence was erected at the plant at a cost

of R20 000. The plant was ready for use on 1 February 2013. An opening function was held in

the plant on 15 February 2013 at a cost of R50 000 in order to entertain customers and to

introduce the new products to be manufactured at this plant. Production only started on

1 March 2013.

The plant has a useful life of 10 years and the residual value was estimated at R200 000.

Expected dismantling costs amount to R140 000 (discounted present value of dismantling costs

equals R100 000).

At the end of August 2013 heavy rain caused severe damage to the plant, the plant stood idle till

December 2013. On 28 December it was decided by management to sell the plant

for R500 000.

The company’s year-end is 31 December.

Required:

4.1 Calculate the cost of the plant. (3)

4.2 Calculate depreciation for the year ended 31 December 2013. (8)

4.3 Determine whether upon disposal of the asset, if a profit or loss exist. (4)

Page 39: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 38

CHAPTER 6

PARTNERSHIPS

QUESTION 1 [20]

The following balances appeared, amongst others, in the accounting records of ND Partners on

30 June 2013:

DEBIT CREDIT

Profit 53 175

Capital

Nicola 40 000

Devina 50 000

Current Accounts

Nicola 20 000

Devina 10 000

Drawings

Nicola 15 000

Devina 5 000

Additional Information

1. Partners are entitled to 8% interest per annum on their capital and 6% interest per

annum on the balance of their current accounts, as at the beginning of the year.

2. The partnership agreement stipulates that partner Devina will receive annual

commission of 15% on profit

3. Nicola and Devina share profits or losses in ratio to their capital after all adjustments

4. No salaries are paid to partners

Page 40: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 39

Required:

1.1 Journalise the profit sharing between the partners. (4)

1.2 Prepare the following ledger accounts:

1.2.1 Current Account for Nicola. (4)

1.2.2 Current Account for Devina. (4)

1.3 Prepare the Statement of Changes in Equity for the year ended 30 June 2013. (8)

QUESTION 2 [30]

Jan and Piet trade in partnership as JP Traders. The following is their trial balance for the year

ended 31 December 2013:

DEBIT CREDIT

R R

Capital

Jan 18 000

Piet 14 000

Current Accounts

Jan 2 600

Piet 8 000

Drawings

Jan 1 892

Piet 2 000

Vehicles 30 000

Furniture 20 000

Accumulated depreciation: Vehicles

01/01/2013

15 000

Accumulated depreciation: Furniture

01/01/2013

6 000

Vat payable 3 610

Inventories 10 000

Debtors 20 008

Creditors 30 000

Page 41: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 40

Bank 13 610

Purchases 80 000

Freight 1 600

Salaries 30 000

Printing 300

Sales 120 000

Rates 600

Repairs 2 000

214 610 214 610

Additional Information

1. The value of inventory on 31 December 2013 was R 15 000

2. Depreciation must still be provided for as follows:

Vehicles at 10% per annum on cost

Furniture at 15% per annum on diminishing balance method

3. R 228 must be written off as irrecoverable and a provision of R89 for bad debts must be

created

4. Salaries of R 3 000 were outstanding which was paid on the 31 December 2013, this

was however credited to creditors

5. Stationery on hand as at 31 December 2013 was R100

6. The partnership agreement stipulates the following:

6.1 Partners will receive 10% interest on capital annually and 8% interest allowed on

current accounts

6.2 Jan will receive a salary of R 3 000 per annum and Piet a salary of R 5 000

6.3 Jan and Piet divide profits or losses in the ratio of 1:2

Required:

2.1 Prepare the Statement of Comprehensive Income for the year ended

31 December 2013. (12)

2.2 Prepare the Statement of Changes in Equity for the year ended 31 December 2013. (12)

2.3 List the essential elements of a partnership agreement. (6)

Page 42: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 41

QUESTION 3 [45]

The following information was extracted from the books of BRADSPIT STORES, a partnership

business with partners B. Brad and S. Spit, on 28 February 2014, the last day of the financial

year-end.

PRE ADJUSTED TRIAL BALANCE OF BRADSPIT STORES AT 28 FEBRAURY 2014.

DEBIT CREDIT

R R

Capital: B Brad 90 000

Capital: S Spit 60 000

Current Account: B Brad (01.03.2013) 15 400

Current Account: S Spit (01.03.2013) 4 800

Drawings: B Brad 28 600

Drawings: S Spit 32 100

Loan: ABSA (18% p.a.) 25 000

Land and Buildings at cost 160 000

Equipment at cost 73 000

Vehicles at cost 85 000

Accumulated Depreciation-Equipment

(01.03.2013)

21 900

Accumulated Depreciation-Vehicles

(01.03.2013)

30 600

Inventory 56 240

Trade Debtors 43 975

Provision for Bad Debts 2 750

Trade Creditors 31 000

Bank 570

Petty Cash 250

Cash Float 1 000

Sales 683 605

Sales Returns 18 230

Cost of Sales 276 420

Page 43: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 42

Salaries 123 000

Rates 8 000

Municipal Services 1 570

Advertising 12 700

Discount Received 1 230

Bad Debts 585

Packing Material 4 130

Insurance 7 300

Rent Income 7 700

Bank Charges 1 050

Interest on Overdraft 2 670

Interest on Loan 4 125

Stationery 3 120

Other Expenses 21 890

969 755 969 755

Additional Information:

1) Goods to the value of R4 200 were delivered to the premises of a customer on

28 February 2014. The cost price of the goods was R2 900. No entry has been made

for this transaction.

