NATIONAL

SENIOR CERTIFICATE

GRADE 12

SEPTEMBER 2022

ACCOUNTING P2

MARKS: 150

TIME: 2 hours

This question paper consists of 12 pages, including a

formula sheet and a 9-page answer book.
2 ACCOUNTING P2 (EC/SEPTEMBER 2022)

INSTRUCTIONS AND INFORMATION

Read the following instructions carefully and follow them precisely.

1. Answer ALL questions.

2. A special ANSWER BOOK is provided in which to answer ALL questions.

3. Show ALL workings to earn part-marks.

4. You may use a non-programmable calculator.

5. You may use a dark pencil or blue/black ink to answer questions.

6. Where applicable, show ALL calculations to ONE decimal point.

7. If you choose to do so, you may use the Financial Indicator Formula Sheet attached
at the end of this question paper. The use of this formula sheet is NOT compulsory.

8. Write neatly and legibly.

9. Use the information in the table below as a guide when answering the question
paper. Try NOT to deviate from it.

QUESTION TOPIC MARKS MINUTES

1 Inventory Valuation and VAT 35 30

2 Reconciliations 35 30

3 Cost Accounting 40 30

4 Budgeting 40 30

TOTAL 150 120

Copyright reserved Please turn over

(EC/SEPTEMBER 2022) ACCOUNTING P2 3

QUESTION 1: INVENTORY VALUATION AND VAT (35 marks; 30 minutes)

1.1 INVENTORY VALUATION

Debra Traders sells electric fans. The business is owned by Deb Fisher.
The information relates to the financial year ended 30 April 2022.
The periodic inventory system and the first-in-first-out (FIFO) method are
used to value the stock of fans.

REQUIRED:

1.1.1 Calculate the following for the financial year ended 30 April 2022:
• Value of the closing stock (5)
• Cost of sales (6)
1.1.2 Deb is concerned about the sales and profitability.
• Calculate the average stockholding period (in days). (5)
• Based on your findings, comment on whether she should be
concerned or not. (2)
1.1.3 Deb wants to change to the weighted average method to value the
electric fans as she feels that this will improve profitability. Comment
on this proposal. Provide TWO points. (4)

INFORMATION:
A. Stock of electric fans:
UNITS TOTAL (R)
On 1 May 2021 330 79 200
On 30 April 2022 470 ?

B. Purchases of electric fans during the year:

UNIT COST TOTAL
MONTH UNITS
(R) (R)
July 2021 250 250 62 500
September 2021 350 260 91 000
December 2021 500 275 137 500
February 2022 300 285 85 500
TOTAL 1 400 376 500

C. Six (6) electric fans from the December 2021 batch, with a total cost of
R1 650, were used as prizes in an advertising campaign.

D. Ten (10) damaged fans from the February 2022 purchases were
returned to suppliers. A refund of the total cost was received.

E. Sales:
Electric fans are sold at a fixed price of R425 each. The total sales
amounted to R528 700.

Copyright reserved Please turn over

4 ACCOUNTING P2 (EC/SEPTEMBER 2022)

1.2 VAT

B-Line Suppliers is registered for VAT. The standard rate of 15% is applicable.
The business is owned by Brenda Fazile.

REQUIRED:

1.2.1 Calculate the amount payable to SARS in respect of VAT for the two-
month VAT period ended 30 June 2022. (9)

1.2.2 Brenda has negotiated with a supplier to provide her with a purchase
invoice for R120 000, although the actual purchase was for R30 000.

As a senior manager, what would you say to Brenda regarding this

transaction? Provide TWO points. (4)

INFORMATION:

A. The balance due by SARS on 1 June 2022 was R3 800.

B. VAT amounts extracted from the records for June 2022:

VAT AMOUNT
R
Total sales 142 500
Total purchases of stock 86 100
Discount received from suppliers 3 750
Goods returned by debtors 1 260
Sale of old equipment 6 000
Goods taken by the owner for personal use 1 125
Bad debts recovered 540

35

Copyright reserved Please turn over

(EC/SEPTEMBER 2022) ACCOUNTING P2 5

QUESTION 2: RECONCILIATIONS (35 marks; 30 minutes)

