SENIOR CERTIFICATE EXAMINATIONS/

NATIONAL SENIOR CERTIFICATE EXAMINATIONS

ACCOUNTING P1

2023

MARKS: 150

TIME: 2 hours

This question paper consists of 11 pages,

a formula sheet and a 10-page answer book.

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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. A Financial Indicator Formula Sheet is attached at the end of this question

paper.

4. Show ALL workings to earn part-marks.

5. You may use a non-programmable calculator.

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

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

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

Statement of Comprehensive Income
1 60 45
and Current Assets
Retained Income Note, Cash Flow
2 35 25
Statement and Financial Indicators
3 Interpretation of Financial Information 40 35

4 Corporate Governance 15 15

TOTAL 150 120

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QUESTION 1: STATEMENT OF COMPREHENSIVE INCOME AND CURRENT

ASSETS (60 marks; 45 minutes)

1.1 Choose a description from COLUMN B that matches the term in COLUMN A.
Write only the letter (A–E) next to the question numbers (1.1.1 to 1.1.4) in the
ANSWER BOOK.

COLUMN A COLUMN B
1.1.1 Independent auditor A investment such as a fixed deposit over
a three-year period
1.1.2 Capital employed
B debt to be settled within 12 months
1.1.3 Current liability
C a staff member of a company who sets
1.1.4 Financial asset up effective internal control procedures

D total of Ordinary Shareholders' Equity

and Non-current Liabilities

E expresses an unbiased opinion on the

reliability of financial statements
(4 x 1) (4)

1.2 STARLIGHT LTD

The information relates to the financial year ended 28 February 2023.

The company trades in electrical items.

REQUIRED:

1.2.1 Refer to Information B (i).

Calculate the value of the closing stock of light bulbs on

28 February 2023, using the weighted-average method. (4)

1.2.2 Refer to Information B (ii).

Calculate:
 Profit or loss on disposal of vehicle (5)
 Total depreciation for the year (7)

1.2.3 Complete the following:

 Statement of Comprehensive Income for the year ended
28 February 2023 (29)
 Current Assets section of the Statement of Financial Position (11)

NOTE: Some figures have been entered in the ANSWER BOOK.

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INFORMATION:

A. Extract from the Pre-adjustment Trial Balance on 28 February:

Balance Sheet accounts section 2023 2022

Loan: Pearl Bank 524 400 690 000
Vehicles ? 1 250 000
Accumulated depreciation on vehicles ? 420 000
Equipment 822 000 774 000
Accumulated depreciation on equipment ? 360 000
Fixed deposit: Pearl Bank 320 000
Trading stock 2 969 800
Debtors' control 645 250
Provision for bad debts ? 21 020
Bank (Dr) ?
SARS: Income tax (provisional tax payments) 875 000
Nominal accounts section
Sales 17 850 000
Cost of sales 10 200 000
Salaries and wages ?
Commission income 85 900
Rent income 89 700
Audit fees 155 200
Directors' fees 2 015 000
Sundry expenses 219 760
Bad debts 16 200
Interest on fixed deposit ?
Asset disposal (cash received on vehicle sold) 91 500

B. Adjustments and additional information:

(i) A physical stock count on 28 February 2023 revealed R2 774 800

stock on hand. However, this figure excludes the closing stock
figure for light bulbs. Note that the weighted-average method is
used to value the light bulbs.

Details of the light bulbs are as follows:

UNIT PRICE TOTAL

UNITS
(R) (R)
Stock on 1 Mar. 2022 8 000 52 416 000
Purchases 47 000 74 3 478 000
Available for sale 55 000 3 894 000
Carriage on purchases 27 500
Stock on 28 Feb. 2023 1 700 ? ?

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(ii) Fixed assets and depreciation:

Vehicles:
 An old vehicle was sold for R91 500 on 30 November 2022.
The amount received was recorded but no further entries were
made.

Details of the vehicle sold:

Carrying value on 1 March 2022 R104 000
Depreciation: 20% p.a. on the diminishing-balance method

 Depreciation on the remaining vehicles: R145 200

Equipment:
 Equipment is depreciated at 15% p.a. on cost.
 New equipment was bought on 31 July 2022.

(iii) The auditors are owed a further R38 800 for the current financial
year.

(iv) Received R9 000 from the insolvent estate of debtor Billy Croon.
His estate paid 80 cents to the rand of his outstanding balance. The
money received was recorded. The balance of his account must still
be written off.

(v) The provision for bad debts must be increased to R25 720.

(vi) Directors' fees:

 The company has two directors who were appointed in 2019.

A third director was appointed on 1 October 2022.
 The directors all earn the same monthly fee.
 Directors' fees paid during the financial year have been
recorded, but one director has already been paid for March and
April 2023.

(vii) Rent income includes the rent for March 2023 received from
the tenant. The monthly rent was increased by R1 170 on
1 January 2023.

(viii) Loan: Pearl Bank

 Interest on the loan capitalised has not been recorded.

 Fixed monthly repayments (including interest) have been paid
and correctly recorded for the financial year.
 Interest on the loan amounts to 60% of the monthly repayments.

(ix) Income tax for the year was calculated to be R858 140.

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QUESTION 2: RETAINED INCOME NOTE, CASH FLOW STATEMENT AND

FINANCIAL INDICATORS (35 marks; 25 minutes)
The information relates to Swallows Ltd for the financial year ended 28 February 2023.
REQUIRED:
2.1 Prepare the Retained Income Note for the year ended 28 February 2023. (9)
2.2 Calculate the following figures for the 2023 Cash Flow Statement:
 Change in loan (2)
 Proceeds from shares issued (3)
2.3 Complete the Cash Effects of Operating Activities section of the Cash Flow
Statement. (10)
2.4 Calculate the following financial indicators on 28 February 2023:
 Current ratio (2)
 Net asset value (4)
 % return on total capital employed (ROTCE)
NOTE: The average capital employed is R20 343 500. (5)
INFORMATION:
A. Extract: Statement of Comprehensive Income on 28 February 2023
Sales R12 754 500
Depreciation 316 500
Interest on loan 648 000
Net profit after tax (tax rate: 30% on net profit) 1 526 000

B. Extract: Statement of Financial Position on 28 February

2023 2022
Ordinary share capital R13 959 500 R12 312 500
Retained income ? 237 400
Loan: Daisy Bank 6 348 000 7 200 000
Total current assets 1 479 600 2 342 000
Total current liabilities 822 000 976 000
Shareholders for dividends 575 400 475 000
SARS: Income tax 23 600 (Dr) 42 100 (Cr)
C. Share capital
1 250 000 Shares on hand on 1 March 2022
180 000 Shares repurchased on 1 May 2022. They do not qualify for dividends.
An EFT of R1 989 000 was issued for the repurchase.
? Shares issued on 1 October 2022 at R11,40 per share
1 370 000 Shares on hand on 28 February 2023

D. Dividends
 An interim dividend of 32c per share was paid on 31 August 2022.
 A final dividend was declared on 28 February 2023.

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QUESTION 3: INTERPRETATION OF FINANCIAL INFORMATION

(40 marks; 35 minutes)
You are provided with information relating to Qumbu Ltd for the year ended
28 February 2023.
REQUIRED:
NOTE: Provide financial indicators with figures and trends to support your comments
or explanations (where applicable).
3.1 Liquidity
Explain whether or not the company is managing their working capital efficiently.
Quote TWO financial indicators. (5)
3.2 % shareholding
Denise Taylor, the CEO, owned 540 000 shares in the company on
1 March 2022. She continued to buy additional shares on the JSE at various
times during the year. On 28 February 2023, Denise became the majority
shareholder as she then owned 51% of the shares in issue.
 Calculate the total number of additional shares that Denise purchased. (4)
 Give ONE possible reason why Denise was determined to become the
majority shareholder. (2)
3.3 Decisions by directors, risk and gearing
3.3.1 The Cash Flow Statement revealed decisions taken by the directors.
 Identify TWO major decisions taken by the directors in 2023 that
were different to those from the previous year.
 Give ONE reason for these decisions. (6)
3.3.2 Explain the impact of these decisions on the degree of financial risk
over the two years. Quote ONE financial indicator. (3)
3.3.3 Explain how these decisions affected the gearing of the company.
Quote ONE financial indicator. (4)
3.4 Dividends and earnings
3.4.1 Certain shareholders expressed concern about the change in the
dividend payout policy. Explain TWO points to support their opinion. (4)
3.4.2 Explain whether shareholders would be satisfied with the trend in the
% return and earnings of the company, as well as the dividends they
earned. Quote TWO financial indicators. (6)
3.5 Comments at the annual general meeting
Some shareholders are angry about the trends of the following two issues
relating to the performance of the company:
 Cash and cash equivalents at the end of the year
 The market price of the shares on the JSE
In EACH case, provide evidence for the shareholders' concerns over these
trends, and explain why they would be concerned about the future prospects for
the company. (6)
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INFORMATION:

A. Financial indicators and additional information on 28 February:

2023 2022
% operating expenses on sales 14,1% 12,0%
% operating profit on sales 14,5% 16,5%
% net profit on sales 10,4% 10,9%
Debt-equity ratio 0,1 : 1 0,4 : 1
Current ratio 0,9 : 1 1,3 : 1
Acid-test ratio 0,3 : 1 0,6 : 1
Average debtors' collection period 42,4 days 30,8 days
Earnings per share 60 cents 74 cents
Dividends per share 64 cents 50 cents
Dividend payout rate 106,7% 67,6%
% return on average equity 5,7% 7,2%
% return on average capital employed 9,0% 11,4%
Net asset value per share 1 007 cents 980 cents
Market price of shares on JSE 850 cents 1 020 cents
Interest rate on loans 13% 13%
Interest rate on fixed deposits 7% 7%

B. Share capital and % shareholding:

 On 1 March 2022, the company issued an additional 300 000 shares.
 On 28 February 2023, there were 1 500 000 shares in issue.

C. Extract from the Cash Flow Statement on 28 February:

2023 2022
R R
Cash flow from operating activities (1 890 000) (652 000)
Cash flow from investing activities
Cash flow from financing activities 1 950 000 3 250 000
Shares 3 750 000 (250 000)
Loans (1 800 000) 3 500 000
Net change in cash and cash equivalents (836 000) 2 200 000
Cash and cash equivalents at beginning 1 914 000 (286 000)
Cash and cash equivalents at end 1 078 000 1 914 000

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QUESTION 4: CORPORATE GOVERNANCE (15 marks; 15 minutes)

4.1 Choose the correct word(s) from those given in brackets. Write only the word(s)
next to the question numbers (4.1.1 to 4.1.3) in the ANSWER BOOK.

4.1.1 The audit report presented in the annual report is addressed to the
(directors/shareholders) of a company.

4.1.2 A/An (qualified/unqualified) audit report will contribute to a favourable

image of the company.

4.1.3 A (qualified/disclaimer of opinion) report is received when the external

auditor refuses to express an opinion on the reliability of the financial
statements. (3)

4.2 MBOMBELA LTD

Refer to the extract below.

Shareholders of the company were unhappy with reports about the chief
financial officer (CFO) and approached the board of directors for a special
meeting to discuss their concerns.

REQUIRED:

Explain THREE questions that the shareholders would want to raise with the
board of directors at the meeting.

NOTES FROM BOARD MEETINGS OF DIRECTORS

The CFO, Nestor Donald, commenced duty at Mbombela Ltd on 1 May 2018
with an annual salary of R1,8 million based on his qualifications of a master's
degree in Accounting Science and a doctorate from international universities.

In September 2022, Donald informed the board that he was offered a package
of R3,4 million by Rose Ltd, a competitor. In response to this, the board of
Mbombela Ltd decided to match the offer of Rose Ltd.

A whistle-blower (informant) alerted the chief executive officer (CEO) that

Donald has no post-graduate qualifications. It was subsequently discovered that
he had also lied about the job offer from Rose Ltd. (6)

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4.3 NEPTUNE LTD

Refer to the information presented by the external auditors.

Concern was raised about the productivity of the business and the remuneration
(fees and salaries) of directors and employees.

REQUIRED:

Provide ONE point of possible mismanagement or corruption under EACH of

the following subheadings. Quote relevant figures to support your answer in
EACH case.

 Payment of directors' fees (3)

 Salaries of other employees (3)

Information identified by the external auditors on 30 April:

NOTE: Rand amounts are expressed in millions.

% change 2023 2022

Amount Amount
No. No.
R R R
General information:
Gross profit + 8,1% 335 m 310 m
Operating profit – 4,7% 101 m 106 m
Net profit – 3,0% 96 m 99 m
Directors' fees: + 37,6% 11 90,8 m 8 66 m
Chief executive officer + 44,4% 1 26,0 m 1 18 m
Chief financial officer + 5,0% 1 12,6 m 1 12 m
Other full-time directors + 45,0% 9 52,2 m 6 36 m

Average fee (per other directors) - 3,3% 5,8 m 6m

Other employees:
Salaries + 29,7% 275 91,3 m 220 70,4 m
Average salary (per employee) + 3,8% 332 000 320 000

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TOTAL: 150

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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 & other receivables + Cash & cash equivalents) : Current liabilities

Average trading stock x 365 Cost of sales .

Cost of sales 1 Average trading stock

(See Note 1 below)

Average debtors x 365 Average creditors x 365

Credit sales 1 Cost of sales 1
(See Note 2 below)
Net income after tax x 100
Net income after tax x 100 Number of issued shares 1
Average shareholders' equity 1
(See Note 3 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: 1. Trading stock at the end of a financial year may be used if required in a question.
2. Credit purchases may be used instead of cost of sales (figures will be the same if stock is constant).
3. 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.

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 NATIONAL
SENIOR CERTIFICATE

GRADE 12

ACCOUNTING P1

NOVEMBER 2022

MARKS: 150

TIME: 2 hours

This question paper consists of 13 pages,

a formula sheet and an 11-page answer book.

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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. A Financial Indicator Formula Sheet is attached at the end of this question

paper.

4. Show ALL workings to earn part-marks.

5. You may use a non-programmable calculator.

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

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

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

Company Financial Statements:
1 Statement of Comprehensive Income 60 45
and Statement of Financial Position
Cash Flow Statement and Financial
2 35 25
Indicators
3 Interpretation of Financial Statements 40 35

4 Corporate Governance 15 15

TOTAL 150 120

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QUESTION 1: COMPANY FINANCIAL STATEMENTS: STATEMENT OF

COMPREHENSIVE INCOME AND STATEMENT OF FINANCIAL
POSITION (60 marks; 45 minutes)

The information relates to Laysano Ltd for the financial year ended on
28 February 2022.

REQUIRED:

1.1 Refer to Information B (i).

Calculate the cost of the stock that was damaged. (5)

1.2 Refer to Information B (ii).

Calculate:
1.2.1 The profit/loss on sale of the delivery vehicle (5)
1.2.2 Total depreciation for the year (4)

1.3 Complete the following for the year ended 28 February 2022:
1.3.1 Statement of Comprehensive Income (28)
1.3.2 Equities and Liabilities section of the Statement of Financial Position (18)
NOTE: Some amounts are provided in the ANSWER BOOK.

INFORMATION:

A. Extract: Balances and totals from the records on 28 February:

2022 2021
(R) (R)
Ordinary share capital 6 670 000
Retained income ?
Loan: Saturn Bank 1 159 000 1 280 750
Debtors' control 2 746 300
Provision for bad debts ? 85 840
Fixed deposit 1 830 000
SARS: Income tax (provisional tax payments) 130 000
Creditors' control 428 000
Sales 9 355 250
Cost of sales 5 665 250
Directors' fees 1 124 000
Audit fees 83 000
Salaries and wages (including contributions) 1 381 500
Commission income 4 560
Rent income 183 600
Security expenses 72 500
Interest on fixed deposit ?
Interest on loan 142 250
Depreciation 328 200
Sundry expenses ?
Dividends on ordinary shares (interim) 207 000
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B. Additional information:

(i) Stock records:

 The business sells sports shirts.
 The weighted-average method is used to value the shirts.
 The following information was extracted from the records:
UNIT TOTAL
UNITS
PRICE R
Stock balance: 1 Mar. 2021 1 900 R660 1 254 000
Purchases during the year 7 100 R750 5 325 000
Total available for sale 9 000 6 579 000
Stock balance: 28 Feb. 2022 1 185 ? ?
Units sold 7 750

 NOTE: Damaged shirts were not included in the closing stock figure.
The damaged shirts must be written off as a loss.

(ii) Fixed assets:

2022 2021
R R
Land and buildings
Vehicles ? 1 750 000
Accumulated depreciation on vehicles ? 620 000
Equipment 956 000 ?
Accumulated depreciation on equipment ? 318 000

 Vehicles are depreciated at 20% p.a. on a diminishing balance.

 Equipment is depreciated at 15% p.a. on cost.

The bookkeeper calculated the total depreciation as R328 200 before

taking the following into account:

Vehicles:
 An old delivery vehicle, with a carrying value of R170 000 on
1 March 2021, was sold for R140 000 on 1 December 2021.

