22 2022

MODULE NAME: MODULE CODE:

ACCOUNTING A ACCOx131
ACCOUNTING A ACCOf131/p/d/w
ACCOUNTING 1A ACCT5111/d

ASSESSMENT TYPE: EXAMINATION (PAPER ONLY)

TOTAL MARK ALLOCATION: 180 MARKS
TOTAL HOURS: 3 HOURS (+15 minutes reading time)
INSTRUCTIONS:
1. Please adhere to all instructions in the assessment booklet.
2. Independent work is required.
3. Five minutes per hour of the assessment to a maximum of 15 minutes is dedicated to
reading time before the start of the assessment. You may make notes on your question
paper, but not in your answer sheet. Calculators may not be used during reading time.
4. You may not leave the assessment venue during reading time, or during the first hour or
during the last 15 minutes of the assessment.
5. Ensure that your name is on all pieces of paper or books that you will be submitting. Submit
all the pages of this assessment’s question paper as well as your answer script.
6. Answer all the questions on the answer sheets or in answer booklets provided. The phrase
‘END OF PAPER’ will appear after the final set question of this assessment.
7. Remember to work at a steady pace so that you are able to complete the assessment within
the allocated time. Use the mark allocation as a guideline as to how much time to spend on
each section.
Additional instructions:
1. This is a CLOSED BOOK assessment.
2. Calculators are allowed.
3. Answer All Questions.
4. Ensure that you have received a special answer booklet (with forms drawn up) for entering
your answers. If you have not received an answer booklet, request one from the invigilator
before starting the assessment. Answer all questions in the answer booklet provided.
5. Show all calculations, where applicable (marks may be awarded for this).
6. Write in pen ONLY.

© The Independent Institute of Education (Pty) Ltd 2022

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Question 1 (Marks: 20)

Answer each of the following independent questions in your answer booklet.

Q.1.1 Name the person who developed the theory of ‘’double‐entry accounting’’. (1)

Q.1.2 State whether the following statements are TRUE OR FALSE: (5)
Q.1.2.1 Financial statements are primarily prepared for managers and other users
inside the organisation.
Q.1.2.2 Management accounting does not need to follow an accounting framework
when preparing financial reports.
Q.1.2.3 Reports to users outside the business are presented in email format.
Q.1.2.4 Financial accounting reports must contain data that is objective and verifiable
Q.1.2.5 Both financial and management accounting reports concentrate on past event
only.

Q.1.3 What is the basic accounting equation? (3)

Q.1.4 Define the following in accordance with IFRS: (6)

 Assets; and
 Liabilities.

Q.1.5 All supplies and services are categorised into one of four supply categories of VAT. Identify (5)
the correct category for each of the following supplies and services:
For example, white bread is standard rated.
Q.1.5.1 Advertising
Q.1.5.2 Diesel for use in the delivery vehicle
Q.1.5.3 Business subscription to the local golf club
Q.1.5.4 The sale of a business as a going concern
Q.1.5.5 Telephone bill

© The Independent Institute of Education (Pty) Ltd 2022

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Question 2 (Marks: 30)

The information below relates to Modise Art Studio. Modise Art Studio tracks their inventory
according to the periodic inventory system and is not a registered VAT vendor.

The following transactions took place during June 2022:

Day Transaction
3 The owner made a capital contribution in the form of furniture with a fair value of
R50 000.
4 Purchased inventory on credit for R50 000 from Davies Art Suppliers.
9 Paid ABC Transport, R3 500 by EFT for the delivery of the inventory purchased from
Davies Art Suppliers.
15 Paid ABC Storage Solution, R5 300 by EFT, to store the inventory purchased from Davies
Art Suppliers.
20 Modise Art Studio borrowed R40 000 from BBVS Bank six months ago. No capital
repayment has been made to date. Paid the interest charged at 7.5% per annum for the
duration of the loan, via EFT.
22 Paid Davies Art Suppliers the amount owing less a 5% settlement discount. (See day 4)
(Hint: remember to show the impact of the payment as well as the 5% settlement
discount on the equation.)
28 Five days ago, Vidal Artful a debtor, has been declared insolvent, Modise Art Studio
received 45c in rand from the debtor who owed a total of R25 000. The balance of the
account needs to be written off as irrecoverable.