BANK RECONCILIATION

2.1 Indicate whether each of the following statements are TRUE or FALSE. Write only
‘true’ or ‘false’ next to each number (2.1.1 to 2.1.3) in the ANSWER BOOK.
2.1.1 Cash withdrawal fee and interest on overdraft on a bank statement are
recorded as bank charges in the Cash Payments Journal.
2.1.2 A credit balance on the bank statement represents a favourable balance
for the business.
2.1.3 It is not necessary to prepare a bank reconciliation statement because the
bank statement will always provide the correct bank balance. (3)
2.2 AMADEV STORES
The information relates to July 2022. The official bank statement, used for
reconciliation purposes, is e-mailed to the business on 25th of each month.
REQUIRED:
2.2.1 Update the CRJ and CPJ totals in the table provided and calculate the
correct bank account balance in the General Ledger on 31 July 2022.
Show ALL workings. (9)
2.2.2 Prepare the Bank Reconciliation Statement on 31 July 2022. (8)
2.2.3 Refer to INFORMATION D: Deposit of R22 500 on 20 July 2022.
Explain why the accountant should be concerned about this deposit.
Provide ONE point. (2)

INFORMATION:

A. The Bank account in the General Ledger reflected a favourable balance of

R21 800 on 1 July 2022.

B. Before inspecting the July bank statement, the provisional totals in the July
journals were: CRJ: R116 400 and CPJ: R132 500.

C. Bank charges on July bank statement but not in the journal, R1 150.

D. Deposit, dated 20 July was not reflected on the bank statement, R22 500.

E Deposit, dated 29 July was not reflected on the bank statement, R12 700.

F. EFT received from a debtor was correctly reflected as R5 300 on the bank
statement, but incorrectly recorded as R3 500 in the journal.

G. The debit order for cellphone data, R1 840, was not recorded in the relevant
journal. It was also incorrectly duplicated on the July bank statement.

H. EFT 778, dated 31 July, was not reflected on the bank statement, R6 200.

Copyright reserved Please turn over

6 ACCOUNTING P2 (EC/SEPTEMBER 2022)

I. Rent received on 30 July, R9 200, was recorded in the journal from a proof
of payment received from the tenant. This did not appear on the statement.
J. Debit order for advertising appeared on the bank statement but not in the
journal, R740.
K. The bank statement closed with a balance of R ? on 25 July 2022.

2.3 MOLLY’S DELI

Molly buys her fast-food products from Gladys Suppliers. She received a
statement from Gladys Suppliers on 26 August 2022. The amount due did not
agree with the balance in the Creditors Ledger.
Her bookkeeper, Janice, stated that the Creditors ledger balance was R41 800.

An analysis of the Creditors Ledger account and the statement received reflected
that the statement was correct in all respects. Errors and omissions were noted
in the books of the business only.

REQUIRED:

2.3.1 Show how the errors and omissions identified must be treated to correct
the Creditors Ledger Account of Gladys Suppliers in the books of the
business.
Use the table provided. Show a “+” for increases or “–” for decreases
next to each amount and calculate the final balance. (9)

2.3.2 Refer to information D

Molly was disappointed that she did not benefit from the discount.
How can Molly improve the internal control process to ensure that this
does not happen in the future? Provide TWO points. (4)

INFORMATION

Errors and omissions identified in the books of the business.

A. An invoice for R8 600 was not recorded in the creditors ledger account.

B. A credit invoice for R17 800 appeared in the creditor’s ledger account of
Gladys Suppliers. This was for goods purchased from Glyn Stores.

C. A credit invoice for R12 600 was recorded as R21 600 in the creditors
ledger account.

D. A discount of R600 was recorded in the creditors ledger when an EFT

payment for R12 000 was made on 7 August 2022. Gladys Suppliers
indicated that this was not granted, as it did not adhere to the credit terms.

E. Returns of damaged goods was recorded as an invoice, R2 240.

35

Copyright reserved Please turn over

(EC/SEPTEMBER 2022) ACCOUNTING P2 7

LEAVE THIS
PAGE BLANK.

