FACULTY/COLLEGE College of Business and Economics

SCHOOL School of Accounting

DEPARTMENT Commercial Accounting
CAMPUS(ES) SWC
MODULE NAME Financial Accounting
MODULE CODE FAC11A1
SEMESTER First
ASSESSMENT OPPORTUNITY, Exam 1
MONTH AND YEAR June 2023

ASSESSMENT DATE 5 June 2023 SESSION

ASSESSOR(S) Ms. M. Carter, Mr. H. Coovadia and Mr. N. Ebrahim
MODERATOR(S) Mrs. C Chetty
DURATION 3 hours TOTAL MARKS 100

NUMBER OF PAGES OF QUESTION PAPER (Including cover page) 9

INFORMATION/INSTRUCTIONS:
___________________________________________________________________________
• This is a closed-book assessment.
• Read the questions carefully and answer only what is required.
• Number your answers clearly and correctly as per the question paper.
• Write neatly and legibly on both sides of the paper in the answer book, starting on the first page.
• Show all workings
_________________________________________________________________________

DETAILS TOPIC MARKS TIME

Question 1 Introduction to Accounting 30 54

Question 2 Inventory 25 45
Question 3 Accounts Payable 15 27
Question 4 Financial Statements 30 54
100 180 minutes

1
 QUESTION 1 (30 MARKS)

Section A (15 MARKS)

Boity owns a bakery business that is registered for VAT named Mnandi traders. Due to all
the load shedding, Boity has decided to invest in an inverter to continue operating during
power outages. The inverter was ordered on the 5th of May 2023 and it was delivered on the
20th of May 2023. The business bought the inverter for R20 000 (excluding VAT) on credit
from Cool ideas Ltd. They have negotiated to settle their account with Cool ideas Ltd on the
30th of August 2023. The financial year end is the 30th of June 2023.

REQUIRED:

1.1 Record the transaction above in the general journal of Mnandi 4 Marks
Traders. A narration and SFP/SPL classification are required.
1.2 On which date can the elements/transaction be recognised in the 1 Mark
financial statements?
1.3 Identify the 2 elements of the financial statements the transaction 2 Marks
above represents. IGNORE VAT.
1.4 By referring to the Conceptual Framework for Financial Reporting, 8 Marks
Provide and apply both the definitions of the elements you identified in
1.3.

Section B (15 MARKS)

Mbappe owns a soccer coaching business named Superstrikers that is a registered VAT
vendor and provides soccer coaching. The following transactions took place during
February 2023.

Transactions:

15 The business provided coaching services to Bafana Ltd for R345 000 (including VAT).
Bafana Ltd paid Superstrikers R40 000 cash and the balance is still outstanding. Ignore
the cost of service.

20 Superstrikers paid R75 000 (excluding VAT) for the rental of soccer fields.

29 Mbappe took R50 000 from the business for personal shopping.

2
.

REQUIRED:

1.5 Prepare the accounting equation of Superstrikers for the above 13 Marks
transactions by using the table below. Round all amounts to the
nearest Rand.

ASSETS = EQUITY + LIABILITIES

Day Account Sign and Dr/Cr Account Sign and Dr/Cr Account Sign and Dr/Cr
name amount name amount name amount

1.6 Calculate the amount of VAT for February 2023 and state whether 2 Marks
VAT is payable to SARS or receivable from SARS.

3
QUESTION 2 (25 MARKS)

Super Fit (Pty) Ltd, is a local manufacturer of bicycles which purchases the parts required
to assemble a bicycle from foreign and local suppliers. Super Fit (Pty) Ltd employees
assembles these parts together to complete the bicycles for resale. Super Fit (Pty) Ltd
reporting period ends 31st May 2022. You are the accountant for Super Fit (Pty) Ltd. The
following transactions took place during the month of May 2022. Inventory relating to bicycle
frames had a closing balance of R 36 000 on the 30th April 2022

PART A

1. On the 1st of May 2022, Super Fit (Pty) Ltd placed an order for 275 bicycle frames
from Ultra-Light Technology Ltd. Ultra-Light Technology Ltd could not complete the
order and only 250 bicycle frames were delivered. Each bicycle frame cost R 1 955
inclusive of VAT. Ultra-Light Technology Ltd granted Super Fit (Pty) Ltd a 2% trade
discount. The amount has not been paid to Ultra-Light Technology Ltd.

2. On the 12th of May 2022 Super Fit (Pty) Ltd sold 30 racing bicycles to MTP (Pty) Ltd
on credit. Super Fit (Pty) Ltd uses a mark-up of 35% on cost of sales. The selling
price of each racing bicycle amounted to R 2 300 including VAT.

3. On the 20th of May 2022, MTP (Pty) Ltd settled the amount of R 69 000 owed to Super
Fit (Pty) Ltd. Super Fit (Pty) Ltd granted the customer 3% settlement discount.

4. On the 30th of May 2022, a physical stock count was performed, and the following
information was obtained:

Stock Item Amount as per Accounting Amounts as per Physical

Records on 30th May 2022 Stock Account 30th May
2022
Bicycle Frame R 49 500 R 49 500
Brakes R 23 400 R 21 200
Tyres R 31 300 R 30 800

4
REQUIRED:

2.1 Record Transaction 1 in the General Ledger of Super Fit (Pty) Ltd 5 MARKS

Show all workings and round off answers to two decimal places
Prepare ALL relevant accounts.