Required:
Analyse each transaction under the headings given in the table below.
Show double‐entry account names for each of the transactions above and using the + and – signs
show how they will affect the accounting equation.
Ignore VAT.
Example: Paid R200 for Telephone account.
Date Debit Account Credit Account Assets Owner’s Equity Liabilities
Name Name

E.g., Telephone Bank ‐200 ‐200

© The Independent Institute of Education (Pty) Ltd 2022

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Question 3 (Marks: 35)

Lucky Dealers is a registered VAT vendor and trades only with registered VAT vendors that can
provide tax invoices. The business charges 15% VAT. Lucky Dealers uses the perpetual inventory
system. The following information relates to all the transactions that Lucky Dealers entered into
during the month of June 2022 which affected the General Journal. The business does not expect
to award any settlement discount nor to qualify for any settlement discounts. All occurrence of
settlements discounts is therefore incidental in nature.
The most recent Journal Voucher number was JV15, issued on 31 May 2022.

The following transactions took place during June 2022:

Day Transaction
1 The owner, Lucky Jones, made a capital contribution in the form of equipment with a fair
value of R20 000. Since the equipment was purchased more than six months ago, no
notional input VAT was allowed by SARS.
5 The owner took trading inventory that would have been sold to the public for R4 500,
including VAT, for personal use. The mark‐up on cost was 33⅓%.
18 Received a bank notification indicating that a direct deposit of R25 000 was made into the
business’s current bank account. The deposit was recorded in the cashbook receipts.
The amount constituted a full settlement of Jorge Maluleke’s account after a discount of
5% was deducted. Record only the discount in the general journal.
19 Paid R15 000 in full settlement of the amount of R15 250 owing to Muller Enterprises, a
supplier from which Lucky Dealers acquire trading inventory. The payment was recorded in
the cashbook payments. Record only the discount in the general journal.
25 It was realised that packing materials purchased on credit during May 2022 for R15 000,
including VAT, was debited to the office consumables account in error. Show the necessary
entry to correct this error. VAT was accounted for correctly.
30 Received a statement of account from a creditor (Max Matoks) showing a debit for interest
amounting to R32.50, since our account has been overdue for 30 days longer than the
agreed terms. Show the double entry that was made in the books of Lucky Dealers at the
time of receipt of this statement.
31 A Debtor, M. Maseko, who owed R1 500, including VAT, has been declared insolvent. The
business received payment constituting 35 cent in the rand from his insolvent estate and
recorded the amount in the cashbook receipts. The remainder of the outstanding debt
should be written off as irrecoverable and should still be recorded.

© The Independent Institute of Education (Pty) Ltd 2022

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Required:
Use the above transactions provided and make the necessary entries in the General (35)
Journal of Lucky Dealers for June 2022.

Narrations are required. Round all amounts to the nearest rand.

Question 4 (Marks: 15)

Kaylan Enterprises uses a periodic inventory system and is not a registered VAT vendor. The
following information appears in its books for June 2022:

 Kaylan Enterprises had 720 units @R25 per unit of their single product on hand on
1 June 2022 (verified by a stocktake on 31 May 2022).
 The following purchases of the single product were made on credit from two different
suppliers during June 2022:
o 168 units @ R25 each from Manjaro Suppliers (Invoice no.C101)
o 40 units @ R25 each from Mathebula Suppliers (Invoice no. 110)
 Kaylan Enterprises made the following returns to the above suppliers during June 2022:
o 68 units to Manjaro Suppliers received credit note GY1.
o 10 units to Mathebula Suppliers received credit note CR3.
 Kaylan Enterprises paid R1 300 to TR Transport for carriage on purchases.
 The business paid R600 for customs duties relating to the purchase of trading inventory
from abroad.
 The business paid R1 120 for import tariffs relating to the purchase of trading inventory
from abroad.
 On 30 June the month‐end stocktake showed closing inventory of R12 250.
Required:
Q.4.1 Use the above information to calculate the cost of sales for Kaylan Enterprises for (14)
the month of June 2022.
Your answer must show all your workings and it must show clearly which amounts
are added or subtracted.
Ignore VAT.

Q.4.2 True or false, salaries paid by Kaylan Enterprises to the sales staff would also form (1)
part of the cost of sales calculation.

© The Independent Institute of Education (Pty) Ltd 2022

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Question 5 (Marks: 30)

Moatshe Club Fashion, a registered VAT vendor, trades online selling clothing, and has several
debtors and creditors. All debtors and creditors are registered VAT vendors, and deal in standard
rated supplies. VAT is charged at 15%.