Equipment:
 An alarm system costing R48 000 was installed on 1 August 2021.

(iii) R33 700 received from a debtor, whose account was previously written off
as irrecoverable, was posted in error to the Debtors' Control Account.
This must be corrected.

The provision for bad debts must then be adjusted to 3% of the Debtors'
Control balance.

(iv) The business signed a contract with Always-Safe Securities for guarding
the premises. An annual premium of R32 400 for the period ended
31 July 2022 was paid in full on 1 August 2021.

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(v) All details in respect of the February 2022 salary of an employee were
incorrectly debited to the Sundry Expenses Account. The following
information relates to his salary:

DEDUCTIONS
NET SALARY
SARS: PAYE PENSION FUND
R11 525 R3 235 R990

The business contributes R2 for every R1 deducted for the Pension Fund.

NOTE: EFT payments have already been processed for all relevant
amounts payable.

(vi) A tenant has been leasing office space on the premises since March 2020.
She has paid the rent until 30 April 2022. Note that the monthly amount
was reduced by R1 350 with effect from 1 January 2022.

(vii) Income tax for the year is calculated at 30% of the net profit. The net profit
after tax is R356 300 after adjustments.

(viii) Loan: Saturn Bank

 All transactions with respect to the loan were recorded.

 Interest of R142 250 on the loan is capitalised.
 A fixed monthly instalment (including interest) was paid in full.
 The capital portion of the repayments will increase by 10% over the
next financial year.

(ix) Shares and dividends:

 On 28 February 2022 there were 1 150 000 shares in issue.

 A final dividend was declared on 28 February 2022.
 Total dividends for the year amounted to R345 000.

(x) Net asset value per share (NAV):

After taking into account all adjustments, the net asset value (NAV) was
correctly calculated as 675 cents per share.

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QUESTION 2: CASH FLOW STATEMENT AND FINANCIAL INDICATORS

(35 marks; 25 minutes)

2.1 Choose the correct word from those given in brackets. Write only the word next
to the question numbers (2.1.1 to 2.1.3) in the ANSWER BOOK.

2.1.1 (Solvency/Liquidity) is the ability of the business to pay off all debts
using existing assets.

2.1.2 Effective control of income and expenses is a reflection of the

(risk/profitability).

2.1.3 The use of loans to finance a company is known as (returns/gearing).

(3 x 1) (3)

2.2 EAGLE LTD

The information relates to the financial year ended 28 February 2022.

The business is registered with an authorised share capital of 1 800 000 shares.

REQUIRED:

2.2.1 Prepare the Retained Income Note on 28 February 2022. (7)

2.2.2 Calculate the following amounts for the Cash Flow Statement:

 Income tax paid (4)

 Funds used to repurchase shares (5)
 Net change in cash and cash equivalents (4)

2.2.3 Calculate the following financial indicators on 28 February 2022:

 Debt-equity ratio (3)

 % return on average capital employed (5)
 Dividends per share (4)

INFORMATION:

A. Extract: Statement of Comprehensive Income on 28 February 2022:

Sales R11 232 000
Depreciation 428 300
Interest on loan 382 000
Net profit before tax 1 297 700
Income tax 389 300
Net profit after tax 908 400

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B. Items identified from the Statement of Financial Position on 28 February:

2022 2021
Shareholders' equity 12 350 800 10 750 000
Ordinary share capital 11 968 000 ?
Retained income 382 800 ?
Loan: Lilly Bank 2 886 000 3 700 000
Total capital employed 15 236 800 14 450 000
Cash and cash equivalents 44 700 8 000
Bank 36 700 0
Petty cash 8 000 8 000
SARS: Income tax 14 400 Cr 21 300 Dr
Shareholders for dividends ? 271 400
Bank overdraft 0 133 000

C. Ordinary shares:

NO. OF SHARES

Number of shares on 1 March 2021 1 180 000

Number of shares issued on 1 July 2021 at R9,30 each 300 000

Number of shares repurchased on 1 January 2022 at R1,40
120 000
above the average share price
Number of shares on 28 February 2022 1 360 000

D. Dividends:
 Interim dividends of R710 400 were paid on 31 August 2021.
 A final dividend of 12 cents per share was declared to all shareholders on the
share register on 28 February 2022.

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QUESTION 3: INTERPRETATION OF FINANCIAL STATEMENTS

(40 marks; 35 minutes)

3.1 Choose the appropriate item from the list provided to fit EACH purpose below.
Write only the letter (A–D) next to the question numbers (3.1.1 to 3.1.3) in the
ANSWER BOOK.

List of items that would appear in a company's annual report:

A Statement of Comprehensive Income (Income Statement)

B Statement of Financial Position (Balance Sheet)
C Cash Flow Statement
D Directors' Report

NO. PURPOSE
3.1.1 To reflect the effects of operating, investing and financing activities

3.1.2 To provide a written explanation of the financial performance of a

company
3.1.3 To reflect the performance of a company in terms of its gross,
operating and net profit (3)

3.2 JESSIE LTD

The information relates to Jessie Ltd for the financial year ended
28 February 2022.

BACKGROUND INFORMATION:

Mike Stuurman was appointed as the chief financial officer (CFO) on

1 March 2021 as a result of his successful track record of improved
performances at other companies where he had worked previously. He is not a
shareholder of Jessie Ltd.

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REQUIRED:

NOTE: Provide figures, trends, financial indicators or calculations in EACH

case to support your comments and explanations.

3.2.1 Profitability:

Mike has informed the board of directors that he has identified and
rectified a number of incidents of fruitless and wasteful expenditure in
the company's records. Provide TWO financial indicators that justify
the success of Mike's strategies. (4)

3.2.2 Dividends:

 Explain whether the change in the dividend pay-out rate in 2022

will benefit the company or not. (3)

 Sue Lee, a shareholder who owns 5 000 shares, is satisfied with

the dividends she has received despite the change in the dividend
policy. Explain why she feels this way. (3)

3.2.3 Risk and gearing:

Some shareholders feel that Mike was reckless when he increased

the loan by R3,35 million soon after his appointment as CFO. Explain
why you do not agree with them. Provide TWO points. (6)

3.2.4 Share capital and % shareholding: Refer to Information C and D.

 Calculate Brent's % shareholding on 28 February 2022. (5)

 Brent and Kerina decided that they would combine their votes at
the upcoming annual general meeting (AGM).

o Explain ONE possible reason for this decision, with figures. (3)

o As an existing shareholder, explain why you would be

concerned about the strategy of Brent and Kerina. Provide
TWO points. (4)

3.2.5 Refer to Information A, B and C.

Mike received an offer for the post of CFO at Premier Ltd, at a much
better remuneration package than the current one at Jessie Ltd. The
directors of Jessie Ltd met and proposed that they offer him a better
package than that offered by Premier Ltd.

Explain THREE points relating to the financial results of the company,

besides those mentioned above, that the Remunerations Committee
can use to justify offering Mike an improved package to remain at
Jessie Ltd. (9)

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INFORMATION:

A. Financial indicators calculated on 28 February:

2022 2021
Mark-up % achieved 70% 60%
% operating expenses on sales 14,8% 27,8%
% net profit on sales 24,7% 10,3%
Solvency ratio 3,6 : 1 5,3 : 1
Debt-equity ratio 0,3 : 1 0,2 : 1
Earnings per share 408 cents 123 cents
Dividends per share 190 cents 120 cents
Dividend pay-out rate 46,6% 97,6%
% return on average shareholders' equity 20,7% 7,3%
% return on average capital employed 16,9% 7,5%
Net asset value per share 1 841 cents 1 685 cents

B. Additional information on 28 February:

2022 2021
Market price of shares on stock exchange 1 920 cents 1 540 cents
Interest rate on loans 7,2% 8,5%
Interest rate on fixed deposits 4,5% 3,5%

C. Issue and repurchase of shares:

Based on Mike's advice, the directors decided to issue additional shares

to existing shareholders at R21,00 per share. Shareholders were
allowed to purchase 10 shares for every 40 shares they owned. All
shareholders exercised this right.

NO. OF SHARES
Number of shares in issue on 1 March 2021 1 300 000
Number of shares repurchased on 31 August 2021 240 000
Number of new shares issued to existing shareholders
on 28 February 2022 at R21,00 per share (these 265 000
shares do not qualify for 2022 dividends)
Number of shares in issue on 28 February 2022 1 325 000

D. Extract from shareholders' register:

Brent Flower and Kerina Moss are shareholders in the company

but not directors. None of their shares were repurchased on
31 August 2021.

BRENT KERINA
TOTAL
FLOWER MOSS
Number of shares they owned on
300 000 280 000 580 000
1 March 2021
% shareholding on 1 March 2021 23,1% 21,5% 44,6%
% shareholding on 28 February 2022 ? 26,4% ?

40

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QUESTION 4: CORPORATE GOVERNANCE (15 marks; 15 minutes)

Extracts from local newspapers have been adapted and presented on the next page.
Use the information presented and your knowledge on companies to answer the
questions.
REQUIRED:

4.1 The Johannesburg Securities Exchange (JSE)

Refer to paragraph 1.

 Explain why companies might want to be listed on the JSE. (2)

 Explain why the JSE would not tolerate 'incorrect, false and misleading
financial results' from companies that are listed. (2)

4.2 Audit reports

Refer to paragraph 2.

Explain the difference between a qualified audit report and a disclaimer of

opinion audit report. (2)

4.3 Concerns of shareholders

Refer to paragraphs 1, 2 and 3.

As a concerned shareholder, what questions would you raise at the AGM?

Provide THREE different questions. In EACH case explain an appropriate
reason.
(3 x 3) (9)

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INFORMATION:

JSE TAKES ACTION AGAINST FORMER NON-EXECUTIVE

DIRECTORS OF MALLO LTD
Paragraph 1
Ben Jimo, Kim Lestin and Solly Prins were disqualified by the JSE from serving on the
board of directors of any listed company for the next five years. The three directors
failed to fulfil their oversight roles in relation to the financial statements. The JSE fined
Mallo Ltd R6,5 million for publishing a 'number of sets of incorrect, false and
misleading financial results'.

Paragraph 2
They were appointed as members of the Audit and Risk Committee in 2018 when
Mallo Ltd was listed on the JSE. They resigned from the board of directors after the
company published its unaudited mid-year financial results in 2021. The independent
auditors had issued a qualified report in 2019 and a disclaimer of opinion audit
report in 2020.

Paragraph 3
Jimo, Lestin and Prins all admitted to having no knowledge of corporate governance
or the rules and regulations governing the financial reporting of a JSE-listed company.
They admitted that they were inexperienced directors and so had not fulfilled their duty
of ensuring that Mallo Ltd had proper financial reporting procedures in place.

15

TOTAL: 150

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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 & other receivables + Cash & 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 Cost of sales 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.

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 NATIONAL
SENIOR CERTIFICATE

GRADE 12

ACCOUNTING P1

NOVEMBER 2021

MARKS: 150

TIME: 2 hours

This question paper consists of 10 pages,

a formula sheet and a 10-page answer book.

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NSC

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 Statement of Financial Position 55 45
Share Capital, Financial Indicators and
2 35 25
Cash Flow Statement
Interpretation of Company Financial
3 40 30
Information
4 Corporate Governance 20 20

TOTAL 150 120

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QUESTION 1: STATEMENT OF FINANCIAL POSITION (55 marks; 45 minutes)

JIMO LIMITED

The information relates to the financial year ended 30 June 2021. The business sells
formal clothing for men and women.

REQUIRED:

1.1 Refer to Information B.

Calculate the value of the closing stock of formal suits that was omitted from
the stock sheets on 30 June 2021. (5)

1.2 Refer to Information C.

Use the table provided to calculate the correct net profit after tax for the year
ended 30 June 2021. Indicate '+' for increase and '-' for decrease. (12)

1.3 Refer to Information A–H.

Complete the following on 30 June 2021:

 Retained Income Note (5)
 Statement of Financial Position (Balance Sheet) (33)
NOTE:
 Adjustments from Information C also affect the Statement of Financial
Position (Balance Sheet).
 Show workings. Certain figures are provided in the ANSWER BOOK.
 Figures are NOT required in the shaded areas.

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INFORMATION:

A. List of balances, before taking into account all adjustments below:

30 June 2021 30 June 2020
(R) (R)
Ordinary share capital ? ?
Retained income 3 240 000
Mortgage loan: Best Bank 3 755 000 4 175 000
Trading stock 4 198 500
SARS: Income tax (provisional tax) 1 200 000
Net trade debtors 3 668 810
Bank overdraft ?
Petty cash and cash float ?
Creditors' control 1 253 000
Accrued income/Income receivable 8 000
Shareholders for dividends 1 170 000 821 700

B. The accountant omitted the closing stock figure of formal suits in the trading stock
balance provided in Information A.

NOTE:
 The first-in-first-out (FIFO) method is used to value the stock of the formal
suits.
 All other relevant entries have been recorded correctly.

The information relating to the stock of formal suits is as follows:

Balances: QUANTITY UNIT PRICE TOTAL VALUE
1 July 2020 110 R1 900 R209 000
30 June 2021 240 ? ?
Purchases: 760 R1 943 500
14 Nov. 2020 360 R2 350 R846 000
10 Feb. 2021 170 R2 600 R442 000
18 May 2021 230 R2 850 R655 500
Returns:
25 May 2021 24 R2 850 R68 400

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C. The net profit before tax, R4 918 950, was calculated before taking into account/
correcting the following:

(i) Audit fees include R123 600 which was paid in advance for the next
financial year.

(ii) The repayments on the loan are fixed at R35 000 per month (including
capitalised interest).

The balances as per loan statement were:

 1 July 2020, R4 175 000
 30 June 2021, R4 028 000

Provide for interest on loan.

(iii) Rent income:

Rent of R74 000 was received from a tenant for the period 1 July 2020 to
31 August 2021. This has been recorded. This amount takes into account a
reduction of R750 per month from 1 May 2021. The year-end adjustment
has not yet been made.

(iv) After taking into account the corrections above, it was determined that an
additional R85 250 is still owed to SARS in respect of income tax for the
year.

D. Shares and dividends:

 26 000 shares were repurchased on 1 July 2020 at R3,00 above the average
share price.
 The business did not pay interim dividends during the 2021 financial year.
 A final dividend of 65 cents per share was declared on 30 June 2021.
 1 800 000 shares were in issue on 30 June 2021.

E. Debtors with credit balances totaling R11 000 must be transferred to the
Creditors' Ledger.

F. On 30 June 2021, Jimo Ltd returned 10 ladies' coats to the supplier, Bargain
Wholesalers. The selling price was R1 750 each. The mark-up was 25% on cost.
No entry has been made.

G. A fixed monthly instalment of R35 000 (to cover loan repayments and interest)
has to be paid over the full period of the loan. Interest will decline over the life of
the loan. The interest on the loan budgeted for the next financial year is
R234 000.

H. The following financial indicators were calculated on 30 June 2021:

Acid-test ratio 1,2 : 1
Net asset value per share (NAV) 540 cents
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QUESTION 2: SHARE CAPITAL, FINANCIAL INDICATORS AND

CASH FLOW STATEMENT (35 marks; 25 minutes)

The information relates to Brewer Ltd for the financial year ended 28 February 2021.

REQUIRED:

2.1 Prepare the Ordinary Share Capital Note on 28 February 2021. (6)

2.2 Calculate the following financial indicators on 28 February 2021:

 % operating expenses on sales (2)

 Dividend per share (4)

 % return on average shareholders' equity (5)

2.3 Complete the Cash Flow Statement for the year ended 28 February 2021.
Certain figures are provided in the ANSWER BOOK. (18)

INFORMATION:

A. Shares and dividends:

DATE DETAILS OF SHARES
1 March 2020 800 000 in issue
30 June 2020 100 000 new shares issued
1 January 2021 30 000 shares repurchased at R1,20 more than the average
share price
28 February 2021 ? shares in issue

 Interim dividend of R162 000 was paid on 30 September 2020.

 A final dividend of 22 cents per share was declared on 28 February 2021.
B. Extract from the Statement of Comprehensive Income (Income Statement)
for the year ended 28 February 2021:
Sales R7 293 000
Cost of sales 4 862 000
Operating expenses 1 458 600
Net profit before tax 1 350 000
Net profit after tax 985 500

C. Extract from the Statement of Financial Position (Balance Sheet) on:

28 Feb. 2021 29 Feb. 2020
R R
Petty cash and cash float ? 20 000
Ordinary shareholders' equity 8 038 100 6 450 000
Ordinary share capital 7 395 000 6 400 000
Retained income 643 100 50 000
Loan: Sharks Bank 1 650 000 2 200 000
SARS: Income tax 29 100 Dr 35 900 Cr
Shareholders for dividends 191 400 115 300
Bank overdraft 0 95 200

35
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QUESTION 3: INTERPRETATION OF FINANCIAL INFORMATION

(40 marks; 30 minutes)

3.1 Choose a category of indicators from COLUMN B that matches the description
in COLUMN A. Write only the letter (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 The benefit that shareholders A liquidity
receive for investing in a company
B gearing
3.1.2 The ability of a business to pay off
C solvency
its short-term debts
D return on equity
3.1.3 The extent to which a company is
financed on borrowed capital (loans)
3.1.4 The ability of a business to settle all
its debts using existing assets
(4 x 1) (4)
3.2 FLEXI LTD AND BROOM LTD

The information relates to two companies.

