AUGUST 2021_ EXAMINATION

TAKE HOME EXAMINATION QUESTION PAPER

PROGRAMME Bachelor of Commerce in Accounting

MODULE Accounting 1

BACT 1_ACC1_16 August 2021_S2

INSTRUCTIONS TO CANDIDATES:

• Students are required to carefully read and fully understand the questions before

answering them.

• Students must answer the questions fully but concisely and as directly as possible

using sufficient research and application.

• Students should follow all specific instructions for individual questions (e.g., “list”,

“in point form”, “show all workings”).

• The mark allocation is there to show you the weighting and length of each question.

• The assessment must be your own work only, plagiarism cases will be investigated.

• Students are to read the examination requirements, rules and instructions on the

Home Page of the Regent Online platform.

• An additional 15 minutes have been granted for set up and reading time.

DATE: 16 August 2021 TIME: 13h00_17h00

DURATION: 13h00_17h00 MARKS: 100

EXAMINER: MODERATOR:
Seedat C Mr Salikram P
QUESTION ONE [25]
The transactions below relate to S ASH for the month ended 30 June 2021.

Date Transactions Amount

2021 R

Jun 01 S Ash deposited capital into the business bank account 80 000

05 The business obtained a loan from LTC Bank 15 000

07 Acquired a vehicle and settled the purchase price by cheque 25 000

08 Bought cleaning material from AD Suppliers on credit 500

10 Invoiced Dekker Hotel for cleaning services rendered 1 000

12 Received a cheque from Dekker Hotel and deposited it in the

bank account 500
14 Paid Salaries by cheque 1 500
16 An advert was published in the daily news. This is payable in
30 days 250
25 S Ash transferred his personal equipment into the business 10 000
30 Stationery on hand 1 000

Required:

Analyse the above transactions in tabular form as follows:

A/C.DEBIT A/C.CREDIT A= E+ L

QUESTION TWO [35]

Bongani Magwaza has been in business in his hometown of Ixopo since 1 April 2014. He
decided to use 31 March as the financial year end for his business Bonga’s General Dealers.
The following information was obtained from the accounting records of Bonga’s on the last
day of the current financial year, 31 March 2019:

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 Bonga’s General Dealers Debits Credits
Pre-adjustment trial balance as at 31 March 2019 R R

Equipment at cost 336 000

Accumulated depreciation: equipment 33 600
Bank 170 800
Fixed deposit (maturity date: 30 June 2022) 220 000
Cash float 8 000
Inventory: trade goods 188 000
Debtors’ control 85 200
Allowance for credit losses 4 800
Creditors control 48 400
Long term borrowings: W Bank 100 000
Capital: Bonga 589 200
Drawings 92 000
Sales 997 200
Cost of sales 456 000
Interest on fixed deposit 12 200
Rental income 14 400
Administrative expenses 28 000
Water and electricity 34 600
Insurance 16 800
Stationery 9 200
Returns from debtors 16 000
Salaries and wages 139 200
1 799 800 1 799 800

Additional information:
1. On 31 March 2019 a physical stock-take revealed that the value of trading stock on hand
was R190 000, and stationery on hand was R3 200.
2. Employees’ salaries of R8 000 were not yet paid on 31 March 2019
3. The entity’s fire insurance policy was entered into on 1 January 2019. The annual
premium of R5 760 was paid for coverage until 31 December 2019.

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4. A tenant moved into office space available for rent on 30 November 2018. The tenant
prepaid the rent for 12 months. No deposit was required.
5. The equipment must be depreciated at the reducing balance method at 25% per year.
No equipment was purchased nor sold during the financial year.
6. The fixed deposit was invested on 1 July 2017. Interest on the investment is provided for
at 12% per year.
7. Included in the water and electricity expense above is an account of R3 200 that was
paid for Bonga’s private residence.
8. The 11% long term borrowing was taken on 30 September 2018 for a period of 4 years.
Provide for the outstanding interest. Repayment will begin on 1 July 2021.
9. Write-off a credit loss of R1 800 and increase the allowance for credit losses by R1 200.

