ACC100: PRACTICAL SESSION for Chapter 5

QUESTION 2

Following the processing of the outstanding transactions in the previous questions, you are
provided with the following list of balances for Lebo’s Shoppe for the period to the end of February
20.18:

Balances up to 28 March 20.18 Note R

Accumulated depreciation: Vehicles (1 April 20.17) 8. 88 000
Advertising 1. 21 720
Bank 135 970
Bank charges 13 320
Capital 169 373
Commission expenses 9. 34 000
Cost of sales 557 720
Discount allowed 13 700
Discount received 21 600
Drawings 78 170
Freight (in) 4 120
ICT expenses 4. 980
Insurance 14 110
Interest income 65 352
Loan from Ms Naidoo 2. 80 000
Rent deposit paid 6 700
Rent expense 3. 76 045
Retained earnings 93 250
Returns (in) 17 200
Returns (out) 16 170
Sales 714 595
Stationery 4. 25 550
Trade and other payables 58 380
Trade and other receivables 89 655
Trade inventories 10. 87 410
Vehicle expenses 6. 350
Vehicles (cost price) 130 000

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In addition, the following relevant information is available:

1. The advertising account includes a current payment of R4 950 in respect of a contract for the
period 1 August 20.17 to 30 April 20.18.

2. The loan from Ms Naidoo was received on 1 April 20.17 and is to be repaid in five equal
instalments on 28 March annually. It bears compound interest at a rate of 8.5% per annum.

3. The rental agreement signed on 1 April 201.7 provides for a monthly rental amount, escalating
by 7% every six months. Rent has only been paid for 11 months.

4. Stationery purchased just before year-end amounting to R980, was erroneously entered as
ICT expenses by the accountant. Stationery on hand on 31 March 20.18 amounted to R2 450.

5. Lebo made the following donations. None of these transactions have been recorded in the
entity’s financial records:

 On 1 March 20.18 she donated office equipment worth R24 500 to the entity as an
additional capital contribution.
 On 25 March 20.18 she donated trade inventories marked as R2 340 to a local
retirement village. Profit is maintained at a rate of 25% on cost.

6. Lebo arranged that trade inventories, purchased on credit, were overnight couriered to a
customer. The cost of R350 was however entered as ‘vehicle expenses’ in the entity’s
accounting records.

7. The details of an employee who was employed on 1 March 20.18 were omitted from the
accounting records of the entity. The following details are provided:

 Monthly salary, R9 360

 PAYE-deduction, R2 210
 Pension fund, 7,5% of gross salary
 For every R1 that the employee contributes to the pension fund, the employer
contributes R1,50.
All payments with regards to the above will be made on 31 March.

8. Depreciation expenses for the year still have to be recognised. Vehicles are depreciated at
25% per annum on the straight-line method whereas office equipment is depreciated at 15%
per annum on the declining balance method.

9. Commission is paid to Lebo’s Shoppe’s sales manager, Reuben. This is calculated at 15% of
the net sales for the year and is always paid on 15 April in the following financial year. During
March 20.18, an advance was made to Reuben in respect of some of the year’s commission
owing to him. This advance was debited to the commission expense account.

10. A physical stock count on 30 March 20.18 revealed trade inventories worth R82 500 on hand.

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REQUIRED:

a) Recognise the additional transactions 4., 5., 6., 7., and 10. in the General Journal of Lebo’s
Shoppe for the reporting period ending 31 March 20.18. Appropriate journal narrations are
required.

GENERAL JOURNAL OF LEBO’S SHOPPE

Debit Credit
4.
R R

Debit Credit
5. R R

Debit Credit
6. R R

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 Debit Credit
7. R R

Debit Credit
10. R R

b) Recognise the closing transfer for transaction 10. in the General Journal of Lebo’s Shoppe
for the reporting period ending 31 March 20.18. Appropriate journal narrations are required.

Debit Credit
10. R R

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c) Present and disclose the abovementioned information in the Statement of Profit or Loss of
Lebo’s Shoppe for the year ended 31 March 20.18 by completing the answer sheet below.

LEBO’S SHOPPE
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MARCH 20.18
R

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 LEBO’S SHOPPE
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MARCH 20.18
R
Revenue
Cost of sales
Gross profit
Other income
Income from subsidiary
Income from other financial assets
Distribution costs
Administrative expenses
Other expenses
Finance costs
Profit/(Loss) before tax
Income tax expense
Profit/(Loss) for the year

d) Present and disclose the abovementioned information in the Statement of Changes in Equity
of Lebo’s Shoppe for the year ended 31 March 20.18 by completing the answer sheet below.

LEBO’S SHOPPE
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 20.18
Retained
Capital Total
earnings
R R R
Balance at 1 April 20.17
Changes in equity for 20.18
Additional capital contribution by the owner
Profit/(Loss) for the year
Distribution to owner (drawings)
Balance at 31 March 20.18

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e) Present and disclose the following sections in the Statement of Financial Position of Lebo’s
Shoppe as at 31 March 20.18: CURRENT ASSETS; NON-CURRENT LIABILITIES and
CURRENT LIABILITIES. Assume any further information you may deem necessary. The
notes relating to corporate information, compliance with IFRS, measurement bases and
accounting policy is not required.

LEBO’S SHOPPE
STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 20.18
R

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