UNIVERSITY EXAMINATIONS UNIVERSITEITSEKSAMENS me om. UNISA lex. FAC1502 Cctober!November 2018 FINANCIAL ACCOUNTING CONCEPTS, PRINCIPLES AND PROCEDURES Duraton 2 Hours 100 Marks EXAMINATION PANEL AS APPOINTED BY THE DEPARTMENT Use of a non-programmable pocket calculator 1s permissible Closed book examination ‘This examination question paper remains the property of the University of South Africa and may not be removed from the examination venueUNIVERSITY EXAMINATIONS. UNIVERSITEITSEKSAMENS UNISA lesz FAC1502 October/November 2018 FINANCIAL ACCOUNTING CONCEPTS, PRINCIPLES AND PROCEDURES Duration 2 Hours 100 Marks. EXAMINATION PANEL AS APPOINTED BY THE DEPARTMENT Use of a non-programmable pocket calculator is permissible. Closed book examination ‘This examination question paper remains the property of the University of South Africa and may not be removed from the examination venue This question paper consists of NINE (9) pages PLEASE NOTE. 1 This paper consists of FOUR (4) questions 2 Ensure that you are writing the correct examination paper 3 Ensure that you are handed the correct examination answer book (BLUE for accounting) by the invigilator 4 Ailquestions must be answered 5 Allalculations must be shown 6 The answer to each question must commence on a new (separate) page 7 Please wnte legibly in blue or black ink PROPOSED TIME-TABLE: (Avoid deviating from this as far as possible) TIME QUESTION TOPIC MARKS | (pinutes) 1 Bank reconciliation statement 25 30 2 Statement of profit or loss and other comprehensive income 34 4 Eerie Membership fees account, statement of changes and 36 775 statement of financial position 4 Muttipte choice questions 5 6 TOTAL| 100 120 ITURN OVER]2 FAC1502 OCTOBER/NOVEMBER 2018 QUESTION 4 (25 marks)(30 minutes) Commence this question on a new (separate) page The following information pertains to Barge Services ‘An inexpertenced bookkeeper prepared the following bank reconciliation statement ‘On 1 October 2017, the bank account of Baige services has a favourable balance of R3 370 Additional information 1 Provisional totals at 31 October 2017 R ‘Cash receipts journal 35.350 Cash payments joural 32.230 Bank statement (unfavourable) 32.402 2 Adeposit of R1 580 made on 31 October 2017 is not shown on the bank statement 21 The bank has erroneously debited a stop order for R100 against the bank account of Bage Services 22 The following cheques issued by the entity have not yet been presented for payment ~ Cheque no 637 (15 October 2017), R 286 ~ Cheque no 640 (20 October 2017), R319. = Cheque no 641 (25 October 2017), RES 3 The deposit of R22 000 dated 28 October 2017 had not been deposited into the bank account and Sheila Shyster, the bookkeeper of Baige Services, cannot account for the whereabouts of the cash An insurance claim was submitted to Big insurers No entries were made in the books of Baige Services regarding the loss of money 4B Brooks, a debior, paid an amount of R2 110 directly into Baige sevices’s bank account The transaction has not yet been recorded in the entity's books The bank credited R30 interest to the entity's account Cheque no 633 for 150, issued to Josmas Limited, was entered as R510 in the cash payments journal Bank charges for October 2017 amount to R140 ‘A cheque for R250 received from A Wilson was unpaid and 1s shown as such on the bank statement 8 As internal auditor you notice that cheque no 975 for R18 000 appeared on the bank statement, bbut not in the cash payments journal On investigation you find that the cheque (signed by the bookkeeper, S Shyster) had been cashed It was found that the cheque was stolen and the bookkeeper S Shyster, had signed all the cheques in the cheque book in advance The amount must be written off because the insurance company refuse to pay out, due to negligence No entries were made regarding the loss [TURN OVER]3 FAC1502 OCTOBER/NOVEMBER 2018 QUESTION 4 (continued) REQUIRE! | Marks (a) Complete the cash receipts and cash payments journals of Baige services, bank | columns only, for October 2017 10 (b) Prepare the bank account in the