Copyright reserved Please turn over

8 ACCOUNTING P2 (EC/SEPTEMBER 2022)

QUESTION 3: COST ACCOUNTING (40 marks; 30 minutes)

3.1 Match the concepts in COLUMN A with an example provided in COLUMN B.
Write only the letters (A–D) next to the question numbers (3.1.1 to 3.1.4) in the
ANSWER BOOK.

COLUMN A COLUMN B
3.1.1 Indirect labour A Cost of raw materials used in the
production process
3.1.2 Administration cost B Manufactured products that are ready for
distribution to retailers
3.1.3 Variable cost C Wages paid to the factory maintenance
workers
3.1.4 Finished goods D Stationery purchased, for office use
(4 x 1) (4)
3.2 ZAZA ACCESSORIES
The information relates to the production of water bottles. The financial year
ended on 28 February 2022.
REQUIRED:
3.2.1 Refer to Information A
Calculate the direct labour cost for the production of water bottles. (8)
3.2.2 Refer to Information D
Correct the Factory Overhead cost amount by taking into account the
errors and omissions. Show (+) for increase and (-) for decrease next
to each amount. (9)
3.2.3 Complete the Production Cost Statement on 28 February 2022. (9)
INFORMATION:
A. Production wages:
• The water bottle factory employs 5 workers.
• Each worked 1 550 hours normal time at R60 per hour.
• A combined total of 225 hours of overtime was reflected on the
overtime register. The overtime rate is 1,6 times the normal rate.
• All employees pay 1% of total earnings to the UIF, and the business
contributed an equal amount to the Fund.
B. Stocks balances:

28 February 2022 1 March 2021

Work in progress R? R 18 750
Finished goods R 42 300 R 46 800

C. Prime cost amounted to R812 500.

Copyright reserved Please turn over

(EC/SEPTEMBER 2022) ACCOUNTING P2 9

D. Factory Overhead Costs:

The bookkeeper calculated the factory overhead cost as R203 720.
The following errors and omissions were noted:
(a) The cleaner earns R5 000 per month. 25% of this must be allocated
to the water bottles factory. This was not taken into account.
(b) The closing stock of factory indirect material, R1 800, was not taken
into account.
(c) The factory overhead cost included insurance of R19 200 which was
shared in the ratio 4 : 2 between the water bottle factory and selling
and distribution. This should have been shared in the ratio 5 : 1.
(d) The entire water and electricity expense of R47 400 was included in
the factory overhead cost. Only 70% of this expense relates to the
water bottle factory.
E. Sales for the year amounted to R1 305 850 (cost R1 004 500).

3.3 UNIT COSTS AND BREAK-EVEN

Cage Traders sells blankets. The information relates to the two years ended
June 2022. The owner is Cage Matt.

REQUIRED:

3.3.1 Comment on the control over direct material cost per unit and selling and
distribution cost per unit. Quote figures. In each case, provide a possible
reason for the change. (6)

3.3.2 Explain whether Cage (the owner) should be satisfied with the level of
production achieved and the break-even point. Provide TWO points.
Quote figures. (4)

INFORMATION:

2022 2021
UNIT PRICE UNIT PRICE
R R
Direct Material Cost 120,00 140,00
Direct Labour Cost 140,00 110,00
Factory Overhead Cost 92,00 90,00
Selling and Distribution Cost 90,00 60,00
Administration Cost 40,00 40,00
Selling price per unit 500,00 470,00

Number of units produced and sold 9 000 units 8 000 units

Break-even point 7 920 units 6 500 units

40

Copyright reserved Please turn over

10 ACCOUNTING P2 (EC/SEPTEMBER 2022)

QUESTION 4: BUDGETING (40 marks; 30 minutes)

4.1 Explain why:
4.1.1 Bad debts will not appear in a cash budget. (1)
4.1.2 A cash budget is an effective internal control mechanism. (2)