2) The physical inventory taken on 28 February 2014 reflected the following items on hand:

Trading inventory R52 670

Packing materials R 940

3) Provide for outstanding interest on loan.

4) Insurance included a premium of R3 600 for the period 1 November 2013 to

31 October 2014.

5) On 25 February 2014, B. Brad took stationery with a value of R90, for personal use. No

entry had been made for this transaction.

6) The monthly rent for February 2014 had not yet been received.

7) The account of a debtor, D. Daniel, who owed R270, must be written off.

8) The provision for bad debts must be adjusted to 5% of debtors.

Page 44: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 43

9) Provide for depreciation as follows:

Equipment – R10 950

Vehicles - R10 880

10) The partnership agreement stipulated the following:

a. Each partner is entitled to a monthly salary of R2 500

b. The partners are to receive interest at the rate of 10% p.a. on the capital

invested. NOTE: B. Brad had increased his capital by depositing an additional

amount of R30 000 into the business bank account on 31 August 2013.

c. The remaining profit/loss is to be shared in proportion of the capital balances of

the partners at the end of the financial year.

Required:

3.1 The Statement of Comprehensive Income for year ended 28 February 2014. (15)

3.2 Prepare the following accounts:

a) Current Account: B. Brad (7)

b) Current Account: S. Spit (7)

3.3 The Statement of Changes in Equity for 28 February 2014 (16)

Page 45: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 44

QUESTION 4 [35]

Kit and Kat trade in partnership as KitKat Traders. The following is their trial balance for the year

ended 31 December 2012:

DEBIT CREDIT

R R

Capital

Kit 30 000

Kat 50 000

Current Accounts

Kit (01 January 2012) 7 500

Kat (01 January 2012) 5 400

Drawings

Kit 2 500

Kat 5 700

Motor vehicle at cost 145 000

Furniture and Fittings at cost 75 000

Accumulated depreciation: Motor

vehicles (31 December 2011)

25 000

Accumulated depreciation: Furniture and

Fittings (31 December 2011)

15 000

Mortgage Loan at 15% 75 000

Fixed deposit at 12% 60 000

UIF payable 4 500

Inventory (01 January 2012) 20 000

Debtors 23 350

Creditors 15 550

Bank 14 000

Purchases 155 000

Import duty 2 300

Purchase returns 6 300

Salaries 40 000

Settlement discount 1 200

Page 46: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 45

Stationery 900

Sales 370 600

Rent expense 11 000

Repairs 4 300

Sales Returns 5 600

Insurance 24 000

597 350 597 350

Additional Information:

Year-end adjustments

1. The value of inventory at 31 December 2012 was R 15 000.

2. Goods to the value of R3 200 were delivered to a customer on the 31 December 2012.

3. Depreciation must still be provided for as follows:

Motor vehicles at 20% per annum on cost method.

Furniture and Fittings at 15% per annum on diminishing balance method, Note new

furniture was purchased on 31 June 2012 for R5 000.

4. R 250 must be written off as irrecoverable and a provision of R159 for bad debts must

be created.

5. Salaries of R 3 000 were outstanding which was paid on the 31 December 2012; this

was however debited to creditors and credited to bank.

6. Stationery on hand as at 31 December 2012 was R100.

7. Interest on mortgage loan is still outstanding for the year.

8. Interest on fixed deposit is still receivable for the year.

9. Rent expense paid above is for 11 months.

10. Insurance is paid for the period 30 June 2012 to 01 July 2013.

11. Land & Buildings consist of shop 1a purchased on 20 January 2013 for R90 000. The

policy for KitKat Traders is not to depreciate Land & Buildings.

Page 47: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 46

Terms of partnership agreement

12. Partners will receive 10% interest on capital annually and 8% interest allowed on current

accounts.

13. Interest is to be charged at 5% on partner’s drawings accounts.

14. Kit will receive a salary of R 3 000 per annum.

15. Kat will receive 10% annual commission on the profit after all adjustments.

16. Kit and Kat divide profits or losses in the ratio of 3:5.

Required:

4.1 Prepare the Statement of Changes in Equity for 31 December 2012. (20)

4.2 Prepare the Property, plant and equipment note for 31 December 2012. (15)

Page 48: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 47

QUESTION 5 [40]

Mr House and Ms Flat started a property investment partnership in 2007 in a profit sharing

ratio 3:2. At the end of the financial year on 01 January 2013, the balances in the capital

accounts were as follows:

Mr House Mr Flat

Capital account 1 260 000 850 000

In December 2013 Mr House passed away and the partnership had to be dissolved. The

following information pertains to the dissolution:

a) The assets of the partnership realised R7 400 000, the carrying value of the assets were

R6 200 000.

b) Long term liabilities of R4 000 000 and current liabilities of R30 000 were settled.

c) Costs of R100 000 were incurred to realise the assets.

d) The net profit for the year was R185 500.

e) A loan from Mr House, treated as an external loan, of R60 000 was settled.

f) The partners drew the following amounts from the partnership over the year, House

R1 500 per month and Flat R1 000 per month.

g) The bank balance before the dissolution was R110 000.