The following balance appeared in the books of Moatshe Club Fashion on 1 June 2022:
 Ngalo Kante (debtor) (D20) R16 500

The following transactions took place during the month of June 2022:
Date Details of transactions
4 Received an EFT from Ngalo Kante to settle his account as of 1 June 2022 in full.
6 Ngalo Kante purchased clothing on credit, R2 000 (including VAT).
10 Moatshe Club Fashion realised that they had undercharged Ngalo Kante by R500
(excluding VAT), on 6 June 2022. A debit note was issued to rectify the error.
15 Ngalo Kante returned some of the purchases made on 6 June 2022, R300 (including
VAT). Moatshe Club Fashion accepted the returns and supplied the necessary credit
note.
22 Debtors are charged R150 for the annual in‐house magazine subscription. As per the
agreement, the amount was directly charged to his account balance.
28 Ngalo Kante made transfer via EFT to pay his account to date after receiving a 2% early
settlement discount
30 Ngalo Kante purchased clothing on credit, R5 000 (including VAT). He offered a
discount voucher of R500 in part payment of the amount due. The discount voucher
was recorded in the General Journal. The gross income amount and the discount were
charged to her account.

Required:
Q.5.1 Prepare the individual account of Ngalo Kante in the Debtors Ledger of Moatshe (26)
Club Fashion from the information provided above for the month of June 2022.
Note: In the ‘’Document name’’ column in your answer booklet, provide ONLY the
correct name of the document, document numbers and transaction codes are not
required.

Round all answers to the nearest rand

© The Independent Institute of Education (Pty) Ltd 2022

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Q.5.2 Answer the following questions:

Q.5.2.1 If a debtor’s outstanding balance on 30 June 2022 of R5 000 is still (3)
outstanding in four months times i.e., 30 October 2022, calculate the
amount of interest the debtor would be charged if an interest rate of
6.5% per annum applied.
Q.5.2.2 Name any one of the benefits of offering credit to customers. (1)

© The Independent Institute of Education (Pty) Ltd 2022

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Question 6 (Marks: 30)

Burnley Stores employs three employees and run their payroll on 25th of each month. Employees are paid via EFT. The EMP201 is submitted on the last
day of each month together with an EFT for the amount owing.

Burnley Stores pays a pension fund fringe benefit equal to half of the employees’ own pension fund contribution and matches the employee’s medical
aid contribution rand for rand. Burnley Stores pays the amounts owing, on behalf of the employees, to the Pension Fund and Medical Aid Fund on the
last day of the month.

The following information was taken from the books of Burnley Stores for May 2022

Pension Pension Medical Medical

Basic Commis‐ Fund Fund PAYE/SDL UIF PAYE Aid Aid
Name Of Employees
Salary sion Fringe Deductions Remuneration Remuneration Payable Contri‐ Fringe
Benefit butions Benefit
Ramsy Burnley 10 000 3 000 350 A 12 650 13 000 1 100 500 B
Alex Burnley 25 000 5 000 875 1 750 28 250 17 712 1 400 1 000 1 000
Dominic Burnley 15 000 4 000 525 1 050 17 950 17 172 1 200 750 750
TOTAL

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Salaries Journal of Burnley Stores for May 2022 SJ5

Name Of Employee Calculation Of Gross Salary Deductions Net Employer’s Contributions

Salary

Commis‐ Gross PAYE UIF Pension Medical UIF SDL Pension Medical
Basic
sion Salary Fund Aid Fund Aid

Ramsy Burnley 10 000 3 000 D 1 100 E F 500 G H I 350 J

Alex Burnley 25 000 5 000 30 000 1 400 177 1 750 1 000 25 701 177 283 875 1 000

Dominic Burnley 15 000 C 19 000 1 200 177 1 050 750 15 851 177 180 525 750

TOTAL

Required:
Q.6.1 Complete the missing amounts for (A – J) in the above two tables. (15)
Round up to the nearest rand.

Q.6.2 Prepare the following ledger accounts in the General Ledger of Burnley Stores for May 2022. (Totalling/balancing accounts is not
required.)
Q.6.2.1 EMP201 Control. The payment to SARS must also be reflected. (9)
Q.6.2.2 Pension Fund The payment to the Pension Fund is not required. (4)
Q.6.2.3 SDL Contributions (2)

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Question 7 (Marks: 20)

The following balances were taken from the books of Sevilla Traders on 31 May 2022, the last day of the
current financial year of the entity:

R
Capital 350 000
Rent Income 9 000
Water and Electricity 238 000
Inventory 75 000
Drawings 124 000
Interest received on positive bank balance 9 000
Salaries and Wages 340 000
Advertising 72 000
Fuel 92 000
Loan: VBBM Bank 40 000
Vehicles 250 000
Bank (DR) 50 000

Required:
Q.7.1 Prepare the Profit and Loss Account in the General Ledger of Sevilla Traders, assuming a (13)
gross profit of R833 000 and using the information supplied above.

Q.7.2 Prepare the post‐closing trial balance of Sevilla Traders as at 31 May 2022. (7)

END OF PAPER

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