Required:

Prepare the following for Heat’s Air Conditioners for the year ended 31 March 2019: (Show
all workings and ignore comparative figures).
2.1 Statement of profit and loss and other comprehensive income,
2.2 Statement of changes in equity, and
2.3 Statement of financial position.

QUESTION THREE [15]

Stan and Ben are in partnership, sharing profits and losses in the ratio of their capital
account balances at the beginning of the financial year.
On 30 June 2019, Stan deposited an additional R150 000 into the partnerships bank
account. The introduction of Stan’s capital has been correctly recorded.

The following is an extract of relevant accounts from the trial balance at financial year end 31
December 2019:
R
Capital - Stan 450 000
Capital - Ben 300 000
Current account - Stan at 1 January 2019 – credit balance 37 500
Current account - Ben at 1 January 2019 – debit balance 12 000
Drawings - Stan 48 450
Drawings – Ben 32 250
Profit for the year 937 500
Turnover/sales for the year 1 800 000

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Additional information:
The partnership agreement provided for the following:
• Interest on capital to be allowed at 10% per year.
• Interest to be provided at 12% per year on current account balances at the beginning
of the year.
• Interest on drawings to be charged at 12% per year on daily balances. This was
calculated as follows: Stan – R3 825; and Ben – R2 775.
• Salaries to be allowed as follows: Stan - R22 500 per month; and Ben R15 000 per
month.
• Stan is to be allowed a commission equal to 5% of turnover for the year.
• Ben is to be allowed a bonus equal to 7,5% of the net profit after allowing for interest
on capital.
• The remaining profits are to be shared in the ratio of the partners capital accounts at
the beginning of the year.

Required:
Prepare the following ledger accounts for the year ended 31 December 2019:
Appropriation account

NB: The accounts must be properly balanced/closed. The detail column must show the
contra account for each transaction.

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QUESTION FOUR [25]

The following information was obtained from the accounting records of First Ltd:

Summarised financial position for year ended 31 December

2019 2018
ASSETS R R
Land and buildings 104 865 95 470
Investments Nil 1 100
Machinery at carrying amount 6 500 1 600
Cost 8 700 5 400
Accumulated depreciation (2 200) (3 800)
Inventories 12 000 9 000
Trade debtors 10 205 30 700
Cash at bank 13 500 Nil

TOTAL ASSETS 147 070 137 870

EQUITY & LIABILITIES

100 070 78 470
Equity
Ordinary share capital 85 000 68 000
Retained earnings 15 070 10 470

Liabilities 47 000 59 400

Long term loan 20 000 30 000
Bank overdraft Nil 700
Trade creditors 6 600 9 200
Income tax payable 2 000 4 100
Dividends payable 18 400 15 400

TOTAL EQUITY AND LIABILITIES 147 070 137 870

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Additional information:
1. The following was extracted from the statement of comprehensive income and statement
of changes in equity for financial year ended 31 December 2019.
Income: R
Profit on sale of land and buildings 7 000
Profit on sale of machinery 300
Expenses:
Depreciation 1 000
Administration expenses 29 730
Selling expenses 12 005
Loss on sale of investment 500
Interest expense 20
Taxation expense 18 000
Profit for the year 23 000
Appropriation:
Dividends declared 18 400

2. The investments of the company were sold for R600 cash.

3. A portion of the land and buildings with a cost price of R11 000 was sold during the year
for R18 000 cash. Additional land was purchased for R20 395 cash.
4. Machinery to the value of R6 400 was purchased for cash. Machinery with a carrying
amount of R500 was sold at a profit of R300.
5. The company paid a portion of the long term liability. No further long term loans were
taken.
6. The company issued new ordinary shares during the year.

Required:

Draft the statement of cash flows for the year ended 31 December 2019 method in compliance
with international financial reporting standards in as much as the given information allows. The
indirect method is in use. Show all workings.

END OF QUESTION PAPER