All transactions with partners are recorded in their capital accounts.

Required:

Prepare the Appropriation, Capital and Bank accounts for the dissolution of the partnership.

Page 49: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 48

CHAPTER 7

CLOSE CORPORATIONS

QUESTION 1 [20]

Answer the following questions:

1. What are the benefits of a close corporation over a private company? (6)

2. Mark and Ajith started a water delivery business together in the form of a CC.

Mark contributed cash at incorporation of R5 000 and Ajith a scooter to the value

of R3 000. The profit sharing ratio was agreed to be 1:1, and salaries were paid

to Mark and Ajith of R61 000 and R55 000 respectively. Profits for the year

amounted to R50 000 and a distribution of R30 000 was agreed upon and paid

on the last day of the year. Mark is an avid theatre-goer and therefore withdraws

all his amounts immediately, while Ajith has another job and leaves his share in

the CC as a short term loan.

2.1 Process the journal entry to record the receipt of capital at incorporation of the

Close Corporation. (4)

2.2 Process the journal entry to record the salaries paid by the Close Corporation

to each member. (4)

3. Briefly discuss whether a distribution of a CC is different from a dividend paid by a

company. (3)

4. Briefly explain why a member would choose to contribute at the incorporation of a

CC through a member’s loan account rather than a member’s contribution account. (3)

Page 50: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 49

QUESTION 2 [20]

The member’s interest of Goldilox CC as at 28 February 2014 was as follows:

Taj 50%

Ally 25%

Tari 25%

Members Contribution 54 000

Retained Earnings 10 000

Net assets value 64 000

On 28 February 2014 Taj resigns and sells his interest to the CC for R 30 000

Required:

3.2 Journalise the above transaction. (2)

3.3 Prepare the Statement of Financial Position as at 28 February 2014. (10)

3.4 Prepare the Statement of Changes in Net Investment for 28 February 2014. (8)

Page 51: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 50

QUESTION 3 [30]

You are the accountant and member of Riviera CC. On 30 September 2013, the following

information was available.

RIVIERA CC

2013

R

2012

R

Land and buildings 700 000 600 000

Machinery at carrying amount 250 000 200 000

Vehicles at carrying amount 400 000 600 000

Retained earnings at beginning of the year ? 30 000

Profit for the year 130 000 150 000

Surplus on revaluation of land and buildings 90 000 50 000

Member’s contribution 240 000 210 000

Additional Information

1. The members of Riviera CC are Mr Fitz, Mrs Fitz and Mr Gerald with interests of 45%,

30% and 25% respectively.

2. On 01 February 2013, Mrs Fitz donated a vehicle with a value of R30 000 to the CC.

This donation serves as an additional members’ contribution.

3. Salaries of R40 000, R30 000 and R35 000 were paid to Mr Fitz, Mrs Fitz and Mr Gerald

respectively.

4. On 30 September 2013 and 30 September 2012 profits of R120 000 and R100 000

respectively were distributed to members in the ratio of their interests.

Required:

3.1 Prepare the Statement of Changes in Net Investment for September 2013. (24)

3.2 List 3 professional bodies whose members qualify for appointment as an

accounting officer of close corporation. (6)

Page 52: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 51

QUESTION 4 [30]

The following information was extracted from the books of TASCO CC, on 31 December 2013,

the last day of the financial year.

TASCO CC

TRIAL BALANCE AS AT 31 DECEMBER 2013

DEBIT CREDIT

Member’s Contribution: TAU 160 000

Member’s Contribution: OLI 40 000

Land and Buildings at cost 520 000

Equipment at cost 55 000

Vehicles at cost 125 000

Accumulated depreciation on equipment

(01/01/2013)

10 000

Accumulated depreciation on vehicles (01/01/2013) 65 000

Debtors Control 23 000

Creditors Control 42 000

Bank 17 500

Fixed Deposit 70 000

Mortgage Loan 250 000

Provision for bad debts 1 650

Retained Earnings (01/01/2013) 30 500

SARS Income tax 49 000

Loan to OLI 50 000

Loan from TAU 60 000

Sales 602 000

Purchases 225 000

Inventory (01/01/2012) 25 000

Salary : TAU 50 000

Salary: OLI 20 000

Settlement discount granted 1 550

Stationery 2 500

Page 53: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 52

Carriage on purchases 6 500

Telephone and faxes 10 200

Subscription fee 1 200

Insurance 5 500

Repairs 4 200

1 261 150 1 261 150

Additional Information

1. The inventory at 31 December 2013 amounted to R 43 000

2. Included in sales is an amount of R 7 000 received on 31 December 2013 for a deposit

on an order to be completed during the next financial year.

3. Provision for bad debts must be adjusted to R1 500

4. Bad debts written off must be R 1 500

5. Land & Buildings consist of shop 1a purchased on 20 January 2013 for R90 000. The

policy for Tasco CC is not to depreciate Land & Buildings

6. Deprecation must still be provided as follows:

Vehicles 20% pa on diminishing balance method

Equipment 10% pa on cost

7. All settlement discounts were claimed

8. Water and electricity is still outstanding at year end, R4 000

9. Insurance above is only recorded for 11 months

10. Provision still has to be made for interest on the fixed deposit at 15% p.a. receivable on

the 01 January 2014.