general ledger of Baige services, properly balanced, at 31 October 2017 5 (©) Prepare the correct bank reconciliation statement of Baige services as at 31 October 2017 Begin with the balance as per bank statement 10 [25] [TURN OVER]4 FAC1502 OCTOBER/NOVEMBER 2018 QUESTION 2 (34 marks}(41 minutes) Commence this question on a new (separate) page. The following information relates to Busy Traders for the year ended 28 February 2018 BUSY TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2018 R R Capital 786 900 Drawings 10000 Land and butiding 523 025, Furnture 53.600 Vehicles 178 250 ‘Accumulated depreciation Furniture 13.850 Accumulated depreciation Vehicles 28 250 Fixed deposit Maya Bank 192 500 Petty cash 1250 Bank 19650 Cash float 2.000 Inventory 42125 Trade receivables contro! 26 250 Trade payables contro! 18 500 Mortgage Maya Bank 337 500 Allowance for credit losses 3.050 Sales 130.000 Cost of sales 106 250 Sales retums 2.500 Interest on fixed deposit 3.850 Rent income 4500 Insurance 9.300 Stationery 1625 Settlement discount granted 550 Settlement discount recewed 925 Credit losses 4.500 Water and electricity 7375 Repairs 2025 Advertising 2.650 Salanes and wages 120 000 Interest on mortgage 50.000 Telephone expenses 5 450 | Packing matenal 5750 | 7 Bt 7 1346 9751346 975 Additional information 1 Aphysical inventory count revealed that the following was on hand on 28 February 2018 Inventory R38 150 Stationery R 625 Packing materials R150 2 Busy Traders deposited R192 500 at an interest rate of 12% per annum into a fixed deposit account on 1 December 2017 at Maya Bank 3. The mortgage at Maya Bank was granted on 1 January 2013 Interest 1s calculated at 16% per annum [TURN OVER]5 FAC1502 OCTOBER/NOVEMBER 2018 QUESTION 2 (continued) 4 MrD Mickey, an empioyee of Busy Traders, has not yet been paid his salary for February 2018 of R12.000 5 Busy Traders sublets part of its building to Miss K Summers The monthly rental is R1 800 and the building has been occupied by Miss Summer since the beginning of the current financial year 6 Busy Traders paid R18 000 to WBM insurers for the business insurance premium This amount was paid on 1 January 2018 for twelve months. No entries was made in the books of Busy Traders regarding thus transaction 7 Mr John Winter's account of R1 000 must be wnitten off as irrecoverable & Busy Traders determined on 28 February 2018, that the allowance for credit losses should amount to R2 500 9 Depreciation must be provided as follows Furniture at 10% per annum using the straight-ine method Motor vehicles at 20% per annum using the diminishing balance method REQUIRED: ae Marks (2) Prepare the statement of profit or loss and other comprehensive income of Busy Traders for the year ended 28 February 2018 % [34] Please note Your answer must comply with the requirements of the International Financial Reporting ‘Standards (IFRS) appropriate to the business of a sole proprietor Round off ali amounts to the nearest Rand All calculations MUST be shown [TURN OVER]6 FAC1502 OCTOBER/NOVEMBER 2018 QUESTION 3 (36 marks)(43 minutes) Commence this question on a new (separate) page The following information pertains to Mike's Tennis Club a small tennis club for children in Soweto 1.___ Extract from the list of balances at 31 December 2017° R ‘Accumulated fund (1 January 2017) 36 243, Equipment 21.000 Accumulated depreciation Equipment 3.040 Long-term loan Mr 8 Summers 4000 Bank (debit balance) 15310 Inventory Tennis balls (1 January 2017) 1250 Fixed deposit 24000 Entrance fees 750 Bank charges 140 Donations received 9650 Repairs 200 Wages 6 200 Rent expenses for tennis courts 2500 Tennis balls (purchases) 450 Interest on joan 320 Affiation fees 180 Honanum 1750 Interest on fixed deposit 1.000 Membership fees received 9360 Refreshments: Inventory (1 January 2017) 250 Purchases 2720 Sales 4.000 Inventory (31 December 2017) 400 2. Additional information: 21 Entrance fees and donations received must be capitiised 22 Membership fees were R100 in 2016, R120 in 2017 and will be R140 in 2018 23 On 1 January 2017, the membership