2.2 Prepare the General Journal entries for Transaction 2, 3 and 4 for 14 MARKS
May 2022.

Show all workings and round off answers to two decimal places
Journal narrations ARE required.
Classifications for each account are required (SFP/SPL)

PART B

On 1st April 2022, Super Fit (Pty) Ltd had 25 bicycles on hand each with a cost price of R1
565 excluding VAT
11th April 2022 Purchased 15 bicycles at R 1300 each (excl. VAT)
22nd April 2022 Purchased 10 bicycles at R1426 each (incl. VAT)
27th April 2022 Sold 18 bicycles
29th April 2022 Purchased 20 bicycles at R 1100 each excl VAT

REQUIRED:

2.3 Super Fit (Pty) Ltd uses the WAM method. 4 MARKS

Calculate the cost of sales of 18 bicycles sold on 27 April 2022

Show ALL workings

PART C
At a recent management meeting, the shareholders argued that the bicycles purchased for
resale should be classified as Property, Plant, and Equipment as the bicycles have a useful
life of greater than 12 months.
2.4 Using IAS 2, discuss whether the classification proposed by the (2 MARKS)
shareholders is correct

Provide reasons for your answer

5
QUESTION 3 (15 MARKS)

The following account appeared in the payable’s subsidiary ledger of Tiktok traders for
March 2023.

Youtube Suppliers
Day Details Debit Credit Balance
1 Balance 15 500
9 Suppliers Invoice 114 2 100 17 600
12 Supplier invoice 115 140 17 740
18 Debit note 006 1 100 16 640
24 Debit note 007 125 16 515
28 Supplier invoice 116 550 17 065
29 Bank Chq 007 2 300 14 765

On 25 March 2023 Tiktok Traders received the following statement from Youtube
Suppliers.

YOUTUBE SUPPLIERS
Statement of account of Tiktok Traders - MARCH 2023
Date Details Debit Credit Balance
1 Opening Balance 15 500
9 Sales and VAT (Invoice 114) 2 100 17 600
12 Sales and VAT (Invoice 115) 1 400 19 000
18 Sales and VAT (Invoice 006) 1 100 20 100
24 Credit note 007 215 19 885

Additional information.

1. The accountant of Tiktok traders recorded the incorrect amount for the transaction
on the 12th (Invoice 115).
2. The accountant of Youtube suppliers incorrectly recorded inventory returned on the
18th as credit sales.
3. The accountant of Tiktok traders recorded the correct amount for the transaction on
the 24th (Debit note 007).
4. On 25 March Tiktok traders bought inventory of R500 (excluding VAT) on credit
from Youtube suppliers. This has not yet been recorded by both Tiktok traders and
Youtube suppliers.
5. The transactions on the 28th and 29th are correct but have not yet been recorded by
the supplier.

6
Required
3.1 Complete the account of Youtube Suppliers in the payable’s 5 MARKS
subsidiary ledger of TiktokTraders for the month ended 31 March
2023.
3.2 Prepare the Payables reconciliation of Youtube Suppliers for the 8 MARKS
month ended 31 March 2023.

3.3 Give an example of a timing difference from this question. 1 MARK

3.4 Give an example of an adjusting difference from this question. 1 MARK

7
QUESTION 4 (30 MARKS)
The following is an extract from the records of Comserv, a computer wholesale, on 31
December 2022. The end of their financial period is 31 December 2022. Comserv is a
registered VAT vendor

Description Dr Cr
Land and Buildings 234 232
Motor Vehicles 324 234
Equipment 979 877
Inventory 57 625
Trade Receivables 670 984
Bank 793 478
Trade and other Payables 982 739
Loan: ABC Bank 76 494
VAT Control 42 343
Allowance for Doubtful debts 45 000
Capital 1 012 000
Accumulated Depreciation: Vehicles 34 333
Accumulated Depreciation: Equipment 54 654
Sales 2 029 668
Cost of Sales 835 097
Water and Elec 34 222
Telephone 68 734
Wages 39 744
Packing Materials 34 322
Stationery 9 977
Salary 78 978
Bad Debts 6 786
Insurance 78 797
Rent Received 46 732
Bank Charges 76 876
4 323 963 4 323 963

8
The following adjustments still need to be recorded for the year end 31 December
2022

1. Depreciation must be accounted for as follows:

a. Vehicles, 30% on the straight-line method.

b. Equipment at 15% on the diminishing balance method.

2. The allowance for doubtful debts must be adjusted to R60 000.

3. Comserv rents out a part of their building for commercial purposes. The tenant has not
paid the rent for the months October, November and December 2022. The rent per
month is R 40 000 (incl. VAT). This transaction was not recorded by the accountant.

4. Stationery on hand on 31 December 2022 is R4 000 (ex VAT). The accountant recorded
the full value of stationery as an expense when it was purchased.

REQUIRED:

4.1 Record the above adjustments in the General journal of Comserv for 11 MARKS
the year ended 31 December 2022
Journal Narrations not required.
Journal classifications are required
4.2 Prepare the Statement of profit or loss for the year ended 31 8 MARKS
December 2022
4.3 Prepare the Statement of financial position as at 31 December 2022 11 MARKS