11. Interest on mortgage loan must still be provided at 10% pa, 40% of the loan will be

repaid on 01 August 2014.

12. The loan to member OLI was granted on the 01 June 2013 and interest of 12% p.a. must

be calculated.

Page 54: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 53

13. The members decided to distribute 30% of the profit of the close corporation, after

taxation, in proportion to their contribution. These amounts will not be paid out in cash

but will be left in the close corporation as loans to the corporation. These loans are

unsecured and an interest rate of 20% p.a. is applicable. It was further decided that 50%

of these loans must be repaid on 31 March 2013. The balances on these accounts are

repayable on 31 December 2020.

14. Actual Income Tax for the year is R 89 850.

Required:

4.1 Prepare the Statement of Comprehensive Income for 31 December 2013. (20)

4.2 Prepare the Statement of Changes in Net Investment for 31 December 2013. (10)

Page 55: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 54

CHAPTER 8

COMPANIES

QUESTION 1 [20]

Scenario 1

Stress Management Ltd was registered on the 01 June 2013 with an authorised share capital

consisting of 100 000 ordinary shares of R3 each. The company offered 20 000 ordinary shares

at par value to the founders of the company, all of which were taken up and paid for on the

01 August 2013. The company offered 40 000 ordinary shares at par value to the public.

Applications closed on the 30 September 2013, all shares were taken up by the public.

Scenario 2

Dogs Breakfast Ltd decided to raise further capital and therefore invited the public to subscribe

to 25 000 shares at R3.50 (par value R2.00). Subscriptions and applications for R20 000 shares

were received. The directors decided to allot the shares. The directors of the company declared

a dividend of R1.50 per share. The company paid R12 000 towards share issue expense.

Required:

Prepare the journal entries in the general ledger for each of the above scenarios. Narrations are

not required.

Page 56: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 55

QUESTION 2 [25]

Eland Limited was founded ten years ago with an authorized share capital of 1 400 000 shares.

The following balances were obtained from the records of the company as at 30 June 2013:

Ordinary share capital (700 000) R350 000

Retained Earnings R 22 000

During the reporting period until 30 June 2013 the following occurred:

1. On 01 October 2012 600 000 unissued ordinary shares were presented to the

public at R420 000. Until the closing date R427 000 were received. The shares

were proportionally allotted to the applications and surplus application money was

refunded.

2. On 01 January 2013 Sayed Entity (consisting of a motor vehicle at R190 000,

receivables R40 000 and payables of R50 000) was acquired by Eland Limited at

a price equal to the net asset value of the entity. The purchase price was settled

with R260 000 cash and 50 000 ordinary shares.

3. Profit for the year amounted to R10 800.

Required:

2.1 Journal entries in the records of Eland Limited for 1 and 2 above. (4)

2.2 Prepare the Statement of Changes in Equity for the year ended 30 June 2013. (15)

2.3 Show the Equity section of the Statement of Financial Position with applicable

notes as at 30 June 2013. (6)

Page 57: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 56

QUESTION 3 [30]

You are provided with information relating to Prime Limited for the year ended 28 February 2013

Figures extracted from the Pre-Adjusted Trial Balance on 28 February 2013

R

Ordinary share capital (R10 per share) 3 200 000

Fixed deposit 280 000

Vehicles 780 000

Equipment 350 000

Accumulated depreciation on vehicles 468 000

Accumulated depreciation on equipment 105 000

Inventory 325 000

Debtors control 65 000

Provision for bad debts 3 700

Mortgage loan from Quick Bank (12 % p.a.) 440 000

Sales 2 900 000

Sales Returns 18 500

Cost of sales 1 650 000

Rent income 200 700

Interest on mortgage loan 126 000

Directors fees 315 000

Auditors fees 30 000

Salaries and wages 372 000

Consumable stores 62 500

Bank charges 7 200

Sundry expenses 30 000

Bad debts 1 500

Page 58: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 57

Additional Information:

1. Inventory on hand according to a physical stock take on 28 February 2013 amounted to

R318 500.

2. The stock take revealed that the value of consumable stores used was R60 000.

3. The following entries appeared on the February bank statement but had not yet been

recorded in the books of the company:

a) Bank charges, R3 600.

b) A direct deposit by a debtor which had been written off as a bad debt in the previous

financial year, R1 900.

4. The account of H Howard, a debtor, must be written off as irrecoverable, R1 000.

5. Provision for bad debts must be adjusted to R3 200.

6. The interest on the loan for February 2013 has not yet been entered and no payment for

February has been made. Interest is capitalised.

7. Provide for depreciation as follows:

Vehicles at 20% p.a. on cost

Equipment at 15% p.a. on the diminishing balance method

8. The book keeper has made an error on 01 March 2012, a new issue of 20 000 ordinary

shares at R10.60 were recorded, but the share premium was not recorded. Authorised

share capital is 400 000 ordinary shares.

9. An interim dividend of 32 cents per share was paid, while final dividends declared was

24 cents per share.