fees of five members for 2016 were stil due 24 An amount of R120 was prepaid by members on 31 December 2016 25 On31 December 2017 four members paid their membership fees for 2018 26 Membership fees recewed during 2017 included the membership fees of three members who did not pay in 2016 The other two members must be written off as irrecoverable 27 — On34 December 2017, two members’ membership fees for 2017 were still outstanding 28 Inventory on hand on 31 December 2017 1s as follows Tennis balls - R480 29 MrB Summers, a retired tennis coach, lent Mike's Tennis Club R4 000 on 1 January 2017 at an interest rate of 12% per annum The loan is repayable on 1 January 2018 [TURN OVER]7 FAC1502 OCTOBER/NOVEMBER 2018 QUESTION 3 (continued) 210 On 1 March 2017 Mike's Tennis Club made a fixed depostt of R24 000 at an interest rate of 10% per annum at WMB Bank The interest is credited to the account on 28 February 2018 211 MrB Peter's wages of R750 for December 2017 must stil be paid 212 Mike's Tennis Club rents the tennis courts from, Soweto Country Club, at R260 per month 213 You may assume that the surplus for the year, after all he above adjustments have been taken Into account, amounted to R6 777 REQUIRED. Warks Prepare the following for Mike's Tennis Club | (2) The membership fees account, properly balanced as at 31 December 2017 o | (©) The statement of changes in equity for the year ended 31 December 2017 6 | (c) The statement of financial position for the year ended 31 December 2017 a | [36] Please note. All calculations must be shown [TURN OVER]8 FAC1502 OCTOBER/NOVEMBER 2018 QUESTION 4 (5 marks)(6 minutes) MULTIPLE CHOICE QUESTIONS This question consists of five (5) multipie choice questions. Only one option for each question is correct. Indicate the chosen option in your exam script next to the question number in brackets, for example, Question 5 (c) 1 Which one of the following options illustrate the transaction of a service received from a cleaning company who will be paid at a later stage (a) Cleaning expense will increase and trade payables will increase (b) Cleaning expense will increase and trade payables will decrease (©) Cleaning expense will increase and trade receivables will increase (d) Cleaning expense will increase and trade recewabies will decrease (€) Cleaning expense will increase and cash will decrease 2 Services were rendered to clients for cash Which one of the following alternatives represent the correct effect of these transactions on the accounting equation (a) Assets increase, labilties increase (b) Assets increase and decrease (©) Assets decrease, equity increase (@) Assets increase, equity increase (e) Assets decrease, liablities decrease 3 The financial resuits of an entity 1s measured in terms of the profit or loss which the entity has made (a) Ona particular date () Over a specific month (©) Over a specific period (@)—Overa particular week (©) Onaspectiic time 4 Which one of the following altematives represent the best answer for the following transaction Sold goods to Mr Mokgokone for cash The entity uses the perpetual inventory system The entries in the general ledger will be as follows (@) Debit bank and credit inventory, debit inventory and credit cost of sales (©) Debit sales and crecit bank, debit cost of sales and credit inventory (©) Debit bank and credit inventory, debit cost of sales and credit inventory (@) Debit bank and credit sales, debit cost of sales and credit inventory (e) Debit bank and credit sales, debit nventory and credit cost of sales [TURN OVER]9 FAC1502 OCTOBER/NOVEMBER 2018 QUESTION 4 (continued) 5 The entnes in the general ledger for carnage on purchases on credit when the perpetual Inventory control system 1s use are as follows fa) (b) {c) (d) fe) ‘Carnage on purchases account debited, Bank account credited Carriage on purchases account debited, Creditors contro! account credited Inventory account debited, Bank account credited Inventory account debited, Trade payables control account credited Inventory account debited, Bank account debited ° UNISA 2018