BACKGROUND INFORMATION:
 Both companies operate in the fashion clothing industry. The financial year
ends on the last day of February each year.
 Bob Yates owns shares in both companies. On 1 November 2020, he
convinced the board of directors of Flexi Ltd to repurchase 150 000 of his
shares. He used the money received to purchase additional shares in
Broom Ltd.
NOTE: Where comments or explanations are required, quote financial
indicators, figures and trends to support your answer.

REQUIRED:
3.2.1 Profitability:
Quote and explain TWO financial indicators to show which company is
managing its expenses more efficiently, and is thereby more
profitable. (4)
3.2.2 Dividends, earnings and returns:
 Comment on the dividend pay-out policy of Flexi Ltd. Explain why
this is an irresponsible change in policy. Provide TWO points. (4)
 Comment on the % return on shareholders' equity of EACH
company. (4)
 A shareholder feels that earnings per share (EPS) in Broom Ltd
are better than that in Flexi Ltd. Explain why you agree with him. (4)

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3.2.3 Shareholding of Bob Yates in both companies:

 Comment on the price paid for the shares repurchased by
Flexi Ltd. Provide TWO points. (4)
 Calculate the number of shares that Bob purchased in Broom Ltd
with the money he received from the share buyback at Flexi Ltd. (2)
 Explain the effect of the share repurchase on the % shareholding
of Bob Yates in EACH company.
(4)
3.2.4 Financing strategies and gearing:
The directors of each company have taken deliberate decisions that
are reflected in their Cash Flow Statements.
 Explain the decisions taken by the directors of Broom Ltd and how
these will benefit the company. (4)
 Explain how the decisions taken by Flexi Ltd affected the risk and
gearing of the business. Quote TWO financial indicators. (6)
INFORMATION:
A. Extracts from the accounting records at the end of each year:
FLEXI LTD BROOM LTD
Feb. 2021 Feb. 2020 Feb. 2021 Feb. 2020
Number of shares in issue 700 000 850 000 1 500 000 1 100 000
Funds used to repurchase shares R1 980 000
Repurchase price R13,20
Increase in share capital 0 R2 640 000
Issue price of additional shares R6,60
Fixed assets purchased R1 000 000 R2 200 000
Increase (decrease) in loan R4 500 000 (R400 000)
B. Financial indicators, interest rate and market price of shares:
FLEXI LTD BROOM LTD
Feb. 2021 Feb. 2020 Feb. 2021 Feb. 2020
% operating expenses on sales 17,5% 14,6% 13,6% 17,0%
% operating profit on sales 18,2% 21,9% 24,2% 20,5%
% net profit on sales 13,8% 18,0% 19,6% 16,0%
Debt-equity ratio 1,1 : 1 0,4 : 1 0,2 : 1 0,4 : 1
% return on capital employed 10,2% 16,1% 17,2% 14,7%
% return on shareholders' equity 7,6% 12,2% 14,1% 10,7%
Net asset value per share 1 081 cents 1 128 cents 632 cents 609 cents
Market price of shares 990 cents 1 130 cents 660 cents 615 cents
Interest rate on loans 13% 13% 13% 13%
Earnings per share 80 cents 138 cents 72 cents 65 cents
Dividends per share 92 cents 82 cents 48 cents 70 cents
Dividend pay-out rate 115% 59% 67% 108%
C. Shareholding of Bob Yates in both companies
FLEXI LTD BROOM LTD
2021 2020 2021 2020
Shares in each company 283 500 433 500 ? 460 000
% shareholding in each company ? 51,0% ? 41,8%
40

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QUESTION 4: CORPORATE GOVERNANCE (20 marks; 20 minutes)

4.1 Explain why a disclaimer audit report would be bad for a company's reputation.
Provide TWO points. (4)

4.2 One of the most important decisions that shareholders have to make at the
annual general meeting (AGM) is to appoint directors to serve on the board.

 Explain why the shareholders have been given this responsibility. (2)

 If you were a shareholder, what factors or characteristics would you want to

find out about the directors who would get your vote? Explain TWO points
and give a reason for EACH. (6)

4.3 A recent news report stated that a major company, Baxco Ltd, had been
awarded a tender to supply equipment worth R20 m to a chain of private
hospitals. The report accuses the CFO (chief financial officer) of that company
of paying R2 m in cash to the CEO of the hospital group.

As a shareholder, explain what you would say at the AGM. Provide TWO
points. (4)

4.4 A major South African company has stated the following on its website and in
its Directors' Report.

We have set up ways for employees and external stakeholders to report

unethical conduct and incidents of individuals not complying with the
company's ethical policies.

We have set up a tip-off phone line (call centre) controlled by an independent

service provider.

All information will be treated confidentially. Whistle-blowers (informants) who

submit genuine information will be protected and will remain anonymous.

In your opinion, explain why this major company found it necessary to

implement this policy. Provide TWO points. (4)

20

TOTAL: 150

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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 & other receivables + Cash & 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 Cost of sales 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
 NATIONAL
SENIOR CERTIFICATE

GRADE 12

ACCOUNTING P1

NOVEMBER 2020(2)

MARKS: 150

TIME: 2 hours

This question paper consists of 10 pages,

a formula sheet and an 9-page answer book.

Copyright reserved Please turn over

Accounting/P1 2 DBE/November 2020(2)
NSC

KEEP THIS PAGE BLANK.

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Accounting/P1 3 DBE/November 2020(2)
NSC

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

Fixed Assets and Statement of
1 60 45
Comprehensive Income
Financial Indicators and Cash Flow
2 40 35
Statement
3 Interpretation of Financial Statements 35 30

4 Corporate Governance 15 10

TOTAL 150 120

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QUESTION 1: FIXED ASSETS AND STATEMENT OF COMPREHENSIVE INCOME

(60 marks; 45 minutes)

The information relates to Robbie Ltd for the financial year ended 28 February 2021.

REQUIRED:

1.1 Refer to INFORMATION B(a) for fixed assets.

Calculate the following:

1.1.1 The missing amounts denoted by (i) to (iii) on the Fixed Asset Note (11)

1.1.2 Profit/Loss on the sale of equipment on 1 October 2020 (2)

1.2 Refer to INFORMATION B(e) for trading stock.

Calculate the trading stock deficit. (4)

1.3 Prepare the Statement of Comprehensive Income for the financial year ended
28 February 2021. (43)

INFORMATION:

A. Extract from the Pre-adjustment Trial Balance on 28 February 2021:

R
Mortgage loan: Sufi Bank 1 005 500
Debtors' control 123 000
Trading stock ?
Provision for bad debts (1 March 2020) 7 030
Sales ?
Cost of sales 6 966 000
Salaries and wages 1 468 120
Directors' fees 3 330 000
Audit fees 91 000
Repairs 476 000
Rent income 173 000
Interest income 25 000
Interest on loan ?
Bad debts 19 200
Advertising 25 680
Sundry expenses 452 310
Ordinary share dividends 86 400

B. Adjustments and additional information:

(a) Fixed assets:

Vehicles:
 The business owns two vehicles on 28 February 2021. The second
vehicle was purchased on 1 November 2020.
 Vehicles are depreciated at 15% p.a. on cost.

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Equipment:
 Depreciation is 20% p.a. on the diminishing-balance method.
 Unused equipment was sold for R40 000 on 1 October 2020.
Accumulated depreciation on the equipment sold was R36 600 on
1 March 2020.
Extract of the Fixed Asset Note:
VEHICLES EQUIPMENT
Cost (1 Mar. 2020) 460 000 360 000
Accumulated depreciation (1 Mar. 2020) (396 750) (187 595)
CARRYING VALUE (1 March 2020) (i) 172 405
Additions (at cost) 510 000 0
Disposals (at carrying value) 0 (iii)
Depreciation (ii) (31 281)
CARRYING VALUE (28 February 2021)
Cost (28 Feb. 2021) 970 000 285 000
Accumulated depreciation (28 Feb. 2021)

(b) The business maintains a mark-up of 120% on cost. Note that trade
discounts of R648 000 were granted to special customers.
(c) The account of debtor B Melta, R800, must be written off.
(d) Provision for bad debts must be adjusted to 5% of outstanding debtors.
(e) Trading stock is valued on the weighted-average method. The Ledger
Account and records reflect that 280 units should be on hand. However, the
physical stock count reflects only 262 units on hand. The stock records are
as follows:
UNITS UNIT PRICE TOTAL
Stock at beginning of year 200 R3 600 R720 000
Purchased during the year 1 840 R4 100 R7 544 000
Returns: damaged units 40 R4 100 R164 000
Available for sale 2 000 R8 100 000
Stock units per records 280 ? ?
(f) 30% of the audit fees is still outstanding.
(g) The monthly rent income did not change during the year. During
February 2021 the tenant paid R9 000 for repairs to the premises, and
deducted this from his rent for February 2021. Repairs are the responsibility
of the company, and this was not recorded. The rent for March 2021 was
received in advance.
(h) The company has four directors earning the same fee. One director resigned
on 31 May 2020 and received his fees up to this date. Another director is still
owed fees for January and February 2021.
(i) Advertising consists of a contract with a newspaper for the entire financial
year. Payments are monthly, however instalments were paid for 11 months
only. NOTE: The monthly rate decreased by R240 from 1 November 2020.
(j) The net profit after tax was accurately calculated at R1 054 000. The income
tax rate is 32%.
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QUESTION 2: FINANCIAL INDICATORS AND CASH FLOW STATEMENT

(40 marks; 35 minutes)

2.1 Choose the correct word(s) from those given in brackets. Write only the word(s)
next to the question numbers (2.1.1 to 2.1.3) in the ANSWER BOOK.

2.1.1 The (directors' report/audit report) gives an explanation of the

operations of the company during a financial year.

2.1.2 The (independent/internal) auditors are responsible for monitoring the

financial control measures of a company on a regular basis.

2.1.3 In the event of bankruptcy, the shareholders are normally

not responsible for the debts of the business. This is because of
(limited/unlimited) liability. (3 x 1) (3)

2.2 USANDA LIMITED

The financial year ended on 28 February 2021.

REQUIRED:

2.2.1 Calculate the following figures for the 2021 Cash Flow Statement:

 Income tax paid (4)

 Dividends paid (4)

2.2.2 Prepare the following sections of the Cash Flow Statement:

 Cash effects for financing activities (11)

 Net change in cash and cash equivalents (4)

2.2.3 Calculate the following financial indicators for the year ended
28 February 2021:

 % operating profit on sales (2)

 Acid-test ratio (4)

 % return on average shareholders' equity (ROSHE) (4)

 Dividend payout rate (%) (4)

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INFORMATION:
A. Extract: Statement of Comprehensive Income for the year ended
28 February 2021:
Sales R17 800 000
Operating profit 2 262 100
Interest on loan (capitalised) 270 000
Net profit before tax 1 777 000
Net profit after tax 1 243 900

B. Extract: Statement of Financial Position:

28 February 2021 29 February 2020
Fixed assets (carrying value) R13 650 600 R13 590 000
Current assets 659 500 1 067 500
Inventories 276 500 373 200
Trade and other receivables 262 300 539 600
Cash and cash equivalents 120 700 154 700
Shareholders' equity 9 891 400 11 985 000
Ordinary share capital 9 555 000 11 220 000
Retained income 336 400 765 000
Loan: VBC Bank (see E) ? 2 080 000
Current liabilities 611 900 592 500
Trade and other payables 252 100 185 700
Bank overdraft 0 90 000
SARS: Income tax 19 800 69 300
Shareholders for dividends 340 000 247 500

C. Share capital:
NUMBER OF DETAILS OF
DATES
SHARES SHARES
1 March 2020 1 650 000 In issue
30 October 2020 50 000 Additional shares issued
27 February 2021 335 000 Shares repurchased at R9,50 each
28 February 2021 1 365 000 In issue

D. Dividends and earnings:

 An interim dividend was paid on 31 August 2020.
 A final dividend of 20 cents per share was declared on 28 February 2021.
 Total dividends for the year amounted to R835 000.
 Earnings per share (EPS) on 28 February 2021 was 74 cents.
E. Loan: VBC Bank
 The balance on 1 March 2020 was R2 080 000.
 Monthly instalments of R35 000, including interest, were paid.
 Interest capitalised amounted to R270 000.

40

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QUESTION 3: INTERPRETATION OF FINANCIAL STATEMENTS

(35 marks; 30 minutes)

3.1 Choose the question from COLUMN B that matches a category of financial
indicators in COLUMN A. Write only the letter (A–E) next to the question
numbers (3.1.1 to 3.1.4) in the ANSWER BOOK.

COLUMN A COLUMN B
3.1.1 Liquidity A Is the business managing expenses
effectively to increase profitability?
3.1.2 Risk and gearing
B Is the investment in the company
3.1.3 Return to shareholders better than investing in a fixed
deposit?
3.1.4 Operating efficiency
C Will the company be able to pay off
its current debts?

D Will the company be able to pay off

all its debts using existing assets?

E How is the company managing loans

or borrowed capital?
(4 x 1) (4)
3.2 SCI-FI GEEKS LTD

The business trades in electronic equipment purchased from China. The

information relates to the past two financial years, ended 31 March. The
COVID-19 lockdown has negatively affected sales over the current financial
year.
REQUIRED:
3.2.1 Liquidity:

The directors are satisfied with the improvement in the current ratio and
the acid-test ratio. Explain why you would disagree with them. Quote
TWO financial indicators in your response. (6)
3.2.2 Dividends:
The directors changed the dividend policy for the current financial year.
 Comment on the dividend per share over the two years. Quote
figures. (2)
 Explain the change in the dividend payout rate and give a reason
for this change. Quote figures. (4)
 A shareholder felt that they should be satisfied with the dividends
they received, as it is better than last year. Explain why you agree
with him. Quote figures. (3)
3.2.3 Comment on the risk and gearing for both years. Quote TWO financial
indicators (with figures). (6)
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3.2.4 Existing shareholders are dissatisfied that the new shares issued on
1 April 2020 were sold to the CEO, Ida Shark. Give TWO reasons why
you consider their feelings to be justified. Quote figures. (6)

3.2.5 The Cash Flow Statement reflected a positive change of R980 000.
Provide TWO points why this should still be a concern to directors.
Quote figures. (4)

INFORMATION:

A. Financial indicators and additional information:

2021 2020
Mark-up % achieved 60% 60%
% net profit before tax on sales 13,9% 20,3%
Current ratio 2,4 : 1 1,1 : 1
Acid-test ratio 1,0 : 1 0,4 : 1
Stockholding period 102 days 32 days
Average debtors' collection period 46 days 31 days
Average creditors' payment period 60 days 60 days
Earnings per share 58 cents 130 cents
Dividends per share 72 cents 90 cents
Dividend payout rate 136,5% 69%
Debt-equity ratio 0,4 : 1 0,3 : 1
Return on average shareholders' equity 17,7% 31,6%
Return on total capital employed 23,2% 39%
Net asset value per share 332 cents 409 cents
Market price of shares on stock exchange 410 cents 540 cents
Interest rate on loans 13,5% 13,5%
Interest rate on fixed deposits 6,8% 7,8%

B. Share capital:

 On 1 April 2020 the company issued an additional 250 000 shares.

 On 31 March 2021 there were 1 250 000 shares in issue.

C. Extract from the Cash Flow Statement on 31 March:

2021 2020
Cash flows from operating activities (148 080) 910 000
Cash generated from operations 1 281 620
Interest paid (232 000)
Taxation paid (272 700)
Dividends paid (925 000)
Cash flows from investing activities 101 580 (300 000)
Cash flows from financing activities 1 026 500 (100 000)
Sale of shares 375 000 0
Change in loan 651 500 (100 000)
Cash and cash equivalents: Net change 980 000 510 000
Opening (330 000) (840 000)
Closing 650 000 (330 000)

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QUESTION 4: CORPORATE GOVERNANCE (15 marks; 10 minutes)

Shareholders and employees associated with a company will be particularly interested

in whether the company is well governed and managed by the directors.

At the AGM, the shareholders will elect two types of directors:

 Executive directors: They attend board meetings and work at the company on a
full-time basis.
 Non-executive directors: They attend board meetings and do NOT work at the
company.

You are provided with four aspects of corporate governance that will be of concern to
the stakeholders.

REQUIRED:

4.1 Audit Report:

Explain why a qualified audit report is not a good reflection of a company.
Provide TWO points. (4)

4.2 The Board of Directors:

Explain why it is important for a company to include non-executive as well as
executive directors on the Board of Directors. (4)

4.3 The Remunerations Committee:

According to the Companies Act, 2008 (Act 11 of 2008), a company must have
a Remunerations Committee.
Explain the role/responsibility of this committee and give a reason why this
committee is necessary. (3)

4.4 Directors engage with clients on a regular basis in an effort to negotiate

contracts and to increase sales and services.