10. Income tax is calculated at 30% of the net profit.

Required:

3.1 Prepare the Statement of Comprehensive Income for 28 February 2013. (20)

3.2 Prepare the Equity and Liabilities section for the Statement of Financial Position. (10)

Page 59: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 58

QUESTION 4 [30]

You are provided with the pre-adjustment trial balance of Dunhill Enterprises Ltd. on

28 February 2014 together with a list of adjustments. All the authorized share capital has been

issued.

DUNHILL ENTERPRISES LTD

PRE ADJUSTED TRIAL BALANCE FOR 28 FEBRUARY 2014

DEBIT

R

CREDIT

R

Ordinary share capital (R2 par value each) 850 000

Share premium 40 000

Retained income 173 000

Loan from Umgeni Lenders 84 500

Equipment 190 000

Vehicles 580 000

Accumulated depreciation on equipment 182 000

Accumulated depreciation on vehicles 136 000

Shares in Uptown Ltd. 240 000

Fixed Deposit 220 000

Inventory 429 000

Debtors Control 68 000

Provision for bad debts 3 000

Bank 51 200

Cash float 1 000

Petty cash 400

Creditors Control 51 800

Creditors for salaries 11 680

Pension fund 4 420

Medical aid fund 1 750

SARS (PAYE) 4 650

SARS (Income tax) 52 600

Sales 1 934 000

Sales returns 11 000

Page 60: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 59

Cost of sales 1 126 000

Advertising 7 300

Audit fees 25 000

Bad debts 5 300

Commission income 88 000

Interest on current account 900

Directors fees 155 000

Income from investments (dividends

received)

38 400

Insurance 17 400

Interest on fixed deposit 16 400

Packing materials 14 400

Rent expense 77 650

Salaries and wages 255 000

Vehicle expenses 34 800

Sundry expenses 16 950

Dividends on ordinary shares 42 500

Additional Information:

1. The bookkeeper has made an error on 1 March 2013 A new issue of 50 000 ordinary

shares at R2, 60 each has been recorded, but the share premium has been incorrectly

credited to the retained income account. The par value was correctly recorded. The

authorized share capital comprises 600 000 ordinary shares of R2 par value.

2. An old delivery vehicle was sold for R9 000 on 31 January 2014 but no entries have

been put through. The cost price of the vehicle was R51 000 and the accumulated

depreciation up to 1 March 2013 amounted to R36 400. Vehicles are depreciated at 20%

p.a. on cost. The purchaser has posted a cheque but it has not yet been received.

3. Depreciate equipment by 10% p.a. on cost (N.B. Inspect the cost and

Accumulated depreciation before you arrive at your answer.)

Page 61: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 60

4. A debtor returned defective stock with a selling price of R4 300 and a cost price of

R2 600. The stock was then returned to the suppliers, but no entries have been made.

5. During a burglary at the shop, stock costing of R14 000 was stolen. The insurance

company has agreed to pay out an amount of R11 000, but this has not yet been

received.

6. An employee was inadvertently omitted from the salaries journal. His details are as

follows:

Gross salary R6 800

PAYE deduction 18%

Pension deduction 7, 5%

Medical aid deduction R320

The business contributes on a rand-for-rand basis to the pension and medical funds.

The employer’s contributions are also debited to the Salaries and Wages account.

7. All the insurance premiums have been paid up to 31 May 2014. Appropriate reversal

were put through at the beginning of the year for prepayments last year.

8. The loan statements from Umgeni Lenders reflect the following:

Balance at the beginning of the year R130 000

Repayments during the year, including interest 45 500

Balance at the end of the year 103 500

Repayments of the loan over the next year excluding

interest 26 000

No entries have been made for interest during the year. Interest is capitalized to the

loan.

9. Further dividends of R20 400 are receivable from Uptown Traders Ltd at year-end.

10. The physical count at year end revealed the following on hand:

Trading stock R411 600

Packing materials 1 800

Page 62: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 61

11. The provision for bad debts is to be decreased by R600.

12. The rent has been paid one month in advance. N.B. the monthly rent increased by R450

on 1 November 2013.

13. A supplier has overpaid commission to Dunhill Enterprises, R2 200. This will be off-set

against future commission.

14. One of the fixed deposits, R75 000, matures within six months. The other fixed deposit

matures in 18 months’ time.

15 Further amounts are owed to the auditors, R3 000, and the two directors, R8 000 each.

16 A final dividend of 15 cents per share has been recommended by the directors.

17 Provide for income tax at 30% of the net income.

Required:

4.1 Prepare the Statement of Comprehensive Income for 28 February 2014. (18)

4.2 Prepare the Statement of Financial Position with the relevant notes

as at 28 February 2014. (12)

Page 63: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 62

CHAPTER 9

CASH FLOW STATEMENTS

QUESTION 1 [25]

The bookkeeper of Mobile Telephone Sales Ltd has provided you with the following balances

that have been extracted from the annual financial statements for the year ended 28 February

2013. The bookkeeper is interested to know whether the normal trading activities of the

business have generated sufficient cash to pay all its non-discretionary expenses during the

year.

