ACCOUNTING

GRADE 12

[DOCUMENT TITLE]

CORRECT NET PROFIT CALCULATION

MARKING
GUIDELINES

1. Purpose of the Accounting Practice Activities:

To give learners quality Practice Activities in order to improve learner performance in Accounting in
Limpopo Province.

2. How to us this booklet

2.1 The Practice Activities are grouped per topic and are mandatory for all Accounting learners.
2.2 Each topic has a number of similar activities that are standardized to train learners for formal tasks
2.3 Teachers must work out these activities before giving them to learners.
2.4 Print the Practice Activities and their Answer books and give them to learners as written work.
NB: Do not give learners Marking Guidelines to Activities, but instead, assist them with feedback.

3. Message to Grade 12 Accounting teachers:

3.1 Accounting Practice Activities have been extracted from past exam papers and arranged according to topics.
3.2 Practice Activities must be given to learners as, and when, a particular topic is being taught.
3.3 Use these Practice Activities as Class work, Informal Tests and/or for Revision purposes.
3.4 Departmental monitors will be asking for these Activities to check content coverage.
3.5 Other Activities may be given to learners in addition to these Mandatory Practice Activities.
MARKING GUIDELINES TO THE CALCULATION OF CORRECT NET PROFIT

ACTIVITY 1 CORRECT NET PROFIT (23 marks; 17 minutes) NSC NOV 2019, Q4

VUSANI LTD

Calculate:
(i) Depreciation for the current year
Workings Answer
192 000  x 20% x 8/12  One part correct
R25 600 
(ii) Carrying value of vehicles sold
Workings Answer
  Two marks

192 000 – 25 600 see (i) above R166 400

If wrong, mark workings.
60 000 + 48 000 + 25 600
Cannot get full marks if
OR: 300 000 – 133 600 superfluous workings
5
Calculate: Profit/loss on sale of asset
Workings Answer
  Two marks

175 000 – 166 400 see (ii) above R8 600

If wrong, mark workings.
Cannot get full marks if
superfluous workings
2

Calculate: Fixed assets carrying value on 28 February 2019

Workings Answer
  See (i) above  see (ii) above
10 170 000 – 25 600 – 166 400
One part correct
192 000 two method marks R9 978 000 
OR: 10 170 000 – (300 000 – 133 600 + 25 600)
One mark one method mark one method mark

Also accept ledger account format

10 170 000 25 600
166 400
9 978 000
4

Calculation of the Correct Net Profit After Tax – Marking Guidelines 2|6
 Calculate the correct net profit after tax for the year ended 28 February 2019.
Indicate (+) for increase and (–) for decrease.
Workings Answers
Incorrect Net Profit before tax 922 800
Provision for bad debts adjustments (68 000) 
Advertising 9 900 
(2500 x 3) (27 500) 
Rent Income [(332 500 – 7 500) / 13] + 2 500
Additional depreciation see (i) (25 600) 
Profit on sale of asset see (ii) 8 600 
Loss on fire (7 400 – 6 500) (900) 
Correct Net Profit before tax 819 300 
Income tax (156 000 + 43 000) (199 000) 
Correct net profit after tax 620 300  12
One part correct
Alternative method: Rent Income
#Rent received in advance can also be calculated as follows:
10m + 3(1m + 2500) = 332500
10m + 3m + 7500 = 332500 TOTAL MARKS
13m +7500 = 332500
13m = 332500 – 7500 23
m = 325000/13 =25000 before increase
After increase: 25000 + 2500 = R27500

ACTIVITY 2 CORRECT NET PROFIT (15 marks; 11 minutes) NSC NOV 2015, Q3

PRECIOUS LIMITED

Calculate the correct net profit after tax for the year ended 30 June 2015.
Indicate (+) for increase and (–) for decrease.
Workings Answers
Incorrect Net Profit 2 445 200
Trading stock deficit (221 100 – 206 400) - 4 700  -
Provision for bad debts adjustment (18 300 – 15 000 decreased) + 3 300 
Rent Income - 1 800  -
Insurance (rec. in adv) 9600/12 = 800 x 3 =2400 - 9600 + 7 200 
Loss on theft (10 500 – 9 500) - 1 000  -
Correction of error: Asset disposal 5 400 1mark + 10 800 
Correct Net Profit before tax Operation, one part correct, 2 452 800 
reasonable, must be approx. R2m
Income tax Accept if no sign - 800 000  -
Correct net profit after tax (check operation, NP – tax) 1 652 800  15
One part correct