Explain why there should be a company policy that directors must declare to
the Board all gifts, donations or favours received by them from clients. Provide
TWO points. (4)

15
c

TOTAL: 150

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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 & other receivables + Cash & 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 Cost of sales 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.

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 SENIOR CERTIFICATE EXAMINATIONS/
NATIONAL SENIOR CERTIFICATE EXAMINATIONS

ACCOUNTING P2

2023

MARKS: 150

TIME: 2 hours

This question paper consists of 13 pages,

a formula sheet and a 10-page answer book.

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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. A Financial Indicator Formula Sheet is attached at the end of this question

paper.

4. Show ALL workings to earn part-marks.

5. You may use a non-programmable calculator.

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

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

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 Bank Reconciliation 30 25

2 Inventory Valuation 35 30

3 Cost Accounting 45 35

4 Budgeting 40 30

TOTAL 150 120

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QUESTION 1: BANK RECONCILIATION (30 marks; 25 minutes)

1.1 Indicate whether the following statements are TRUE or FALSE. Write only 'true'
or 'false' next to the question numbers (1.1.1 to 1.1.3) in the ANSWER BOOK.

1.1.1 A credit balance on the Bank Statement means that the business has a
positive balance in the bank.

1.1.2 A debit card may be used to withdraw cash from an ATM.

1.1.3 A bank overdraft is a short-term loan that is transferred into the

business current bank account. (3)

1.2 VIOLET STORES

The information was extracted from the records of the business for April 2023.

 Violet uses the official Bank Statement which is available on the 25th of each
month to complete the monthly reconciliation process.
 She also uses her EFT transaction records (renumbered) to complete the
Cash Payments Journal.

REQUIRED:

1.2.1 Update the totals for the Cash Receipts Journal and Cash Payments
Journal for April 2023. Use the table provided in the ANSWER BOOK. (10)

1.2.2 Calculate the correct Bank Account balance on 30 April 2023. (4)

1.2.3 Prepare the Bank Reconciliation Statement on 30 April 2023. (9)

1.2.4 Violet noticed problems with the depositing of cash. Explain TWO
measures that she can use to address these problems. (4)

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INFORMATION:

A. Extract from the Bank Reconciliation Statement on 31 March 2023:

Favourable balance as per Bank Statement R12 200
Deposits not on Statement: 18 March 2023 23 600
28 March 2023 37 200
Outstanding EFTs: EFT 768 5 480
EFT 769 17 800
Favourable balance as per bank account 49 720

 The outstanding deposit on 18 March 2023 appeared on the April 2023

Bank Statement.
 The deposit on 28 March 2023 appeared as R22 200. An investigation
revealed that the cashier has disappeared with the outstanding amount.
It was decided to write off the outstanding amount.
 Both the EFTs were on the April Statement, but EFT 768 appeared with
the correct amount of R4 580.

B. The provisional totals in the Cash Journals before receiving the Bank
Statement:
Cash Receipts Journal: R115 600 Cash Payments Journal: R217 800

C. Information on the April 2023 Bank Statement

None of these items appeared in the April Cash Journals:
Debit order: Brylet Municipality R2 880
Cash handling fees R220
Deposit: Y Marigold R8 400
Deposit: Bentley Microloans R65 000
Cash withdrawal R740
Investment matured R18 300
EFT transaction fees R360
EFT transaction fees R360

D. Additional Information:
 The debit order to Brylet Municipality was for water and electricity.
 Y Marigold, the tenant, deposited the monthly rent.
 The deposit from Bentley Microloans did not relate to the business. The
bank was informed of this error.
 The cash withdrawal of R740 was for fuel for the owner's vehicle.
 The EFT transaction fees were duplicated on the Bank Statement in error.

E. The Cash Journals reflected the following entries that did not appear
on the April 2023 Bank Statement:
 Deposit of R22 500 on 30 April 2023
 EFT 883 for R9 520 for stationery purchased
 EFT 884 for R12 530 for repairs to the buildings

F. Bank Statement balance on 30 April 2023: R?

30
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QUESTION 2: INVENTORY VALUATION (35 marks; 30 minutes)

Mandie Jones is the owner of TV City that sells TV sets and has two branches (shops)
in KZN. The periodic stock system is used. No missing items were recorded for the
financial year ended 28 February 2023.

2.1 Howick branch

This branch sells Arctic TV sets.

2.1.1 Calculate the value of the closing stock of the Arctic TV sets on
28 February 2023 using the first-in-first-out (FIFO) method. (5)

2.1.2 Calculate the stockholding period (in days) using the closing stock figure (3)

COST PRICE TOTAL

ARCTIC TV SETS UNITS
PER UNIT AMOUNT
Opening stock: 1 March 2022 280
Purchases 1 600 6 310 000
May 2022 500 R3 800 R1 900 000
August 2022 400 3 950 1 580 000
September 2022 400 4 000 1 600 000
January 2023 300 4 100 1 230 000
Returns 60 4 100 (246 000)

Closing stock: 28 February 2023 270 ?

Cost of sales R6 010 000
Sales 1 550 R5 000 R7 750 000

2.2 Durban Branch

This branch sells Pacific and Caspian Smart TV sets.

Mandie was concerned about the following issues:

 The Caspian Smart TV sets would be too expensive for her customers.
 High stock levels in all her products might negatively affect the business.

Mandie expected to sell 1 000 Pacific TV sets in the 2023 financial year. She
therefore adjusted the selling price of the Pacific TV sets in September and
asked the bookkeeper to provide an analysis of the quarterly sales.

Refer to Information A and B.

2.2.1 Calculate the value of the closing stock of the Pacific TV sets on
28 February 2023 using the specific identification method. (4)

2.2.2 Calculate the gross profit earned on sale of the new Caspian Smart TV
sets. (3)

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2.2.3 Comment on the quarterly sales of the Pacific TV sets and explain
whether or not Mandie's adjustment of the selling price was a wise
decision. Quote figures or calculations. (4)
2.2.4  Comment on the stockholding periods of the Pacific and Caspian TV
sets. (4)
 Explain how the different holding periods affect the business
financially. (4)
 Explain what these periods indicate about the preferences of the
customers. Quote figures or calculations. (4)

2.2.5 Provide TWO points of advice to Mandie on how she can rectify the high
stock levels of some of her products without reducing prices offered to
customers any further. (4)
INFORMATION:

A. Durban branch stock records

TV SETS PACIFIC CASPIAN SMART

Cost price R9 300 R10 200
Mark-up % on cost Fluctuating 60%
TOTAL TOTAL
Stock records UNITS UNITS
(R) (R)
Stock on 1 March 2022 350 3 255 000
Purchases 800 7 440 000 800 8 160 000
May 2022 400 3 720 000
August 2022 400 3 720 000
September 2022* 800 8 160 000
Sales 765 9 408 500 670 10 934 400

*The branch started selling the new Caspian Smart TV sets on 1 September 2022.

B. Quarterly sales

The bookkeeper provided Mandie with the following analysis of quarterly sales
and stockholding periods:

PACIFIC CASPIAN SMART

SALES PER SELLING
TOTAL TOTAL
QUARTER UNITS PRICE UNITS
SALES SALES
PER TV
Mar.–May 250 R13 500 R3 375 000 -
June–Aug. 245 13 500 3 307 500 -
Sep.–Nov. 160 10 300 1 648 000 340 R5 548 800
Dec.–Feb. 110 9 800 1 078 000 330 5 385 600
Stockholding
184 days 71 days
period
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QUESTION 3: COST ACCOUNTING (45 marks; 35 minutes)

3.1 LADOO MANUFACTURERS

The business manufacturers leather purses. The financial year ended on

28 February 2023.

REQUIRED:

3.1.1 Refer to Information C.

Calculate the factory overhead cost. (8)

3.1.2 Prepare the Production Cost Statement on 28 February 2023. (10)

INFORMATION:

A. Work-in-progress stock balance on 1 March 2022 was R542 000.

B. Details of the workers in production:

Number of workers 40
Basic (normal) wage rate R60 per hour
Normal time hours worked by each worker 1 920 hours
Overtime (in total) R1 142 000

C. The bookkeeper calculated the factory overhead cost at R2 638 600.

The following costs were omitted and must be taken into account:
 Insurance is a fixed monthly premium for the entire financial year.
The amount paid, R235 950, includes the premium for March 2023.
2
/3 of this expense relates to the factory.
 Water and electricity allocated to the office was R69 200. Note that
water and electricity is shared according to floor space, as follows:
Factory Sales Office
560 m2 240 m2 160 m2

The following entry must be corrected:

Rent of R316 000 was recorded in the factory overhead cost. However,
the bookkeeper used the incorrect ratio of 2 : 5 : 1 for Factory, Sales and
Office. The correct ratio is 5 : 2 : 1 respectively.

D. Total prime cost for the year amounted to R12 500 000.

E. Total production for the year, 33 500 units, were produced at a cost of
R475 per unit.

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3.2 STYLZ MAKER

The business manufactures designer shirts. The financial year ends on

30 April each year. The business is owned by Lez Styles.

REQUIRED:
NOTE: Provide evidence in the form of figures or calculations to support the
comments and explanations required below.

3.2.1 Break-even point, production and profit:

 Do a calculation to confirm that the break-even point for 2023 is
correct. (3)
 Comment on the level of production and the break-even point for
the past two years. Explain whether Lez Styles would be happy
about the trends in these results and the profit he is earning.
Provide figures or calculations. (4)

3.2.2 Fixed costs:

Explain why Lez is not concerned about the fixed costs increasing to
R6,1 m in 2023. Quote figures. (4)

3.2.3 Selling and distribution cost:

 Identify how the selling and distribution costs in total and per unit
changed over the two years. (2)
 Explain TWO reasons why Lez deliberately wanted to adjust this
cost. (2)

3.2.4 Direct material and direct labour: Refer to Information A and C.

Lez made specific decisions to improve the business and its product.
Explain how the decisions he took have benefited the business by
providing:
 TWO separate points relating to the raw material (6)
 TWO separate points relating to the direct labour (6)

INFORMATION:

A. Lez's general strategic decisions with effect from 1 May 2023:

 Lez decided to improve the quality of the shirts to be more competitive and to
export to retailers in other countries.
 He changed to a new supplier of the fabric (raw materials) and employed
some highly skilled and creative workers to replace workers who resigned or
retired.
 Factory overheads for 2023 included a training programme for factory workers
(R600 000) and the hiring of equipment with the latest technology for R1,4 m
per year.

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B. Production and cost

2023 2022
Number of units produced and
10 500 shirts 6 500 shirts
sold
Selling price R1 830 R1 430
Break-even point 4 815 shirts 4 267 shirts
2023 2022
TOTAL PER UNIT TOTAL PER UNIT
R R R R
VARIABLE COSTS 5 916 000 563 3 047 500 469
Direct materials cost 3 780 000 360 1 787 500 275
Direct labour cost 936 000 89 960 000 148
Selling and distribution cost 1 200 000 114 300 000 46
FIXED COSTS 6 100 000 581 4 100 000 631
Factory overhead cost 5 600 000 533 3 600 000 554
Administration cost 500 000 48 500 000 77
TOTAL COST OF PRODUCTION 12 016 000 1 144 7 147 500 1 100

C. Lez undertook a short course on managerial accounting to enable him to analyse

the production costs more effectively every month. He has analysed the following
production costs:

Raw materials: 2023 2022

Cost of fabric per metre R200 R110
Metres of fabric per shirt (including wastage) 1,8 metres 2,5 metres
Fabric used in metres 43 200 metres 44 000 metres

Direct workers:
Number of direct workers 12 workers 15 workers
Average wages per worker p.a. R78 000 R64 000
Hours per worker per year 1 920 hours 1 920 hours
Hours worked by all workers 23 040 hours 28 800 hours
Average number of shirts produced per worker 875 shirts 433 shirts

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QUESTION 4: BUDGETING (40 marks; 30 minutes)

4.1 Show the amounts for the following transactions in the appropriate columns for
the Cash Budget and the Projected Statement of Comprehensive Income in the
ANSWER BOOK:
4.1.1 A computer costing R26 400 will be purchased for cash on 1 July 2023.
Depreciation will amount to R550 per month.
4.1.2 A fixed deposit of R90 000 will be invested on 1 July 2023. Interest at
9% p.a. will be deposited into the business bank account at the end of
each month. (6)
4.2 ALICE FURNISHERS (PTY) LTD
The information relates to the budget period ending July 2023.
REQUIRED:
4.2.1 Complete the Debtors' Collection Schedule for July 2023. (7)
4.2.2 Calculate missing figures (i) to (iii) on the Cash Budget provided. (8)
4.2.3 Salaries of workers:
 Calculate the % increase that workers will receive in July 2023. (3)
 Give TWO reasons why you think that workers would be satisfied
with this increase. (2)
4.2.4 Advertising and delivery expenses: Refer to Information F.
 Comment on the effectiveness of the advertising. Provide figures or
calculations. (4)
 Alice is satisfied with the control over delivery expenses. Provide
figures or calculations to justify her feelings. (2)
 Alice is, however, concerned about the control over each vehicle.
Identify a different issue (problem) for EACH vehicle that confirms
her concern. Provide figures or calculations to justify her feelings. (4)
 Provide TWO suggestions on how Alice can improve the use or
efficiency of the vehicles. (4)
INFORMATION:
A. Sales and cost of sales:
APRIL MAY JUNE JULY
Sales 1 260 000 1 274 000 1 316 000 1 330 000
Cost of sales 900 000 910 000 940 000 950 000

B. Credit sales comprise 70% of total sales. Debtors pay according to the
following trend:
 20% pay in the month of sales and receive 7,5% discount.
 55% pay in the month following the month of sale.
 22% pay two months after the sales month.
 The balance is written off thereafter.
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C. Stock sold is replaced in the month of sales. A base stock is maintained.

80% of stock is purchased on credit and creditors are paid two months
(60 days) after the month of purchase.

D. Additional information:
The business plans to take a loan on 30 June 2023. This has been
negotiated with the bank at 11% p.a. interest, payable at the end of each
month and commencing on 31 July 2023.
E. Extract from the Cash Budget:
JUNE 2023 JULY 2023
RECEIPTS (R) (R)
Cash sales 394 800 (i)
Collections from debtors 854 952 ?
Commission income 131 600 133 000
Loan: Cheetah Bank (ii)
PAYMENTS
Cash purchase of stock 188 000 190 000
Payments to creditors 720 000 (iii)
Directors' fees (two directors) 52 000 49 600
Salaries of workers (including drivers) 172 000 182 320
Advertising 39 480 39 900
Delivery expenses 65 800 66 500
Packing material 78 960 79 800
Interest on loan - 5 500
Municipal services
Sundry expenses

F. Advertising and delivery expenses:

 The business has two delivery vehicles and offer a free delivery service
to customers.
 The budget for delivery expenses is fixed at 5% of the budgeted sales,
on an average distance of 2 000 km to be covered.
Actual and budgeted figures for May 2023:
BUDGETED/
ACTUAL VEHICLE 1 VEHICLE 2
EXPECTED
Sales 1 274 000 1 082 900
Advertising 38 220 36 820
Salaries of drivers 30 000 30 000 15 000 15 000
Delivery expenses 63 700 54 100 35 500 18 600
Petrol/Fuel 47 700 40 000 26 000 14 000
Maintenance 16 000 14 100 9 500 4 600
Kilometres covered 2 000 km 1 800 km 1 260 km 540 km
Date purchased 1 Mar. 2018 1 Mar. 2022

40
TOTAL: 150

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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 & other receivables + Cash & cash equivalents) : Current liabilities

Average trading stock x 365 Cost of sales .

Cost of sales 1 Average trading stock

(See Note 1 below)

Average debtors x 365 Average creditors x 365

Credit sales 1 Cost of sales 1
(See Note 2 below)
Net income after tax x 100
Net income after tax x 100 Number of issued shares 1
Average shareholders' equity 1
(See Note 3 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: 1. Trading stock at the end of a financial year may be used if required in a question.
2. Credit purchases may be used instead of cost of sales (figures will be the same if stock is constant).
3. 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.

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 NATIONAL
SENIOR CERTIFICATE

GRADE 12

ACCOUNTING P2

NOVEMBER 2022

MARKS: 150

TIME: 2 hours

This question paper consists of 13 pages,

a formula sheet and a 10-page answer book.

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KEEP THIS PAGE BLANK.

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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. A Financial Indicator Formula Sheet is attached at the end of this question

paper.

4. Show ALL workings to earn part-marks.

5. You may use a non-programmable calculator.

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

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

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 Cost Accounting 35 30

2 VAT and Inventory Valuation 45 35

3 Budgeting 45 35

4 Bank Reconciliation 25 20

TOTAL 150 120

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QUESTION 1: COST ACCOUNTING (35 marks; 30 minutes)

1.1 Choose an example from COLUMN B that matches a cost category in

COLUMN A. Write only the letter (A–E) next to the question numbers
(1.1.1 to 1.1.4) in the ANSWER BOOK, e.g. 1.1.5 F.