2013 2012

Sales 1 204 000 1 139 600

Cost of sales 586 250 553 700

Noncurrent assets (carrying value) 240 000 180 000

Rent income 48 000 36 000

Operating expenses 564 200 532 350

Accrued interest expense 0 2 400

Profit on sale of asset 10 500 0

Long term loan (liability) 52 500 42 000

Trade receivables 14 000 26 250

Trade payables 24 500 31 500

South African Revenue Services (Income tax) 8 750 (Dr) 17 500 (Cr)

Shareholders for dividend 30 000 3 500

Share capital at 50c par value 300 000 175 000

Page 64: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 63

Additional Information:

The following additional information had been made available for the 2013 financial year:

a) Non-current assets with a carrying value R35 000 were sold for cash.

b) The company declared a final dividend of R30 000 on the last day of the current financial

year. An interim dividend of R22 000 had been declared on the 31 August 2012 and paid

in cash on 23 September 2012.

c) The bookkeeper estimated that the company would be liable for income tax to the

amount of R34 000.

d) Rent income earned during the year has been received and no amounts were

outstanding or prepaid as at 28 February 2013.

e) The following amounts are included in operating expenses:

Depreciation 89 500

Employee cost 189 900

Interest expense 7 350

Required:

Prepare ONLY the Cash Flow from operating activities section of the statement of cash flows

UNDER THE INDIRECT METHOD for the year ended 28 February 2013. (25)

Notes are required. Comparatives are not required.

Page 65: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 64

QUESTION 2 [30]

The following information relates to Jozini Ltd for the year ended 30 June 2012:

EXTRACTS FROM THE STATEMENT OF FINANCIAL POSTION AND NOTES

2012 2011

Ordinary Share Capital (par value R4 each) 3 000 000 2 750 000

Share Premium 50 000 20 000

Retained Income 860 000 700 000

Mortgage Loan from Umtata Bank 410 000 450 000

Land and Buildings 3 148 000 3 120 000

Equipment at Cost 789 000 640 000

Accumulated Depreciation - Equipment 209 000 140 000

Investment in Fixed Deposit 260 000 190 000

Trading Stock 355 000 450 000

Trade and Other Receivables (excluding items listed

separately)

150 000

115 000

SARS (Income Tax) (Dr) 15000 (Cr) 60 000

Cash at Bank 240 000 0

Petty Cash 10 000 5 000

Trade and Other Payables (excluding items listed

separately)

248 000

89 500

Deferred Income 10 000 8 000

Shareholders for Dividends 180 000 192 500

Bank Overdraft 0 110 000

Page 66: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 65

EXTRACTS FROM THE STATEMENT OF COMPREHENSIVE INCOME

2012 2011

Net Profit Before Tax 1 100 000 1 500 000

Income Tax 520 000 700 000

Interest on Loans ? 43 000

Depreciation 80 000 70 000

Additional Information:

1. The loan statements received from Umtata Bank reflect the following:

Balance of loan on 1 July 2011 R450 000

Interest capitalized R ?

Payments by Jozini Ltd during the year to cover interest and loan R 91 000

Balance of loan at the end of 30 June 2012 R410 000

2. Equipment was sold at book value, R18 000.

(The cost price was R29 000, and the accumulated depreciation

was R11 000 at the date of sale).

3. Improvements were done to the office reception area.

4. The new shares were issued at the beginning of the year.

5. An interim dividend of 32 cents per share was paid while, final dividends declared were

24 cents per share.

Required:

2.1 Prepare the Cash Flow Statement with the notes for the year ended 30 June 2012. (25)

2.2 During the year, Jozini Ltd was able to improve their cash situation and pay

dividends. Explain how they were able to do this when the net income decreased. (5)

Page 67: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 66

QUESTION 3 [30]

The following balances of Inspired Ltd as at 30 June 2013 are submitted to you.

INSPIRED LIMITED

EXTRACT OF STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013

2013

R

2012

R

Share Capital 520 000 400 000

Bank account (debit balance) 0 80 000

Investment in Rea Limited at fair value 180 000 100 000

Receivables 100 000 140 000

Payables 180 000 220 000

Machinery at cost 420 000 600 000

Retained earnings 240 000 340 000

Bank overdraft 60 000 0

Fixed property 200 000 40 000

Inventories 360 000 120 000

Accumulated depreciation on machinery 280 000 320 000

The following transactions amongst others, took place during the year:

a) Machinery with a cost of R200 000 and a carrying amount of R60 000 was scrapped

during the year. Machinery with a carrying amount of R160 000 was sold for R240 000.

The company bought machinery with a cost of R300 000.

b) During the current year an amount of R220 000 was written off as depreciation.

c) The company declared dividends of R140 000 of which R120 000 was paid. The balance

is included in payables.

d) Income tax expense amounted to R18 000 for the year and has been paid.

e) On 30 June 2012 there were no amounts owing for dividend or tax.

Page 68: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 67

f) An investment of 10 000 ordinary shares was held in Rea Limited on 01 July 2012.

During the year another 40 000 ordinary shares was obtained for R70 000 in Rea

Limited. Dividends received amounted to R10 000.

g) Interest of R5 000 was paid during the year.

h) Sales amounted to R750 000 for the year.