4.2 MARIE (PTY) LTD

The company is registered with an authorised share capital of 800 000 ordinary
shares.
REQUIRED:
4.2.1 Refer to Information A and B
Calculate the collection from debtors during September 2022. (7)
4.2.2 Calculate the missing amounts denoted by (i) to (iv) on the extract Cash
Budget provided in Information E. (13)
4.2.3 Calculate the % increase in salaries and wages. (3)
4.2.4 Provide TWO reasons why the company decides to invest in staff
training. (2)
4.2.5 Refer to Information J.
Marie has decided to change the sales strategy due to low turnover
during the Covid-19 pandemic.
• Comment on the new approach regarding cash and credit sales. (2)
• Explain TWO disadvantages of the approach adopted. (4)
• Comment on the actual and budgeted figures for advertising and
packing material. Quote figures. (6)
INFORMATION:

A. JULY AUGUST SEPTEMBER

R R R
Credit sales 364 000 382 200 354 900
Cost of sales figures: 320 000 336 000 312 000
B. Debtors pay according to the following trend:
50% of debtors pay in the month of sales and receive a 4% discount
30% pay in the month following the sales month
18% pay in the second month after the sales month
Bad debts accounts for 2%
C. Cash sales is 35% of total sales.
D. Purchases and payment to creditors:
• Stock sold is replaced in the month of sale.
• Cash purchases amounts to 25% of total purchases.
• Creditors for stock purchases are paid in the second month following
the purchase (60 days).

Copyright reserved Please turn over

(EC/SEPTEMBER 2022) ACCOUNTING P2 11

E. Extract of the Cash Budget for the two months:

AUGUST SEPTEMBER
Receipts
Cash Sales 205 800 191 100
Cash from Debtors
Rent Income (i) 13 878
Additional shares 465 000
Payments
Cash purchases of stock 84 000 78 000
Payment to creditors 225 000 (ii)
Salaries and wages 134 300 142 358
Repayment of loan (iii)
Interest on loan 3 300 2 750
Advertising 17 640 16 380
Packing material 35 280 32 760
Delivery expenses 41 160 38 220
Ordinary share dividends (iv)
Staff training 70 000

F. The rent will increase by 8% p.a. from 1 September 2022.

G. Part of the loan will be re-paid on 1 September 2022. Interest on loan at
11% p.a. is payable on the last day of each month, and is not capitalised.
H. On 1 July 2022, there were 480 000 ordinary shares in issue.
Additional shares will be issued on 1 August 2022 at R6,20 per share.
Interim dividends of 15 cents per share is payable on 30 September 2022,
to all shares on the share register.

I. Advertising is a fixed percentage of budgeted cash sales.

Delivery to customers is outsourced to Victor Reliable.
J. Budgeted and Actual figures for July 2022:
BUDGETED ACTUAL
BUDGET ITEMS
R R
Cash sales 196 000 50 400
Credit sales 364 000 285 600
Total sales 560 000 336 000
Advertising 16 800 13 440
Packing material 33 600 18 500

40

TOTAL: 150

Copyright reserved Please turn over

 12 ACCOUNTING P2 (EC/SEPTEMBER 2022)

GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET

Gross profit x 100 Gross profit x 100

Sales 1 Cost of sales 1

Net profit before tax x 100 Net profit after tax x 100
Sales 1 Sales 1
Operating expenses x 100 Operating profit x 100
Sales 1 Sales 1

Total assets : Total liabilities Current assets : Current liabilities

(Current assets – Inventories) : Current liabilities Non-current liabilities : Shareholders’ equity

(Trade and other receivables + Cash and cash equivalents) : Current liabilities

Average trading stock x 365 Cost of sales .

Cost of sales 1 Average trading stock

Average debtors x 365 Average creditors x 365

Credit sales 1 Credit purchases 1
Net income after tax x 100
Net income after tax x 100 Number of issued shares 1
Average shareholders' equity 1
(*See note below)
Net income before tax + Interest on loans x 100
Average shareholders' equity + Average non-current liabilities 1

Shareholders’ equity x 100 Dividends for the year x 100

Number of issued shares 1 Number of issued shares 1

Interim dividends x 100 Final dividends x 100

Number of issued shares 1 Number of issued shares 1
Dividends per share x 100 Dividends for the year x 100
Earnings per share 1 Net income after tax 1
Total fixed costs .

Selling price per unit – Variable costs per unit

NOTE:
* In this case, if there is a change in the number of issued shares during a financial year, the
weighted-average number of shares is used in practice.

Copyright reserved Please turn over