COLUMN A COLUMN B
1.1.1 Administration A carriage on raw material purchased

1.1.2 Direct material B salary of the factory foreman

1.1.3 Selling and distribution C rent expense for the office building

1.1.4 Factory overhead D workers in production

E commission paid to sales staff

(4 x 1) (4)

1.2 WEZA STITCHES

Weza Stitches, owned by Annie Brown, manufactures bathroom towel sets.

Anne buys fabric from local suppliers. The information relates to the financial
year ended 30 June 2022. Note that there were no work-in-progress stock
balances.

REQUIRED:

1.2.1 Calculate the following for the financial year ended 30 June 2022:

 Direct labour cost (7)

 Factory overhead cost (6)
 Total cost of production (4)

1.2.2 Annie is concerned that fixed costs increased to R806 400. Explain
why she should not be concerned. Provide TWO points. Quote
figures. (4)

1.2.3 Refer to Information C.

Comment on whether the production staff deserves the production

bonus that they received. Provide THREE points, with figures. (6)

1.2.4 Annie wants to improve her profit by R50 000 during the next financial
year while maintaining costs. Calculate the additional units that must
be produced to achieve this target. (4)

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INFORMATION:

A. Direct labour cost:

 Six workers were employed in production in 2021 and 2022.
 Each of them worked 1 840 hours normal time during the year at R40
per hour.
 The overtime register reflected a combined total of 230 hours worked
at 1,6 times the normal time rate.
 Production staff received a production bonus of 8% of the normal
time wages.

B. Factory overhead cost:

The bookkeeper calculated the factory overhead cost as R541 600.

However, he made the following errors, which must still be adjusted:
 He included the entire insurance expense of R32 500 to the factory
overhead cost, instead of only 60% of this expense.

 He allocated R54 000 to factory water and electricity using the

ratio 3 : 2 : 2 for factory, sales and office respectively. This expense
should have been split in the ratio 2 : 1 : 1.

C. Additional information: (after taking all corrections into account)

30 JUNE 2022 30 JUNE 2021
Total Per unit Total Per unit
Variable costs: R1 561 600 R244 R1 317 750 R251
Direct material R652 800 R102 R672 000 R128
Direct labour ? ? R498 750 R95
Selling and distribution R147 000 R28

Fixed costs: R806 400 R126 R792 750 R151

Factory overheads
Administration

Number of units
6 400 units 5 250 units
produced and sold
Break-even point 6 156 units 6 954 units

Selling price per unit R375 R365

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QUESTION 2: VAT AND INVENTORY VALUATION (45 marks; 35 minutes)

2.1 VAT

The information relates to Nomhle Traders. The business is registered for VAT.
The standard VAT rate is 15%. Nomhle also sells zero-rated goods.

REQUIRED:

Calculate the VAT amount that must be paid to SARS for the VAT period
ended 31 May 2022. (9)

INFORMATION:

A. Harry, the clerk, calculated the VAT amount due to SARS as R55 785.

However, he did not take the following into account:

(i) VAT on goods returned to suppliers R5 070

(ii) VAT on expenses paid R6 240
(iii) VAT on goods taken by Nomhle for personal use R5 400

B. VAT on discount allowed must also be taken into account. The total
discount allowed amounted to R18 860.

C. VAT on sales was incorrectly recorded. Certain goods with a selling

price of R31 200 (excluding VAT) should have been recorded as
zero-rated items.

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2.2 STOCK VALUATION

Pitten Sports Shop is owned by Milo Slav. The financial year ended on
28 February 2022.

The stock records of the following two products are provided:

 Mountain bikes
 Powdered energy drinks (1 kg tubs)

MOUNTAIN BIKES

The stock of mountain bikes is valued using the specific identification stock
valuation method.

REQUIRED:

2.2.1 Calculate the value of the closing stock on 28 February 2022, using
the specific identification method. (9)

2.2.2 A whistle-blower (informant) reported to Milo that he has evidence to

prove that the purchasing manager is stealing mountain bikes
purchased by the business.

An investigation revealed that 40 units of the King model, missing

from the stock records, was supplied to Easy Rides, a competitor.
There were no other stock shortages.

Explain TWO different examples of how the division of duties could

prevent an incident such as this from occurring again in the future. (4)

2.2.3 Provide TWO points that show that Milo and his customers are happy
with the quality of the Gama Bikes. Quote figures. (4)

INFORMATION:

Stock records of mountain bikes:

KING PALO GAMA

Units on hand: 1 March 2021 128 62 40
Units purchased during the year 400 250 220
Units returned to suppliers 54 2 0
Units sold 286 245 242
Units on hand: 28 February 2022 148 ? 18
Cost price per unit R4 500 R5 200 ?
Value of closing stock R666 000 ? ?

Selling price per unit R6 750 R7 800 R9 600

Total sales amount (in rands) R1 930 500 R1 911 000 R2 323 200
Mark-up % 50% 50% 60%

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POWDERED ENERGY DRINKS (1 kg TUBS)

The periodic inventory system and the first-in first-out (FIFO) stock valuation
method is applicable. These items have a shelf life of 66 days.

REQUIRED:

2.2.4 Calculate the value of the closing stock on 28 February 2022, using
the FIFO stock valuation method. (6)
2.2.5 Calculate the stockholding period (in days) on 28 February 2022. Use
the closing stock figure. (3)
2.2.6 Comment on your findings above. Provide TWO points, with figures.
Note that the stockholding period for 2021 was 58 days. (4)
2.2.7 Milo has noticed that some of the stock of energy drinks has
exceeded the shelf life (sell-by date). Identify the value of stock that
Milo is referring to. (2)

2.2.8 Milo wants to sell the outdated stock at half the cost price. What
advice would you offer him about this proposal? Provide TWO points. (4)
INFORMATION:
A. Stock of powdered energy drinks balances:

NUMBER OF TUBS
1 March 2021 130
28 February 2022 235

B. Purchases of powdered energy drinks during the financial year:

NUMBER UNIT PRICE CARRIAGE TOTAL
OF UNITS R R R
Apr.–Sept. 2021 550 420 4 400 235 400
Nov. 2021 330 460 2 640 154 440
Jan. 2022 180 475 1 440 86 940
TOTAL 1 060 8 480 476 780

C. Carriage on purchases:
The business pays MTY Transport a fixed rate of R8 per tub delivered to
the store.
D. Returns to suppliers:
30 damaged tubs from the January 2022 purchases were returned to the
supplier. The supplier reversed the total cost price paid, excluding
carriage on purchases.
E. Sales and cost of sales:
 925 units were sold.
 Cost of sales amounts to R404 140, after all adjustments were taken
into account.

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QUESTION 3: BUDGETING (45 marks; 35 minutes)

The information relates to JR Sanitisers (Pty) Ltd. The CEO is Juanita Rose.
James Peter is the bookkeeper.

REQUIRED:

3.1 Complete the Creditors' Payment Schedule for December 2022. (7)

3.2 Calculate missing figures (i) to (iii) in the Cash Budget. (10)

3.3 Refer to Information E and G.

3.3.1 Calculate the deposit that will be paid for the purchase of the
company vehicle during December 2022. (5)

3.3.2 Juanita is concerned about the cash position for December 2022.
She proposes moving the purchase of the vehicle to January 2023.

Use the table in the ANSWER BOOK to show the effect of this
proposal to the December 2022 Cash Budget. (6)

3.4 Refer to Information H.

Juanita is concerned about her decisions in October 2022 to adjust the

mark-up % and the amount actually spent on advertising. Provide TWO points
to indicate whether these were wise decisions or not. Quote figures and/or
calculations. (4)

3.5 Refer to Information H.

3.5.1 Explain why Juanita should be concerned about the actual amount
spent on repairs and maintenance during October 2022. Quote a
figure and/or a calculation. (2)

3.5.2 James feels that there has been a lack of control over the amounts
spent on delivery expenses and packing material. Explain whether
James' opinion is correct or not. Provide calculations. (8)

3.6 Juanita wants to use social media to create an on-line shopping platform to
increase her sales from January 2023. Name THREE additional payments that
must be included in the January 2023 budget. (3)

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INFORMATION:

A. Sales, cost of sales and debtors' collection:

OCTOBER NOVEMBER DECEMBER

Total sales R584 100 R643 500 R432 300
Cost of sales R354 000 R390 000 R262 000

 Cash sales comprise 30% of total sales.

 Debtors settle their accounts in the month following the month of sales.

B. Purchases of stock and payment to creditors:

 A base stock is maintained. Stock sold is replaced in the same month.
 Cash purchases comprise 15% of total purchases.
 Creditors are paid according to the following trend:
o 80% are paid in the month of purchases to receive a 5% discount.
o 20% are paid in the month after purchases.

C. Rent income:
 Storage space is rented at a fixed rate per square metre.
 An existing tenant occupies 60 m2. His lease expires on 30 June 2023.
 A new tenant has signed a lease agreement for the period 1 December 2022
to 30 November 2023. She will occupy a 75 m2 storage area.

D. Salaries:
 A new employee will be appointed from 1 December 2022. He will earn
R14 840 per month.
 All other employees will receive an increase of 4,5% p.a., effective from
1 December 2022.

E. Purchase of company vehicle for the CEO and insurance:

 A new company vehicle will be purchased on 1 December 2022. A deposit of
25% of the cost of the vehicle, excluding interest, will be paid on this date.
 The remaining balance will be paid in equal monthly instalments of R20 800
over 24 months, including interest, with effect from 31 December 2022.
 Interest calculated for the full two-year period is R45 600.
 The existing insurance premium will increase by the amount applicable to the
new company vehicle. It will also be payable at the end of each month, from
31 December 2022.

F. Delivery expenses:
Deliveries are outsourced to Aldo Deliveries. Delivery expenses are budgeted at a
fixed percentage of the monthly sales.

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G. Extract from Cash Budget:

NOV. 2022 DEC. 2022
RECEIPTS (R) (R)
Cash sales 193 050 129 690
Collections from debtors 408 870 (i)
Loan 400 000
Rent income 15 000 (ii)
TOTAL RECEIPTS
PAYMENTS
Cash purchase of stock 58 500 39 300
Payments to creditors 312 120 ?
Salaries (iii) 55 595
Purchase of vehicle: deposit - ?
Purchase of vehicle: monthly instalments - 20 800
Repairs and maintenance 30 000 30 000
Advertising 40 000 40 000
Delivery expenses (Aldo Deliveries) 38 610 25 938
Packing material 25 740 17 280
Insurance 6 500 9 700
Fuel for company vehicle - 7 500
Interest on loan 6 000 6 000
Dividends 190 000
Telephone, water and electricity
Sundry expenses
TOTAL PAYMENTS
CASH SURPLUS/DEFICIT 174 000 (120 000)
BANK (BEGINNING) (66 000) 108 000
BANK (END) 108 000 (12 000)

H. Budgeted and actual figures for October 2022:

BUDGET ACTUAL VARIANCE
Number of units sold 7 080 units 11 470 units + 4 390 units
Mark-up % 65% 45% -20%
Sales R584 100 R831 546 + R247 446
Cost of sales 354 000 573 480 + 219 480
Gross profit 230 100 258 066 + 27 966
Repairs and maintenance 30 000 8 000 – 22 000
Advertising 40 000 28 000 – 12 000
Delivery expenses (Aldo Deliveries) 35 046 42 896 + 7 850
Packing material 23 364 37 850 + 14 486

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QUESTION 4: BANK RECONCILIATION (25 marks, 20 minutes)

4.1 Indicate whether the following statements are TRUE or FALSE. Write only
'true' or 'false' next to the question numbers (4.1.1 to 4.1.3) in the ANSWER
BOOK.

4.1.1 Debit card fees form part of bank charges.

4.1.2 Interest on overdraft is recorded in the Cash Receipts Journal.

4.1.3 A debit balance on the Bank Statement reflects a favourable balance.

(3 x 1) (3)

4.2 BANK RECONCILIATION

The information provided relates to Surprise Stores. The business is owned by

Themba Zwane.
 Themba receives the official Bank Statement on the 26th day of each
month. He uses this to do the bank reconciliation.
 EFTs are renumbered according to date order.

REQUIRED:

4.2.1 Use the table provided in the ANSWER BOOK to calculate the final
totals of the Cash Journals on 31 July 2022. (10)

4.2.2 Calculate the correct bank balance in the ledger on 31 July 2022. (4)

4.2.3 Prepare the Bank Reconciliation Statement on 31 July 2022. (8)

INFORMATION:

A. On 1 July 2022, the Bank Account in the ledger reflected a favourable

balance of R53 800.

B. The Bank Reconciliation Statement prepared on 30 June 2022 showed

the following outstanding deposits and EFTs:

 Deposit dated 15 June 2022 R19 500

 Deposit dated 29 June 2022 R12 800
 EFT 297 R9 600
 EFT 298 R12 300

NOTE:
(i) The deposit on 15 June 2022 appeared on the July Bank
Statement as R15 500. An investigation revealed that the cashier
at that time has resigned. The outstanding amount must be written
off.
(ii) EFT 297 was correctly reflected as R6 900 on the July Bank
Statement.
(iii) The other outstanding amounts from the previous month appeared
on the July Bank Statement.

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C. Before receiving the July 2022 Bank Statement, the Cash Journals
reflected the following provisional totals:

CASH RECEIPTS JOURNAL CASH PAYMENTS JOURNAL

R101 200 R135 215

D. The following items on the July Bank Statement must still be recorded:

(i) A debit card payment of R1 400 for petrol for the business vehicle.
Themba neglected to submit the transaction document to the
bookkeeper.

(ii) The direct deposit received from debtor D Singwane, R5 800, in

settlement of his account of R6 000.

(iii) A debit order to Palm Insurers for the business insurance, R1 800.

(iv) A direct deposit of R72 000 from Unitech College. This is an error
on the statement as it does not apply to Surprise Stores. The bank
was notified of this error.

(v) Total bank charges, R825

(vi) Interest earned on savings account, R260

E. Entries in the Cash Journals after 26 July 2022:

 Deposit on 29 July 2022 R29 500

 EFT 350 to PN Stationers, dated 28 July 2022 R 4 200
 EFT 351 to PF Couriers, dated 30 July 2022 R 3 800

F. Bank Statement balance on 31 July 2022: R?

25

TOTAL: 150

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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 & other receivables + Cash & 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 Cost of sales 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.

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SENIOR CERTIFICATE

GRADE 12

ACCOUNTING P2

NOVEMBER 2021

MARKS: 150

TIME: 2 hours

This question paper consists of 14 pages,

a formula sheet and a 12-page answer book.

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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 Debtors' Reconciliation and Age Analysis 30 25

2 Cost Accounting 45 35

3 Budgeting 35 30

4 Inventories and Fixed Assets 40 30

TOTAL 150 120

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QUESTION 1: DEBTORS' RECONCILIATION AND AGE ANALYSIS

(30 marks; 25 minutes)

Zig Zag Traders sells ladies clothing on credit. Debtors are allowed a credit term of
30 days to settle their accounts.

REQUIRED:

1.1 Provide TWO documents that Zig Zag Traders will need from potential debtors
before they will be allowed to open accounts. (2)

1.2 Refer to Information A and B.

Use the table provided in the ANSWER BOOK to calculate the following:

 The correct closing balance of the Debtors' Control Account on

30 September 2021. Indicate changes with '+' for an increase, '–' for a
decrease or '0' for no change. (9)

 The correct amounts owed by the following debtors only:

- A Barnes
- C Davis
- E Foley (9)

1.3 Refer to Information C.

Explain THREE different problems highlighted by the debtors' age analysis.

Provide the name of a debtor and/or the figure(s) in EACH case. (6)

1.4 Refer to Information D.

Provide TWO points to support the internal auditor's concern that Susan's job
description could lead to potential fraud. (4)

INFORMATION:

A. Balances on 30 September 2021, before taking into account errors and omissions
in Information B:

 Debtors' Control Account: R228 000

 Extract from the debtors' list:

DEBTORS FOLIO AMOUNT

A Barnes D10 R13 500
C Davis D23 R25 000
E Foley D35 R18 300

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B. The following errors and omissions must be taken into account:

(i) An invoice for R1 750 issued to A Barnes was not recorded in the books of
Zig Zag Traders.

(ii) A direct deposit of R2 500 by E Foley was correctly recorded in the journal
but incorrectly posted to the account of E Foges (another debtor) in the
Debtors' Ledger.

(iii) The total of the Debtors' Journal, R62 500, was incorrectly recorded as
R65 200 in the Debtors' Control Account.

(iv) Merchandise sold to C Davis, R3 500, was treated as a return of goods and
recorded in the Debtors' Allowances Journal.

(v) R5 200, received from D Klein, a debtor whose outstanding balance was
written off six months ago, was recorded in the Cash Receipts Journal as a
receipt from a debtor.

(vi) Merchandise returned by A Barnes was recorded in the relevant journal as

R250 instead of R700 and posted accordingly.

(vii) An EFT for R7 850, received from E Foley as part payment of his account,
was entered correctly in the relevant journal but no entries were made in the
Debtors' Ledger.