Required:

3.1 Calculate the profit before tax. (10)

3.2 Prepare the Cash flow Statement with notes for the year ended 30 June 2013. (20)

QUESTION 4 [20]

Outdoor Stores is an adventure group that offers personalized adventure vacations, both to the

domestic and international market.

The owner has been given the option of buying up a small competitor that has been extremely

successful in attracting the Japanese market. The competitor is asking a cash price of R350

000. Outdoor Stores is able to raise a loan of R150 000 and requires a positive cash balance of

R50 000 at the start of next year. The business had R24 000 in the bank account at 01 January

2013. There were no capital expenditure during the year, however the owner withdrew R10 000

for personal use.

Extracts of the Statement of Comprehensive Income and Statement of Financial Position is

presented below:

Statement of Comprehensive Income for the year ended

31 December 2013

R

Revenue 464 400

Less Expenses: 253 300

Net Income 211 100

Page 69: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 68

Extract of Statement of Financial Position as at

31 December 2013

2013

R

2012

R

Prepaid Expenses 0 12 150

Accrued Expenses 31 200 0

Deferred Income 0 51 400

Accrued Income 337 500 0

Assume that the 2012 prepaid expense and deferred income items became expenses and were

earned in the 2013 year and the accrued items were either received in cash or were paid in the

2013 year.

Required:

Determine whether Outdoor Stores had sufficient cash on hand to purchase the new business

venture.

Page 70: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 69

CHAPTER 10

BANK RECONCILIATION

QUESTION 1 [25]

You are provided with information relating to Ace Traders for September 2013:

Information on 30 September 2013:

Balance prior to doing the Bank Reconciliation

Balance of the Bank Account in the Ledger on 30 September 2013 60 000

Balance as per Bank Statement on 30 September 2013 17 600

Difference 42 400

Individual differences noticed between the books of Ace Traders and the Bank Statement

for September 2013:

No Details Amount

R

1. Cheque No. 657, dated 2 March 2013, still not reflected in Bank

Statement

2 000

2. Deposit, dated 11 September 2013, not reflected in Bank Statement 43 000

3. Dishonoured cheque, originally received from a debtor on 15

September 2013, reflected in Bank Statement but not in the journals

9 500

4. Cheque No. 931, dated 18 September 2013, not reflected in Bank

Statement

4 800

5. Cheque No. 936, dated 30 October 2013, not reflected in Bank

Statement

10 200

6. Deposit, dated 28 September 2013, not reflected in Bank Statement 5 700

7. Bank charges in Bank Statement, but not in the journals 1 200

Page 71: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 70

Required

1.1 Calculate the correct bank balance of Ace Traders on 30 September 2013. (15)

1.2 Use the information above to prepare the Bank Reconciliation Statement

of Ace Traders. (8)

1.3 Refer to the outstanding deposit of R43 000, dated 11 September 2013.

Why should the internal auditor be concerned? (2)

QUESTION 2 [25]

The following information relates to SMASHDOWN PRINTERS,

Bank Reconciliation as at 31 January 2013

DR CR

Bank account balance 1 658

Outstanding cheques

Cheque 314 1 376

Cheque 319 786

Cheque 333 538

Outstanding deposits 1 540

Balance as per bank statement 498

3 198 3 198

Page 72: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 71

TOTALS OF COLUMNS IN CASH JOURNALS ON 28 FEBRUARY 2013:

CASH RECEIPTS JOURNAL R

Bank 21 705

Debtors control 5 378

Sales 18 769

CASH PAYMENTS JOURNAL R

Bank 17 555

Creditors control 4 200

On comparing the February bank statement with the cash journals and the January bank

reconciliation the following were noted:

1. Cheque no 314 which was still outstanding was issued to the Blind Charity Club as a

donation. The organization was disbanded and therefore must be cancelled. A cheque

(no. 355) for the same amount must be issued in favour of Community Charity Club on

the 28 February 2013.

2. The deposit that was outstanding was noted on the 07 February 2013.

3. Interest on overdraft amounted to R 215, service fees of R 560 was not recorded on the

cash journals.

4. Cheque no 340 to a creditor was entered incorrectly as R2 500 instead of R1 500 in the

journals.

5. A deposit of R 3 905 only appears in the cash journal.

6. A client (debtor) settled his debt by handing over a cheque of R 855; this was

dishonoured on the due date due to insufficient funds.

7. The following cheques were issued but did not appear on the bank statement:

Cheque no 348 R 260 (dated 30 March 2013)

Cheque no 351 R 170 (dated 28 February 2013)

Cheque no 319 R 786 (dated 27 December 2012)

8. A cheque received from a debtor for R 1 300 dated 31 March 2013 appears neither in

the cash journal nor in the bank statement.

9. Cheque no 319 above was misplaced in transit.

Page 73: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 72

10. A deposit for rent paid by a tenant had not been recorded in the journals, the amount of

R 500.

11. The following debit orders are not recorded in the journals:

Monthly insurance of R 150

Monthly subscription of R 250

12. The bank statement has a favourable balance of R 649 on the 28 February 2013

Required

2.1 Prepare the Bank Account of Smashdown Printers as at 28 February 2013. (15)

2.2 Prepare the Bank Reconciliation statement as at 28 February 2013. (10)

QUESTION 3 [25]

Baseline Traders employs Joe Crook to write up the books, do the bank deposits and issue

cheques. You are required to assist as an internal auditor.