Calculation of the Correct Net Profit After Tax – Marking Guidelines 3|6
ACTIVITY 3 CORRECT NET PROFIT (22 marks; 16 minutes) PRELIM KZN 2019, Q3

WESTVILLE LTD

Net profit before tax 1 449 704

Directors fees (625 000 – 25 000) (600 000) 
Packing material (12 000 x 80/20) (48 000) 
Bad debts (1 200 - 480) (720) 
Provision for bad debts (44 800 – 720)  x 5%  (2 204-1 700) (504) 
Rent income (177 600 – 26 400) 151 200 
Salaries 55 820 
Operating profit before interest expense 1 007 500 
Interest expense (157 500) 
Net profit before tax Operation one part correct 850 000 
Income tax (850 000 x 30%) (255 000) 
Net profit after tax Operation 595 000  22
Accept brackets instead of – If no sign, assume + Positive/negative effect & figure must
be correct Foreign entries -1 (max -2)

Alternative method: Rent Income

#Calculation of rent income
6m + 8m (1.1) = 177 600
6m + 8.8m = 177 600
14.8m = 177 600
m= 12000 (before increase)
After increase = 12000 x 1.1 = 13200
For 2 months= 13200 X 2 = R26 400

Calculation of the Correct Net Profit After Tax – Marking Guidelines 4|6
ACTIVITY 4 CORRECT NET PROFIT (12 marks; 9 minutes) PRELIM GP 2017, Q3

AMARA LIMITED

Calculate the Net Profit after Tax.

R
Incorrect Net Profit before Tax 1 025 600
Telephone  (3 000)
Insurance  4 500
Trading stock deficit (304 300 – 303 100)  (1 200)
220 177 600  (26 400)
Rent Income x
1 480 1
Stationery  500
Net profit before tax one part correct 1 000 000
Income Tax NPBT X 0,28  (280 000)
Net Profit after tax tax must be deducted one part correct 720 000 12

ACTIVITY 5 CORRECT NET PROFIT (12 marks; 9 minutes) PRELIM NC 2017, Q3

MTILENI LIMITED
Calculate the correct net profit after tax for the year ended 30 June 2015.
Indicate (+) for increase and (–) for decrease.
Workings Answers
Incorrect Net Profit 389 408`
Interest on loan (43 800 – 25 000) (18 800) 
Loss on fire (6 500 – 5 600) (900) 
Packing materials (18 000/ 0,20) = 90 000 x 80% (72 000) 
Directors’ fees (26 000) 
Audit fees (8 000) 
Rent income [(151 372- 7 020)/13] + 1 404 (12 508) 
Salaries (correction of error) 28 000 
Insurance (30 600/12 =2 550 x 3months = 7 650 7 650 
Correct Net Profit before tax Operation, one part correct, 286 850 
reasonable, must be approx. R2m
Income tax Check calculations of 28% of net profit before tax 80 318 
One part correct
Correct net profit after tax (check operation, NP – tax) 206 532  15
Operation, one part correct

Calculation of the Correct Net Profit After Tax – Marking Guidelines 5|6
ACTIVITY 6 CORRECT NET PROFIT (12 marks; 9 minutes) PRELIM KZN 2018, Q3

MASAKONA LTD

Net profit before tax 2 072 908

Accept brackets instead of – If no sign, assume + Positive/negative effect &
figure must be correct
Foreign entries -1 (max -2)
Gross profit (-3000 + 2 150) (850) 
Profit on sale of asset (7 500 + 7 500) 15 000 
Auditors (27 000) 
Repairs (90 000) 
Rent income [(247 958-1 0968)/13] + 1 828 (2 0058) 
Trading stock surplus (469 750 – 468 750) 1 000 
Packing materials (8 000/0,25 x 75%) (24 000) 
Net profit before tax operation on part correct 1 927 000 
Income tax (1 927 000 x 30%) (578 100) 
Net profit after tax operation 1 348 900  15

Calculation of the Correct Net Profit After Tax – Marking Guidelines 6|6