C. The following age analysis was compiled on 30 September 2021:

CREDIT- MORE THAN
DEBTOR BALANCE CURRENT 30 DAYS 60 DAYS
LIMIT 90 DAYS
R R R R R R
J Blom 52 000 45 000 18 000 7 000 20 000
Z Phi 22 000 29 000 3 000 26 000
S Sah 16 000 12 500 12 500
O Mach 6 000 6 000 2 000 4 000
Other debtors 146 300 55 244 48 192 30 148 12 716

TOTALS R238 800 R90 744 R81 192 R50 148 R16 716
100% 38% 34% 21% 7%

D. Susan, a member of the sales staff, is also responsible for:

 Collecting cash from customers who choose to pay in this way
 Receiving goods returned and issuing credit notes to customers who return
goods.

The internal auditor is not happy with Susan's job description as he feels it has the
potential for fraud, which could lead to loss of cash and trading stock.

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QUESTION 2: COST ACCOUNTING (45 marks; 35 minutes)

2.1 PRUDY MANUFACTURERS

The information relates to the financial year ended 28 February 2021.
The business produces one style of travelling bag. The owner is Prudy Sithole.
REQUIRED:
Complete the following for the year ended 28 February 2021:
2.1.1 Production Cost Statement (10)
2.1.2 Abridged Statement of Comprehensive Income (Income Statement) (11)

INFORMATION:
A. Stock balances:
28 February 2021 1 March 2020
Finished goods stock R96 000 R72 000

There is no work-in-progress at the beginning or end of the year.

B. Raw material issued to the factory for production, R1 494 000.
C. Production wages:
Information extracted from the production wages records:
NET WAGES PAID TO
TOTAL DEDUCTIONS
PRODUCTION WORKERS
R647 400 22% of gross wages

D. The bookkeeper calculated the following costs for the year ended
28 February 2021:
Factory overhead cost R520 280
Selling and distribution cost R224 960
Administration cost R187 760

It was discovered that she did not take the following into account:
 The telephone account of R22 400 was posted in error to the
factory overhead cost. This expense relates to the office.
 The entire amount of rent expense, R98 400, was posted to the
factory overhead cost. This expense should have been split in the ratio
7 : 2 : 1 between the factory, sales and administration departments.
 The insurance expense of R26 400 was divided equally between the
factory overhead cost and the sales department in error. 60% of
this expense relates to the factory and the balance applies to the
sales department.
E. Sales:
Total sales for the year amounted to R4 433 600.

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2.2 CONTROL OF RAW MATERIAL

After completing the statements in QUESTION 2.1, the internal auditor of

Prudy Manufacturers suspects that the raw material (fabric) is not being
controlled well in the storeroom and the factory.

2.2.1 Calculate:
 The metres of fabric missing from the storeroom
 The metres of fabric wasted in the factory

Apart from installing cameras, provide a specific strategy to improve

internal control in the storeroom and factory. In EACH case, provide a
different point. (6)

2.2.2 Calculate the total cost of fabric lost and wasted and explain how this
loss should be shown in the statements mentioned in
QUESTION 2.1. (3)

INFORMATION:

A. Raw material (fabric):

Fabric used in production is issued to the factory from the storeroom, as

required. The record of fabric is as follows:

METRES TOTAL AMOUNT

Raw material issued to factory 12 450 R1 494 000
Balance on 1 March 2020 2 700 324 000
Purchase of fabric during the year 10 800 1 296 000
Balance on 28 February 2021 850 102 000

B. Additional information:

 Fabric is purchased at a fixed cost price of R120 per metre.

 It takes 1,5 metres of fabric to make one travel bag.
 7 800 bags were produced during the financial year.

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2.3 ROSEMARY'S TOY FACTORY

This factory manufactures toy teddy bears. There is no work-in-progress stock

at the beginning or end of each year. The financial year ends on 31 December.

Rosemary decided to address the problem of low profits made in 2020 by

making some changes to improve sales and production.

REQUIRED:

2.3.1 Provide a calculation to confirm that the break-even point for the 2021
financial year is correct. (3)

2.3.2 Explain why Rosemary is pleased with the production level, sales and
break-even point. Quote figures. (4)

2.3.3 Explain to Rosemary why the fixed cost per unit decreased from
R56,00 to R45,71. (2)

2.3.4 Rosemary made deliberate decisions regarding variable costs to

improve the business.

Explain the decisions that she might have taken on these costs and
how these could have had positive effects on the business. Quote
figures. (6)

INFORMATION:

31 DECEMBER 2021 31 DECEMBER 2020

AMOUNT UNIT COST AMOUNT UNIT COST
R R R R
Direct material cost 490 000 100,00 320 000 80,00
Direct labour cost 274 400 56,00 288 000 72,00
Selling and distribution cost 176 400 36,00 96 000 24,00
VARIABLE COST 940 800 192,00 704 000 176,00
Factory overhead costs 160 000 32,65 160 000 40,00
Administration cost 64 000 13,06 64 000 16,00
FIXED COST 224 000 45,71 224 000 56,00

Selling price per unit R255 R240

Units produced and sold 4 900 units 4 000 units

Break-even point 3 556 units 3 500 units

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QUESTION 3: BUDGETING (35 marks; 30 minutes)

Shepstone Traders sell household appliances for cash and on credit. They also charge
fees for repairing appliances, but only for cash. The business owner is Brian Johns.
The information relates to the budget period November 2021 to January 2022.

REQUIRED:

3.1 Calculate the amounts indicated by (a)–(c) on the Debtors' Collection Schedule
provided in the ANSWER BOOK. (6)

3.2 Calculate the amounts indicated by (a)–(c) on the Cash Budget provided in
Information F. (9)

3.3 Workload of employees: Refer to Information G.

Brian is concerned about the workload of his staff. He plans to reduce the sales
staff by one person. The other sales staff members are not happy with this
plan.

 Provide TWO points that Brian can explain to his sales staff to justify his
plan. Quote figures. (4)
 Explain why the repair staff members are not satisfied with their workload.
Quote figures. (3)
 What suggestions can you offer to solve the problem of the workload of
employees? Provide TWO points. (4)

3.4 Sales trends: Refer to Information G.

Comment on the cash and credit sales figures for November 2021. Explain why
Brian is concerned. Quote figures. (3)

3.5 Variances: The budgeted and actual figures for November 2021 are provided.

Comment on the control over fuel for the delivery vehicle and the consumable
stores used for repairs. Quote figures.

BUDGETED ACTUAL
VARIANCE
R R
Sales 798 000 707 000 – 91 000
Fee income 32 000 66 000 + 34 000
Fuel for leased delivery vehicle 20 800 19 900 – 900
Consumable stores for repairs 8 000 12 100 + 4 100 (6)

INFORMATION:

A. Sales and cost of sales:

September October November December January
2021 2021 2021 2021 2022
Total sales R735 000 R770 000 R798 000 R910 000 R882 000
Cost of sales R420 000 R440 000 R456 000 R520 000 R504 000
B. Credit sales: 40% of total sales are on credit.
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C. Debtors paid according to the following trend:

 30% paid in the month of sale and receive a 5% discount.
 45% paid in the month following the month of sale.
 22% paid in the second month following the month of sale.
Bad debts are taken into account in the third month.

D. Purchases and payments to creditors:

 80% of the stock is purchased on credit.
 Stock sold is replaced in the month of sales.
 Creditors are paid two months after the purchase month.

E. Information on specific items from the Cash Budget:

 Rent income will be increased by 9% p.a., effective from 1 January 2022.
 Shepstone Traders undertake special and extensive cleaning and sanitisation
during December each year. This has the effect of increasing the cleaning
services budget by 65%, in December only. The normal monthly fee is
expected to increase by 5% p.a. commencing on 1 January 2022.

F. Extract from the Cash Budget:

RECEIPTS Dec. 2021 Jan. 2022

Cash sales R546 000 R529 200
Fee income (repairs) 38 400 52 200
Rent income (a) 20 056
PAYMENTS
Cash purchases 104 000 100 800
Payments to creditors 352 000 (b)
Consumable stores (repairs) 9 600 13 050
Fuel 21 840 23 930
Cleaning services 15 510 (c)
Salaries to sales staff 82 000 87 330
Wages to repair staff 11 000 11 715
Advertising 36 400 35 280

G. Information for November 2021:

Number of sales employees, including the driver 5
Number of repairs employees 2
BUDGETED ACTUAL
Number of customers: Sales 230 175
Number of customers: Repairs 70 136
Total sales R798 000 R707 000
Cash sales 478 800 142 000
Credit sales 319 200 565 000
Gross profit 342 000 303 000
Fee income (cash only) 32 000 66 000
Salaries: Sales staff 82 000 82 000
Wages: Repairs staff 11 000 11 000

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QUESTION 4: INVENTORIES AND FIXED ASSETS (40 marks; 30 minutes)

4.1 INVENTORIES

Justime Footwear (Pty) Ltd sells one brand of running shoes. The business
uses the weighted-average method to value these shoes. The periodic
inventory system is used.

REQUIRED:

Calculate the following on 28 February 2021, the financial year-end:

4.1.1 Value of the closing stock (7)

4.1.2 Stock turnover rate (4)

INFORMATION:

The following information relates to the running shoes.

A. Balances:
QUANTITY TOTAL VALUE
DATE
(PAIRS) (INCLUDING CARRIAGE)
1 March 2020 206 R101 090
28 February 2021 420 ?

B. Purchases during the year:

NUMBER OF COST PRICE TOTAL
ITEMS PER ITEM AMOUNT
Purchases 2 490 R2 236 700
15 April 2020 560 R820 R459 200
20 September 2020 1 120 R900 R1 008 000
5 January 2021 810 R950 R769 500

C. Carriage on purchases:
A fixed cost of R25 per unit is paid for each pair of running shoes
delivered to the shop. This rate was unchanged during the financial year.
This is not included above.

D. Returns:
60 pairs of running shoes were returned from the September 2020
purchase. A refund of the cost price was received from the supplier. The
carriage on purchases was not refunded.

E. Sales:
2 216 units were sold at R1 400 each, R3 102 400.
NOTE: There were no stolen items.

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4.1.3 Justime (Pty) Ltd trades in three types of footwear. The table below
indicates the overall performance for the year.
The directors are satisfied with the management of running shoes but
not with the boots and sandals:
 The boots are imported and Justime (Pty) Ltd is the only business
in town selling these boots.
 The sandals are locally made and all competitors sell them at
R480 each.
Comment on the stock turnover rates for boots and sandals and
identify the major problem relating to EACH product. Quote figures.
RUNNING
BOOTS SANDALS
SHOES
Mark-up % 57,3% 80% 331/3%
Selling price R1 400 R2 900 R480
Average cost price R890 R1 610 R360
Gross profit per pair R510 R1 290 R120
Total gross profit R1 130 160 R1 122 300 R1 368 000
Orders received from
2 216 pairs 870 pairs 15 000 pairs
customers
Sales 2 216 pairs 870 pairs 11 400 pairs
Items on hand at year-end 420 pairs 440 pairs 150 pairs
Stock on hand at year-end ? R708 400 R54 000
Stock turnover rate ? 2 times 76 times (6)

4.2 FIXED ASSETS

The following information relates to the fixed/tangible assets of
Justime Footwear (Pty) Ltd. The financial year ended on 28 February 2021.
REQUIRED:
4.2.1 List THREE points for good internal control over movable fixed assets. (3)
4.2.2 Refer to Information A and B.
Calculate the cost of land and buildings purchased on
31 August 2020. (3)
4.2.3 Refer to Information A and C.
Calculate depreciation on the vehicle for the year ended
28 February 2021. (2)
4.2.4 Refer to Information A and D.
The business depreciates equipment at 30% p.a. on the diminishing-
balance method. On 30 November 2020, they decided to trade in a
photocopy machine for a new model.
 Calculate the loss on the photocopy machine that was traded in on
30 November 2020. (6)
 Calculate depreciation on the new photocopy machine and on the
remaining old equipment for the year ended 28 February 2021. (7)

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4.2.5 The CEO feels that the land and buildings are worth at least
R10 000 000 and wants to adjust the figure in the Statement of
Financial Position (Balance Sheet) accordingly. Explain why the
auditor does NOT agree. (2)

INFORMATION:

A. Extract from Trial Balances on 28 February:

2021 2020
R R
Balance Sheet accounts section
Land and buildings 6 250 000 5 500 000
Vehicle 480 000 480 000
Accumulated depreciation on vehicles ? 450 000
Equipment 2 190 000 2 100 000
Accumulated depreciation on equipment ? 1 440 000

B. Land and buildings:

Glamour Construction provided an invoice on 31 August 2020 after

completing the new storage facilities. The full invoice amount was paid
and debited to land and buildings. However, the auditor found that repairs
to the old storeroom, R60 000, were included in the invoice. This has not
been corrected.

C. Vehicles:

The company has only one vehicle. The depreciation rate is 25% p.a. on
cost.

D. Equipment:

A photocopy machine was traded in on 30 November 2020 for R88 000

for a better model. The cost price of the new model that was delivered on
1 December 2020 was R410 000. The fixed asset register reflected the
following:

Fixed asset register:

Category: Photocopy machine
Model: Clearfont X23
Date purchased: 1 March 2019
Cost price: R320 000
Depreciation rate: 30% on diminishing-balance method
Date Depreciation Carrying value
28 February 2020 R96 000 R224 000
30 November 2020 ? ?

40

TOTAL: 150

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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 & other receivables + Cash & 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 Cost of sales 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.

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 NATIONAL
SENIOR CERTIFICATE

GRADE 12

ACCOUNTING P2

NOVEMBER 2020(2)

MARKS: 150

TIME: 2 hours

This question paper consists of 13 pages,

a formula sheet and a 10-page answer book.

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KEEP THIS PAGE BLANK.

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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 VAT and Creditors' Reconciliation 25 20

2 Cost Accounting (Manufacturing) 50 40

3 Budgeting 40 30

4 Stock Valuation 35 30

TOTAL 150 120

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QUESTION 1: VAT AND CREDITORS' RECONCILIATION (25 marks; 20 minutes)

1.1 VAT

Amahle Traders is registered for VAT. The standard VAT rate is 15%.

REQUIRED:

1.1.1 Calculate the figures indicated by (a) to (d) in the table below. (9)

1.1.2 The internal auditor discovered that Amahle has been underpaying the
amount due to SARS in respect of VAT, at each submission date. On
enquiry, Amahle stated that she used the money to pay business
expenses and adjusted the payments later.

Comment on this practice and give Amahle advice. (3)

INFORMATION:

EXCLUDING INCLUDING VAT

VAT VAT AMOUNT
Invoices received from suppliers R78 000 R89 700 (a)
Discount received from suppliers R12 400 (b)
Credit notes issued to customers (c) R210
Invoices issued to customers R158 700* (d)

* This includes sales for R9 200 which should have been sold at zero rate.
The bookkeeper incorrectly included VAT of R1 200 on these goods.

1.2 CREDITORS' RECONCILIATION

Ekasi Traders buys goods on credit from Thembeka Suppliers.

REQUIRED:

1.2.1 Use the table provided to indicate changes to the:

 Creditors' Ledger Account in the books of Ekasi Traders

 Creditors' Reconciliation Statement on 30 April 2021 (9)

1.2.2 Refer to Information C(c) about Invoice 395. It was discovered that the
purchasing manager, Bradley, had taken these goods for his personal
catering business. The owner regards Bradley as a valued member of
staff and does not regard this as theft.