The following information is made available:

At the end of the previous month, 30 September 2013, the following items appeared in the Bank

Reconciliation Statement:

R

Balance per Bank Statement 17 000

Outstanding deposits for cash sales:

- Dated 28 September 2013

- Dated 30 September 2013

30 000

12 400

Outstanding cheques:

- 502 (dated 19 April 2013)

- 613 (dated 24 September 2013)

- 614 (dated 27 September 2013)

6 200

13 400

9 100

Balance per bank account 30 700

Page 74: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 73

1. The balance on the bank statement is R42 092 (favorable) on 31 October 2013.

2. The provisional totals in the journals for October 2013 before reconciling to the bank

statement are:

Cash Receipts Journal R510 000

Cash Payments Journal R463 600

3. From the bank reconciliation for September 2013 only the outstanding deposit of R12 400

and cheque No. 614 appeared on the October bank statement.

The R30 000 reflected on the deposit slip, dated 28 September, was never deposited into

the bank account by Joe Crook. He cannot account for the whereabouts of the cash.

4. The October bank statement reflected bank charges of R1 310 and interest of R102 on the

favorable bank balance.

5. A dishonored cheque was reflected on the bank statement, R1 700. This was originally

received from a debtor in payment of his account.

6. A direct deposit of R5 500 from a tenant was reflected on the bank statement.

7. As an internal auditor you also detected that cheque No. 642 for R18 000 appeared on the

bank statement, but not in the CPJ. The bookkeeper, Joe Crook, forged the signatures and

used the funds for personal benefit.

8. Cheque No. 633 was reflected in the CPJ as R2 630, but on the bank statement it was

reflected as R6 230. The amount on the bank statement is correct.

9. The following items appeared in the October CRJ and CPJ, but not in the bank statement:

No. 652 – R3 800 (dated 15 November 2013)

No. 655 – R1 300

Deposit of R12 700 for cash sales.

Page 75: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 74

Required:

3.1 Why does a business prepare a Bank Reconciliation Statement each month? (2)

3.2 Calculate the correct totals in the Cash Receipts Journal (CRJ) and Cash

Payments Journal (CPJ) for October 2013. (6)

3.3 Prepare the Bank Reconciliation Statement on 31 October 2013. (7)

3.4 Refer to Information numbered 4 and 8 above

3.4.1 It appears that Baseline Traders will not be able to recover all amounts,

or part of the amounts, lost due to the fraudulent activities of Joe Crook.

If you were the owner of this business, what steps would you take against

Joe Crook? Provide four steps. (4)

3.4.2 Explain why the rule of prudence will be used in accounting for the fraudulent

activities in the books and the financial statements. (3)

3.4.3 Explain what was wrong with the procedures in the accounting department

which led to this type of fraudulent activity. (3)

Page 76: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 75

QUESTION 4 [25]

Furniture Frenzy is a furniture business based in George that purchases and sells both wooden

and bamboo furniture and offers a service that restores old wooden furniture. The business

uses the cost model to measure vehicles, the FIFO cost allocation method to measure the cost

of inventory and the perpetual method for recording inventory. The business has a year-end of

31 March 2013.

Extract: Pre-Adjustment Trial Balance of Furniture Frenzy as

at 31 March 2013

Debit Credit

Bank 45 200

The bank reconciliation process identified the following differences between the bank account in

the general ledger and the bank statement for March 2013:

1. Outstanding deposits in the February and March bank account amounted to R3 900 and

R8 400 respectively.

2. On 29 March 2013 Furniture Frenzy incorrectly entered the rent expense EFT payment

for April 2013 of R15 000 as R1 500 in the cash payments journal.

3. The bank statement for March 2013 included, amongst others, the following

transactions:

Bank charges amounting to R478

Direct deposit by a client for restoration income amounting to R3 663 for work completed

on 15 March 2013

Dishonoured cheque for R3 520 that had been received from a debtor and had

been deposited by Furniture Frenzy on 10 March 2012.

Required:

4.1 Prepare the Bank account as it should appear in the general ledger of Furniture

Frenzy on 31 March 2013. (15)

4.2 Identify any amounts that have not been used to update the bank account in

point above and explain how these amounts will be treated in the bank

reconciliation process as at 31 March 2013. (10)

Page 77: BACHELOR OF COMMERCE DEGREE (BCOM) Graduate/BCOMDEG/BCGAC1/Module Gui… · including photocopying machines, ... Accounting 1 Question Bank BCOM REGENT ... Mr Abel acquired the hydraulic

Accounting 1 Question Bank BCOM

REGENT Business School Page 76

BIBLIOGRAPHY

Dempsey, A. and Pieters, H.N. (2009), Introduction to Financial Accounting, 7th Edition,

LexisNexis.

Dempsey, A. and Pieters, H.N. (2009), Introduction to Financial Accounting – Questions and

Answers, 7th Edition, LexisNexis.

Kew, J.; Watson, A.; and Carpenter, R. (2012), Financial Accounting The Question Book, 4th

Edition, Oxford University Press.

Sowden-Service, CL. and Kolitz, DL. (2010), GAAP: Graded Questions, 10th edition, LexisNexis.