What should the owner say to Bradley regarding this incident? Explain
TWO points. (4)

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INFORMATION:

A. Creditors' Ledger Account in the books of Ekasi Traders

THEMBEKA SUPPLIERS (CL6)
DEBIT CREDIT BALANCE
2021 1 Balance b/d R81 000
April 12 Invoice 220 97 200 178 200
EFT 40 500 137 700
18 Debit Note 702 10 300 127 400
Invoice 289 49 100 176 500
Invoice 333 30 000 206 500
24 Debit Note 877 9 700 216 200
25 Journal voucher 585 6 400 209 800
31 Cheque and discount 92 600 117 200

B. Statement of account from Thembeka Suppliers

Ekasi Traders
225 Crocodile Road 25 April 2021
DEBIT CREDIT BALANCE
2021 1 Balance R81 000
April 12 Invoice 220 97 200 178 200
Receipt 742 40 500 137 700
18 Credit Note 791 13 100 124 600
Invoice 333 30 000 154 600
22 Invoice 395 12 500 167 100
24 Credit Note 888 9 700 157 400

C. Errors, omissions and other information:

(a) Invoice 289 was incorrectly reflected in the account of Thembeka
Suppliers in the Creditors' Ledger. These goods were purchased
from Thami Suppliers.
(b) Credit Note 791 was recorded incorrectly on the statement of
account. This relates to the correct entry for Debit Note 702 in the
Creditors' Ledger.
(c) Invoice 395 on the statement of account was for goods ordered by
Ekasi Traders.
(d) Thembeka Suppliers also purchased goods on credit from Ekasi
Traders. Ekasi Traders has transferred a debit balance from the
Debtors' Ledger (Journal voucher 585). Thembeka Suppliers will
include this on the next statement.
(e) The transaction on 24 April 2021 is for merchandise returned to
Thembeka Suppliers.
(f) The statement of account reflects transactions up to 25 April 2021.
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QUESTION 2: COST ACCOUNTING (MANUFACTURING) (50 marks; 40 minutes)

2.1 PERFECT FIT MANUFACTURERS

The business produces formal shirts. The financial year ended

28 February 2021.

REQUIRED:

2.1.1 Prepare the Production Cost Statement. (14)

2.1.2 Calculate:
 Gross profit earned on sale of shirts (5)
 Mark-up % achieved on shirts (2)

INFORMATION:

A. Stock on hand:
28 FEBRUARY 2021 1 MARCH 2020
Work-in-progress ? R230 000
400 shirts, valued using 900 shirts at R380
Finished goods
FIFO method = R342 000

B. The bookkeeper calculated the costs below. Some errors were

made.
Direct material cost R1 575 000
Selling and distribution cost R385 000
Administration cost R256 400
Direct labour cost ?
Factory overhead cost R518 800

C. Errors and omissions:

 Payment to Quick Deliveries, R75 000 for carriage on raw materials,
was incorrectly allocated to selling and distribution cost.
 The entire insurance amount of R25 200 was transferred to the
Administration Cost Account. Two-thirds (2/3) of this expense should
be allocated to the factory.
 The Factory Overhead Cost Account included an amount of R117 600
for water and electricity. The bookkeeper had incorrectly allocated this
expense to factory, administration, and selling and distribution in the
ratio 6 : 3 : 1. The correct ratio is 5 : 4 : 1.
D. Prime cost: R2 550 000 (after adjustments)
E. Production and sales for the year:
 7 600 shirts were produced at a unit cost of R420 each.
 8 100 shirts were sold for R4 860 000.

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2.2 LEATHER MANUFACTURERS

Leather Manufacturers is owned by Tello Andrews. They produce leather
purses and leather jackets. The financial year ends on 28/29 February each
year.
REQUIRED:
PURSES
2.2.1 Calculate the break-even point for purses for the year ended
28 February 2021. (4)
2.2.2 Comment on the level of production achieved and the break-even point
for purses for 2021. Quote figures. (4)
2.2.3 Apart from inflation and wage increases, give TWO other possible
reasons for the increase in the direct labour cost per unit for purses. (4)
2.2.4 Give TWO reasons for the decrease in the direct material cost per unit
for purses. (2)
JACKETS
2.2.5 Although Tello was aware that importing leather for the jackets would
increase the direct material cost per unit, he thought that this would
improve the quality of the jackets.
 Explain why the direct material cost per unit for jackets would
probably increase if raw material were imported. State TWO points. (2)
 Provide figures to prove that Tello was correct about the effect this
decision would have on the cost of the jackets. (2)
2.2.6 Calculate the % increase in the selling price of the jackets. (3)
2.2.7 Explain the impact of the increase in the selling price of jackets on the
sales and profit. Quote figures or calculations. (4)
2.2.8 Tello wants to increase profits on jackets by an additional R250 000 in
the next financial year. Assuming the cost structure remains the same,
calculate the total number of additional units he must produce to
achieve this target. (4)
INFORMATION:
PURSES JACKETS
2021 2020 2021 2020
Direct material cost per unit R100 R125 R360 R180
Direct labour cost per unit R135 R105 R280 R240
Selling and distribution cost per unit R20 R30 R60 R45
Total variable cost per unit R255 R260 R700 R465
Total fixed costs R936 000 R836 000 R1 706 250 R2 000 000

Number of units produced and sold 24 000 22 000 3 631 6 350

Break-even number of units ? 20 900 3 750 5 000
Selling price per unit R295 R300 R1 170 R780

50
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QUESTION 3: BUDGETING (40 marks; 30 minutes)

Blossom (Pty) Ltd sells expensive ladies' dresses of high quality. They also repair
dresses for customers, but they aim to break even on this service.

Customers are allowed to buy dresses for cash or on credit, but they are required to
pay cash for all repairs.

The information relates to the budget period ending 31 May 2021.

REQUIRED:

3.1 Complete the Debtors' Collection Schedule for March to May 2021. (9)

3.2 Calculate the missing amounts indicated by (a) to (d) in the Cash Budget. (14)

3.3 Refer to Information G and H.

Advertising:
 Explain the decisions that the directors took regarding the budgeted and
actual expenditure for advertising in May 2021. Quote figures or
calculations. (4)

 The directors ask you for a report on the effect that the advertising
decisions have actually had on customers and sales in May 2021.
- Provide TWO points that you would include in your report. Quote figures
or calculations. (4)
- Explain how the decline in the national economy has affected the
average amount that customers spent in May 2021. Quote figures. (3)

Consumable stores:
Comment on whether the consumable stores have been well controlled or not.
Quote figures or calculations. (2)

3.4 Refer to Information F and H.

Rental and customers:
The owners of the property, Propco Ltd, informed the directors of Blossom Ltd
of the increase in rent planned with effect from 1 April 2021.
In order to economise on rent, the directors asked the owners, Propco Ltd, for
a reduction of the area rented from 1 May 2021. Propco Ltd agreed to this
request. Calculate the reduction of the area rented (in square metres). (4)

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INFORMATION:

A. Total sales and cost of sales:

MARCH APRIL MAY
Sales R560 000 R630 000 R770 000
Cost of sales 320 000 360 000 440 000

 Goods are sold at a mark-up of 75% on cost.

 Credit sales are expected to be 65% of total sales.

B. Expected debtors' collection based on the past:

 40% collected in the month of sale, less 6% discount for early payment
 50% collected in the month following the month of sale
 8% collected two months after the sale
 2% regarded as uncollectable two months after the sale

C. Purchases of stock:
 All purchases of stock are on credit.
 Trading stock is replaced in the month of sale. A fixed stock level is maintained.
 Creditors are paid in full in the month after purchasing stock.

D. Loan from Janet Bloom:

 Janet Bloom has provided a loan to the business at an interest rate of 9% p.a.
Interest is not capitalised and one-third of the loan is repaid to her on
31 December each year.
 As the company was still experiencing cash flow problems owing to the
Coronavirus lockdown in 2020, Janet agreed to increase her loan to the
business on 1 April 2021.

E. Salaries of sales assistants:

 The sales assistants all earn the same monthly salary.
 They were promised a 5% increase in salaries with effect from 1 April 2021.
 The business employed two sales assistants in March and planned to employ
an additional assistant from 1 April 2021.

F. Rent and number of customers:

 The directors secured premises in a local shopping mall from Propco Ltd with
enough space to cater for the expected number of customers.
 Rent is charged per square metre according to the floor area. The rent
increased by 11% p.a. commencing on 1 April.
 The following figures were identified for planning purposes:
MARCH APRIL MAY
2
Floor area in square metres (m ) 120 m2 120 m2 ?
Rent expense per m2 ? ? ?
Expected average sales per customer R7 000 R7 000 R7 000
Expected number of customers 80 customers 90 customers 110 customers

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G. Extract from the Cash Budget:

MARCH APRIL MAY
RECEIPTS R R R
Cash sales 196 000 (a) 269 500
Cash from debtors 278 369 355 992 ?
Fee income (for repairs) 15 000 15 000 15 000
Loan from Janet Bloom (see Information D) (b)

PAYMENTS
Payments to creditors 220 000 320 000 360 000
Salaries of sales assistants (see Information E) 22 400 (c) ?
Wages of repair staff 9 000 10 000 10 000
Consumable stores (for repairs) 4 200 4 200 4 200
Interest on loan 1 365 2 625 2 625
Rent expense (see Information F) (d) 39 960 39 960
Advertising 10 000 12 000 30 000
Audit fees 60 000

H. Comparison of budgeted figures to actual figures for May 2021:

BUDGETED ACTUAL
Number of customers 110 customers 135 customers
R R
Sales 770 000 690 000
Fee income (repair service) 15 000 21 000
Advertising 30 000 42 000
Consumable stores (for repairs) 4 200 5 520
Wages (for repair staff) 12 000 18 000
Audit fees 60 000 48 000
Rent expense 39 960 31 968
Salaries (shop assistants) 35 280 37 044
Delivery expenses 6 930 4 850
Packing material 19 250 13 480

40

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QUESTION 4: STOCK VALUATION (35 marks; 30 minutes)

4.1 Give ONE word/term for each of the following statements. Write only the
word/term next to the question numbers (4.1.1 to 4.1.4) in the ANSWER BOOK.

periodic system; FIFO; perpetual system;

specific identification; weighted average

4.1.1 This method is most suitable for inexpensive goods purchased

regularly.
4.1.2 The closing stock balance is recorded at the most recent prices paid.
4.1.3 Individual stock items are valued at the cost price on the purchase
invoice.
4.1.4 The cost of sales is recorded for every sales transaction. (4 x 1) (4)

4.2 LOTUS ACCESSORIES

The owner is Alex Lotus. The business uses the first-in first-out method to value
gas lamps. They decided to sell gas stoves as well, expecting a demand due to
increased load shedding. The specific identification method is used to value
these stoves.

The financial year-end is 30 April each year.

REQUIRED:

4.2.1 Calculate the following for the gas lamps on 30 April 2021:

 Value of closing stock (using FIFO) (6)

 Stockholding period in days (using closing stock) (6)

4.2.2 Alex suspects that the stock of gas lamps are not well controlled.

Calculate the number of gas lamps missing. (4)

4.2.3 An investigation revealed that Alex's brother (employed at the store)

orders gas lamps using the business ordering system, and sells them
privately to his friends.

What should Alex say to his brother when dealing with this matter?
Provide TWO points. (4)

4.2.4 Calculate the closing stock value for gas stoves on 30 April 2021 (using
the specific identification method). (5)

4.2.5 Alex thinks he should stop selling gas stoves as they are causing a
liquidity problem and the profit is low.

 Provide figures to support his opinion. (2)

 Explain TWO points to convince him NOT to discontinue trading in
gas stoves. (4)
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INFORMATION:

A. STOCK RECORDS FOR GAS LAMPS:

UNIT PRICE AMOUNT

UNITS
(R) (R)
Stock balance on 1 May 2020 230 R12 650

Purchases during the year: 2 750 R193 500

July 2020 650 R60 39 000
September 2020 800 R68 54 400
January 2021 1 100 R75 82 500
March 2021 220 R80 17 600
Returns (from March 2021) 40 ? ?
Available for sale 2 940

Stock balance: 30 April 2021 270 ? ?

Total sales 2 180 R140 R305 200

c

B. STOCK RECORDS FOR GAS STOVES:

PURCHASES:
MONTH MODEL UNITS UNIT PRICE AMOUNT
August 2020 B-LITE 80 R495 R39 600
B-LITE 80 R495 R39 600
October 2020
SMART 100 R700 R70 000
B-LITE 120 R495 R59 400
February 2021
SMART 60 R700 R42 000

SALES:
MODEL UNITS SOLD SELLING PRICE AMOUNT
B-LITE 132 R790 R104 280
SMART 54 R980 R52 920

GROSS PROFIT AND MARK-UP:

MODEL COST OF SALES GROSS PROFIT MARK-UP
B-LITE R65 340 R38 940 60%
SMART R37 800 R15 120 40%

35

TOTAL: 150

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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 & other receivables + Cash & 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 Cost of sales 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
 NATIONAL
SENIOR CERTIFICATE

GRADE 12

ACCOUNTING

NOVEMBER 2019

MARKS: 300

TIME: 3 hours

This question paper consists of 21 pages and a 17-page answer book.

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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. Write neatly and legibly.

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

QUESTION 1: 40 marks; 20 minutes

Topic: This integrates:
Managerial accounting
Production Cost Statement
Manufacturing Break-even analysis
Managing resources
Internal control
QUESTION 2: 30 marks; 20 minutes
Topic: This integrates:
Financial accounting
Bank reconciliation
Reconciliation
Managing resources
Internal control
QUESTION 3: 45 marks; 25 minutes
Topic: This integrates:
Managing resources
Inventory Valuation Valuation methods
Internal control
QUESTION 4: 70 marks; 45 minutes
Topic: This integrates:
Financial accounting
Concepts
Balance Sheet and Audit Balance Sheet and notes
Report Fixed assets
Managing resources
Auditing
QUESTION 5: 75 marks; 45 minutes
Topic: This integrates:
Managing resources
Cash Flow Statement and Concepts
Interpretation Cash Flow Statement
Interpretation

QUESTION 6: 40 marks; 25 minutes

Topic: This integrates:
Managerial accounting
Cash Budget
Budgeting Projected Income Statement
Managing resources
Internal control

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QUESTION 1: MANUFACTURING (40 marks; 20 minutes)

Sihle Sangweni owns two separate factories that manufacture products according to
orders received. There is no work-in-progress stock. The year-end is 28 February.

1.1 Indicate whether the following statements are TRUE or FALSE. Write only 'true'
or 'false' next to the question numbers (1.1.1 to 1.1.3) in the ANSWER BOOK.

1.1.1 Wages of factory cleaners is a direct labour cost.

1.1.2 Delivery costs of finished goods to retailers are a selling and distribution
cost.

1.1.3 Depreciation on office equipment is an administration cost. (3 x 1) (3)

1.2 DESKS FACTORY

REQUIRED:

1.2.1 Complete the Factory Overhead Cost Note. (8)

1.2.2 Calculate the total cost of production of finished goods. (5)

1.2.3 Sihle wants to produce an additional 1 500 desks, while maintaining the
selling price and costs.

Calculate the additional profit he can expect. (4)

1.3 CHAIRS FACTORY

REQUIRED:

1.3.1 Provide a calculation to confirm the break-even point for 2019. (4)

1.3.2 Comment on the break-even point and the production level achieved.
Quote figures. (4)

1.3.3 Raw material consists of wood only. In 2019 the cost is R120 per square
metre (m2) and 1,2 m2 of wood is needed to make one chair.

During the year, 22 000 m2 wood was dispatched to the factory. Sihle
feels that the wood raw material was not well controlled.

 Provide a calculation to support his opinion. (4)

 Identify TWO possible causes of this problem. Provide a solution for
EACH. (4)

1.3.4 Give TWO reasons for the increase in direct labour cost. Provide a
solution for EACH. Note that wages and salaries increased by 5% in the
current financial year. (4)

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INFORMATION:
A. DESKS FACTORY
Extract of pre-adjustment amounts on 28 February 2019
R
Indirect labour 296 500
Depreciation of factory plant 166 000
Advertising 24 500
Water and electricity 248 000
Rent expense 345 600
Insurance allocated to sales department 12 600
Factory sundry expenses 107 700

Adjustments to factory overheads for desks:

 Water and electricity for February 2019, R18 000, must be taken into
account. 80% is allocated to the factory. The balance is an
administration cost.
 Rent must be allocated according to floor area:
Factory: 810 m2 Office: 180 m2 Sales department: 90 m2
 75% of insurance must be allocated to the factory. The balance applies
to the sales department.

B. INFORMATION FOR BOTH FACTORIES

DESKS CHAIRS
COSTS 2019 (Unit costs)
Amount Per unit 2019 2018
Direct material R3 060 000 R340 R165 R124
Direct labour ? R160 R90 R70
Variable
Selling and distribution R720 000 R80 R50 R60
Total variable costs R580 R305 R250
Factory overheads R76 R75
Fixed
Administration R360 000 R40 R20 R18

SELLING PRICES
Per unit R750 R390 R370

UNITS
Produced and sold 9 000 16 000 15 000
Break-even point 8 471 18 071 12 400

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QUESTION 2: RECONCILIATION (30 marks, 20 minutes)

The information relates to Klonex Traders.

REQUIRED:

2.1 The owner, Ben Joseph, realises that many people are now using electronic
funds transfers (EFTs) instead of cheques.

2.1.1 State THREE advantages of EFTs. (3)

2.1.2 Janet, the bookkeeper, has been assigned the duty of processing and
controlling all EFTs.

Explain TWO reasons why the internal auditor is concerned about this. (4)

2.2 Show changes in the Cash Journals for June 2019. (11)

2.3 Calculate the correct Bank Account balance on 30 June 2019. (4)

2.4 Prepare the Bank Reconciliation Statement on 30 June 2019. (8)

INFORMATION:
A. Extract: Bank Reconciliation Statement on 31 May 2019
Outstanding deposit R9 500
Outstanding cheques
No. Date
321 10 December 2018 R1 500
427 14 May 2019 R1 400
444 27 May 2019 R4 670
516 28 May 2019 R7 950
Favourable balance on Bank Account R9 200

NOTE:
 The outstanding deposit appeared on the June Bank Statement.
 Cheque 321 was issued for the owner's club fees. It was never deposited.
 Cheque 427 did not appear on the June Bank Statement. It was lost and a new
cheque will be issued in July.
 Cheque 444 did not appear on the June Bank Statement.
 Cheque 516 appeared on the June Bank Statement with the correct amount of
R5 250.

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B. Provisional totals in the Cash Journals on 30 June 2019 before

receiving the Bank Statement:

Cash Receipts Journal: R27 470

Cash Payments Journal: R32 400

C. Entries in the Cash Journals NOT on the June Bank Statement:

 Deposit, R9 675
 EFT 14 (30 June 2019), R3 800
 Cheque 522 (12 August 2019), R4 580

D. Entries on the June 2019 Bank Statement NOT in the Cash Journals:

DATE DETAILS R
15 Debit order: Micro Insurance* 1 125
Debit order: Micro Insurance* 1 125
16 Unpaid cheque (debtor, B Marais) 1 200
25 M Malan (EFT by tenant) 2 800
30 Interest income 130
30 Service fees 175

*Insurance appeared twice in error. This will be rectified next month.

E. Bank Statement balance on 30 June 2019: …?

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QUESTION 3: INVENTORY VALUATION (45 marks; 25 minutes)

George Grande is the majority shareholder and CEO of Grande Ltd. The company
supplies hotels with cabinets and lamps.

The periodic system is used. The year-end is 30 September 2019.

REQUIRED:

CABINETS

3.1 Calculate the value of closing stock for cabinets on 30 September 2019 using
the first-in first-out method. (6)

3.2 In 2019, the company decided to extend the target market and to grant trade
discounts to increase sales.

3.2.1 Calculate the % mark-up achieved in 2019. (4)

3.2.2 Provide TWO points (with figures) to prove that this decision achieved its
aims. (4)

3.2.3 The CEO feels that this decision also negatively affected the company.
 Provide TWO points (with figures) to support his opinion. (4)
 Give the directors advice to solve this problem. Explain TWO points. (2)

LAMPS

3.3 Calculate the stockholding period for lamps (use closing stock). (3)

3.4 George is concerned about the control of lamps. An investigation revealed that
the store manager was supplying local boarding houses with lamps without
documentation.
 Calculate the number of missing lamps. (5)
 Give TWO suggestions to solve this problem. (4)

TELEVISION SETS

3.5 During April 2019, while George was in hospital, Bruce Swann (the chief
financial officer) decided to include television sets in their product range. He was
able to secure bulk discounts from Roseway on two TV set models, namely LYN
and KYA.

Calculate the value of the closing stock of TV sets on 30 September 2019 using
the specific identification method. (7)

3.6 An employee of Roseway told George that Bruce received a 10% 'commission'
from Roseway for buying excess stock. George wants to discuss this at the next
board meeting.

Explain THREE different concerns that George would have about this problem. (6)

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INFORMATION:

A. Stock records of cabinets and lamps:

CABINETS LAMPS
UNIT
UNITS TOTAL UNITS TOTAL
PRICE
Stock balances
1 Oct. 2018 370 R800 R296 000 600 R108 000
30 Sep. 2019 280 ? 265 R59 625
Purchases: 2019
January 800 R920 R736 000 1 200 R240 000
April 1 200 R990 R1 188 000 1 800 R432 000
July 250 R1 100 R275 000 800 R210 000
Total 2 250 R2 199 000 3 800 R882 000
Returns 20 R1 100
Sales 3 675
Cost of sales R930 375

B. Information relating to cabinets:

2019 2018
Sales R3 480 000 R3 375 000
Cost of sales R2 170 500 R1 950 000
Units sold 2 320 2 500
Selling price per unit R1 500 R1 400
% mark-up achieved ? 73%
Customers on record 37 26

C. Stock records of television sets:

MODELS UNITS UNIT PRICE TOTAL

Purchases
May 2019 LYN 800 R6 000 R4 800 000
KYA 950 R7 200 R6 840 000
July 2019 LYN 500 R6 000 R3 000 000
KYA 500 R7 200 R3 600 000
TOTAL 2 750 R18 240 000
Sales LYN 430 R8 400 R3 612 000
KYA 540 R10 080 R5 443 200

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QUESTION 4: BALANCE SHEET AND AUDIT REPORT (70 marks; 45 minutes)

4.1 Choose an explanation in COLUMN B that matches the term in COLUMN A.

Write only the letters (A–E) next to the question numbers (4.1.1 to 4.1.5) in the
ANSWER BOOK.

COLUMN A COLUMN B
4.1.1 Internal auditor A appointed by shareholders to manage
a company
4.1.2 Memorandum of
incorporation (MOI) B the body responsible for registration
of all companies
4.1.3 Limited liability
C employed by a company to ensure
4.1.4 Director good internal control procedures

4.1.5 Companies and D indicates that a company has a legal

Intellectual Property personality of its own
Commission (CIPC)
E the document that establishes the
rules and procedures of a company
(5 x 1) (5)

4.2 VISIV LTD

The financial year ended on 28 February 2019.

REQUIRED:

4.2.1 Calculate:

 Amounts for (i) and (ii) in the Fixed Assets Register (5)
 Profit/Loss on sale of asset (2)
 Fixed assets carrying value on 28 February 2019 (4)

4.2.2 Calculate the correct net profit after tax for the year ended
28 February 2019. Indicate (+) for increase and (–) for decrease. (9)

4.2.3 Refer to Information A–H. Prepare the following on 28 February 2019:

 Retained Income Note (9)

 Statement of Financial Position (Balance Sheet). (27)
NOTE: Show workings. Certain figures are provided in the
ANSWER BOOK.

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INFORMATION:

A. Fixed assets:
A delivery vehicle was sold on 31 October 2018 but no entries were made
to record this transaction.
Details of vehicle sold:
Delivery Vehicle X43
Date purchased: 1 March 2016
Date sold: 31 October 2018 Sold for: R195 000 (cash)
Depreciation rate: 25% p.a. (diminishing-balance method)
CARRYING
COST DEPRECIATION
VALUE
28 February 2017 R400 000 R100 000 R300 000
28 February 2018 75 000 225 000
31 October 2018 (i) (ii)

B. List of balances/totals on 28 February 2019 (before taking into

account all adjustments below):
Ordinary share capital R8 152 000
Retained income (1 March 2018) 865 300
Mortgage loan: Prati Bank 1 758 000
Fixed assets (carrying value) 10 190 000
Fixed deposit: Prati Bank (balancing figure) ?
Trading stock 1 102 000
Net trade debtors 1 090 000
Bank (favourable) ?
SARS: Income tax (provisional tax payments) 155 000
Creditors' control 1 906 800

C. Net profit before tax, R822 700, was calculated before correcting the
following:
 Provision for bad debts must be increased by R65 000.
 R9 800 of an advertising contract applies to the next financial year.
 A tenant paid rent of R334 000 for the period 1 March 2018 to
31 March 2019. Rent was increased by R3 000 per month from
1 January 2019.
 Depreciation and profit/loss on the vehicle sold must be recorded.
 A further R43 000 is owed for income tax.

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D. Ordinary shares:
DATE DETAILS
1 March 2018 2 000 000 shares in issue; total book value R7 600 000
31 May 2018 360 000 shares repurchased at R4,10 each
1 October 2018 800 000 new shares issued
28 February 2019 2 440 000 shares in issue

E. Dividends:
 Interim dividends were paid in September 2018, R295 200.
 Final dividends of 20c per share were declared on 28 February 2019.

F. A creditor with a debit balance of R7 600 must be transferred to the

Debtors' Ledger.

G. A cheque for R75 000, dated 30 April 2019, was issued to a supplier in
February.

H. After processing all adjustments:

 The current ratio is 0,8 : 1.
 The current liabilities totalled R2 900 000.
 The current portion of the loan is the balancing figure.

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4.3 AUDIT REPORT FOR YEAR-END 28 FEBRUARY 2019

The financial statements of Visiv Ltd (see QUESTION 4.2.3) were audited. You
are provided with extracts from the audit report.

Extracts from the audit report:

Basis for audit report

Point 1 We were unable to obtain sufficient audit evidence to support the

amounts provided for certain income and expense items ...

Point 2 Furthermore, the repurchase of shares on 31 May 2018 is not in

accordance with provisions of the Companies Act, 1973 (Act 61 of
1973), as the liquidity of the company has been compromised …

Opinion

Point 3 Because of the significance of the matters described above, we do not

express an opinion …

REQUIRED:

4.3.1 Refer to Point 3.

What type of audit report did the company receive? (1)

4.3.2 Refer to Point 1.

Give TWO examples of audit evidence that the auditors would have
required regarding this problem. (2)

4.3.3 Refer to Point 2.

 Apart from the current ratio, identify and calculate ONE other financial
indicator that the auditors would have used in deciding on this opinion. (4)
 Explain what the directors could have done to prevent this comment
by the auditors. Provide TWO points. (2)

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QUESTION 5: CASH FLOW STATEMENT AND INTERPRETATION

(75 marks; 45 minutes)

5.1 Three financial statements are provided as options in which each of the following
items would appear. Choose the financial statement and write only the letter
(A–C) next to the question numbers (5.1.1 to 5.1.4) in the ANSWER BOOK, e.g.
5.1.5 D.

A Statement of Financial Position (Balance Sheet)

B Statement of Comprehensive Income (Income Statement)
C Cash Flow Statement

5.1.1 Profit on sale of a fixed asset

5.1.2 Amount due to shareholders for final dividends payable

5.1.3 Total amount spent on the repurchase of shares

5.1.4 Total income tax amount for the current financial year (4 x 1) (4)

5.2 SUNSET LTD

The financial year ended on 28 February 2019.

REQUIRED:

5.2.1 Calculate the following figures for the 2019 Cash Flow Statement:

 Income tax paid (4)

 Dividends paid (4)
 Proceeds of shares issued (6)
 Fixed assets purchased (5)

5.2.2 Calculate financial indicators for the year ended 28 February 2019:

 % operating profit on sales (4)

 Net asset value per share (4)
 Debt-equity ratio (4)

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INFORMATION FOR SUNSET LTD:

A. Information from Income Statement on 28 February 2019:

Sales R8 725 000

Gross profit 3 525 000
Depreciation 408 000
Operating profit 2 033 900
Interest expense 441 000
Income tax 477 900
Net profit after tax 1 138 000

B. Information from Balance Sheet on 28 February:

2019 2018
Fixed assets (carrying value)* R11 835 100 R10 658 000
SARS: Income tax 18 000 Cr 63 000 Dr
Shareholders' equity 8 625 000 10 065 000
Ordinary share capital 7 724 000 9 300 000
Loan: Funza Bank 3 500 000 2 800 000
Shareholders for dividends 372 000 195 000

*NOTE: Fixed assets were sold at carrying value, R490 000.

C. Share capital and dividends:

NUMBER OF
SHARE CAPITAL DETAILS OF SHARES
SHARES
1 March 1 500 000 In issue at R6,20 per share
2018
30 April 300 000 Repurchased at R6,90 per share
1 January 40 000 New shares issued
2019
28 February 1 240 000 In issue

DIVIDENDS DIVIDENDS PER SHARE

Final 2 March 2018 Paid 13 cents
Interim 31 August 2018 Paid 35 cents
Final 28 February 2019 Declared 30 cents

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5.3 HORIZON LTD and OPTIMA LTD

Refer to Information D to F.

Mike Mbele owns shares and is a director in both these companies.

He recently invested another R420 000 in each company by buying shares on

the JSE at market value as follows:

HORIZON LTD OPTIMA LTD

R8,40 R4,00

REQUIRED:

NOTE: Provide figures, financial indicators or calculations in EACH case to

support your comments and explanations.

5.3.1 Purchase of shares:

 Explain why directors should be interested in the price of their

companies' shares on the JSE. (2)
 Calculate the number of additional shares in Horizon Ltd that Mike
was able to buy on the JSE in 2019. (3)
 Comment on the price that Mike paid for these shares and give TWO
reasons why he might have been satisfied to pay this price. (6)

5.3.2 Dividends and earnings:

 Explain your opinion on which company has the better dividend

pay-out policy. (6)
 Compare and comment on the % return on equity earned by EACH
company. (4)
 Mike feels that the earnings per share (EPS) of Optima Ltd is much
better than that of Horizon Ltd. Explain why he feels this way. (5)

5.3.3 Refer to the Cash Flow Statements.

The poor economy has negatively affected Horizon Ltd more than
Optima Ltd.

 Explain TWO decisions taken by the directors of Horizon Ltd in

response to the state of the economy, and how these decisions will
affect the company in future. (6)
 Explain TWO decisions taken by the directors of Optima Ltd that
affect risk and gearing. Quote and comment on TWO financial
indicators. (8)

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D. Shareholding of Mike Mbele in two companies:

HORIZON LTD OPTIMA LTD

Number of shares bought in 2017 580 000 shares 1 430 000 shares
Total shares issued by each
1 240 000 shares 2 600 000 shares
company
Additional shares bought by Mike ? 105 000 shares
Mike's % shareholding before
46,8% 55,0%
buying additional shares

E. Financial indicators and additional information on 28 February 2019:

HORIZON LTD OPTIMA LTD

Earnings per share (EPS) 97 cents 83 cents
Dividends per share (DPS) 65 cents 80 cents
Debt-equity ratio 0,1 : 1 0,7 : 1
% return on average equity 6,2% 18,2%
% return on average capital
9,4% 15,1%
employed
Net asset value (NAV) 750 cents 445 cents
Additional information:
Interest rate on loans 12,0% 12,0%
Interest on investments 6,5% 6,5%

F. Extracts from Cash Flow Statements for year ended 28 February 2019:

HORIZON LTD OPTIMA LTD

Cash flows from investing
R2 700 000 (R2 730 000)
activities
Purchase of fixed assets 0 (1 580 000)
Sale of fixed assets 1 800 000 0
Change in investments 900 000 (1 150 000)

Cash flows from financing

(2 670 000) 4 000 000
activities
Proceeds of new shares
0 200 000
issued
Shares repurchased (1 070 000) 0
Cash effects of long-term loan (1 600 000) 3 800 000

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QUESTION 6: BUDGETING (40 marks; 25 minutes)

The financial year-end of Carpets Galore (Pty) Ltd is 31 October 2019. Thembi Tsomi is
the sole shareholder and director.

6.1 Indicate amounts in the appropriate blocks for the Cash Budget and Projected
Income Statement for three months ending 31 January 2020.
 A printer costing R40 800 will be bought for cash on 30 November 2019.
Depreciation will be R680 per month.
 On 1 January 2020, R48 000 will be paid for a 12-month insurance contract.
 A loan of R100 000 will be received from Viva Bank on 31 December 2019.
This will be repaid in equal instalments over 20 months, commencing on
31 January 2020. Interest at 12% p.a. is paid monthly and is not capitalised. (11)

6.2 Refer to Information A: Debtors' Collection Schedule.

Thembi is preparing projections for the period commencing 1 November 2019.

Thembi does not grant discount for early payment.

Calculate the % of debtors:

 Who settle their accounts in the 2nd month following the credit sales
transaction month (3)
 Written off as bad debts at the end of the 3 rd month following the credit sales
transaction month (4)

6.3 Refer to Information B: Projected Income Statement for September and

October.

6.3.1 Office workers are unhappy with the increase that Thembi gave them on
1 October 2019. Explain what she should say to them. Provide TWO
points. Quote figures or a calculation. (6)

6.3.2 Thembi pays her son, Jacob, to deliver and install carpets for customers.
She budgets R2,80 per metre for this. Comment on the control of this
expense. Quote figures or a calculation. (4)

6.3.3 A new competitor commenced trading in the area on 1 September 2019.

 Provide figures to illustrate the impact on sales in September. (2)
 Explain THREE decisions that Thembi took in October in response to
the new competitor. Quote figures or a calculation. (6)

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6.3.4 Stock sold is replaced in the same month. 50% of the stock is bought on
credit. Creditors are paid in the month following the purchases month to
receive a 5% discount.

Calculate the actual amount payable to creditors in November 2019. (4)

INFORMATION:

A. Debtors' Collection Schedule for the period ending 31 January 2020:

CREDIT COLLECTIONS
SALES NOV. 2019 DEC. 2019 JAN. 2020
August R80 000 R17 600
September 90 000 67 500 R19 800
October 100 000 75 000 R22 000
November 120 000 90 000
R94 800 R112 000

B. Information identified from the Projected Income Statement:

SEPTEMBER 2019 OCTOBER 2019

Projected Actual Projected Actual
Metres sold 5 000 m 3 800 m 5 000 m 6 000 m
Selling price per metre R100 R100 R100 R88
Cost price per metre R60 R60 R60 R60
Sales: cash R400 000 R310 000 R400 000 R132 000
: credit 90 000 70 000 100 000 396 000
Total sales 490 000 380 000 500 000 528 000
Cost of sales (300 000) (228 000) (300 000) (360 000)
Gross profit 190 000 152 000 200 000 168 000
Director's fees 50 000 50 000 50 000 40 000
Wages: Office workers 9 200 9 200 9 200 11 040
Salary: Salesperson 20 000 20 000 20 000 0
Commission: Salesperson 0 0 0 52 800
Advertising 5 000 5 000 5 000 5 000
Packing materials 2 500 1 900 2 500 2 550
Delivery and installation
14 000 14 000 14 000 16 800
of carpets
Staff training 15 000 0 15 000 40 000

40

TOTAL: 300

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